Financial Fair Play

Go down

Financial Fair Play Empty Financial Fair Play

Post by Jonathan Prendergast on Tue Sep 04, 2012 1:14 pm

I enjoyed this satirical article on Soccernet.


UEFA president Michel Platini said he believes Financial Fair Play is having a positive effect on European football and confirmed that the rules would remain in place.

Platini - speaking in Monaco, where the draws for the Champions and Europa League group stages were made - claimed the majority of people in football were in favour of the rules.

"We are never going to go back on this,'' he said. "There was a provisional period of three or four years for the system to get set up. This period is reaching its end. We are determined to see this through.''

UEFA's general secretary, Gianni Infantino, showed details of a decrease in transfer dealing between clubs but also warned that more needed to be done to prevent clubs from making huge losses.

Infantino noted a decrease in transfer expenditure in January, when spending was down to €393 million from the record high of €613 million the previous January.

This trend continued into the summer transfer window, with only 18 players moving for more than €15 million, prior to deadline day compared with 26 in the same period in 2011.

"The current winter and summer transfer spending of €2,065 million is only 75% of the 2008-11 average," Infantino said. "This underlines the impact of Financial Fair Play and the fact that many clubs have overstretched or no longer have easy access to debt funding. These are clear facts and figures, and this is extremely significant."

Money owed to club employees was down 47% in 2012, compared to 30% in 2011, which Infantino believes provides further evidence that the laws are working.

"The conclusions are that the club financial control body monitoring activity is having a clear positive effect and that Financial Fair Play is now well under way," Infantino said. "There is only way, and this is forward."

Dan Jones, a partner in the Sports Business Group at Deloitte, said: "While there has been significant spending already this summer, totalling around £380 million, there are still a number of clubs likely to be concluding deals right up to the deadline.

"While spending in this transfer window looks set to be close to record levels, this should be considered in the context of increases of over 70% in the Premier League domestic broadcast deals announced earlier this year.

"Once overseas broadcast deals are factored in, the average Premier League club looks set to benefit from at least an additional £25 million of revenue per year from next season.

"Nonetheless, the key challenge for Premier League clubs is how they manage their costs - notably transfer expenditure and players' wages - so as to retain more of this increased revenue, address falling profits and for the top clubs continue on the road to compliance with UEFA's Financial Fair Play regulations."

----------------------------------------------------------------------------------------------------

If anything has happened in the past year, the gap between the biggest and smaller clubs in Europe has widened. It needs to come in properly ASAP and be made to work.
Jonathan Prendergast
Jonathan Prendergast
Cult Hero

Posts : 1265
Join date : 2012-01-08
Location : Sydney

View user profile

Back to top Go down

Financial Fair Play Empty Re: Financial Fair Play

Post by Jason Morrison on Thu Sep 06, 2012 4:59 am

Some Questions regarding FFP answered.

I had the opportunity to spend a little bit of
time with Michel Platini and the rest of the
UEFA top brass in Monaco last week, and
unsurprisingly, Financial Fair Play was one
of the big talking points. It's pretty obvious
that FFP will be one of the defining issues of
Platini's tenure as president and may impact
whether he goes on to head FIFA, as some
say he hopes to do, or whether he disappears
into the background when his mandate is
up.
FFP basically limits the number of losses a
club can sustain. If you're one of those
wonkish types who enjoys reading legalese,
you can get your kicks by checking out the
full regulations here . The penalties for FFP
noncompliance include a limit on squad size
in UEFA competitions such as the Champions
League and Europa League, fines and
withholding of prize money and, ultimately,
exclusion.
There is still plenty of confusion around FFP
in some quarters. Some of it can be cleared
up rather easily; some of it requires some
conjecture and guesswork. Here's my
attempt to shed some light.
Q: What's to stop a wealthy owner from
simply doing a bogus deal between one of
his other companies and his club to inflate
revenue? For example, an owner could sign
a $200 million sponsorship deal between his
ball-bearing company and his club and
they'd instantly have all this extra money to
spend.
A: Many point to the very lucrative
sponsorship deal that Manchester City signed
with Etihad, an airline that happens to be
owned, like City, by Sheikh Mansour as an
example of this. UEFA is pretty vigliant here.
The regulations say that sponsorship deals
will be "benchmarked" against those struck
by other clubs. So, for example, if Barcelona
has a $50 million sponsorship agreement
with someone and it's the highest in the
world, then a smaller club with less reach
than Barca can't very well claim a $200
million deal. Or, rather, UEFA will calculate
only a proportion of that and assume the rest
is bogus or a covert "gift" from the owner.
UEFA has made it very clear that it has closed
all loopholes in terms of getting around the
FFP regulations. This includes other types of
transactions between a club and "related"
companies. Again, using City as an example,
the club can't sell a pen to one of Mansour's
other companies or Mansour himself for
$100 million. Or, rather, City could, but only
the benchmarked value of the pen would
count toward FFP.
Q: Do you really think UEFA can enforce
those rules? What if there's a legal
challenge?
A: UEFA seems pretty confident that it can.
The way the rules are written, it has the
ultimate discretion to determine who's
compliant and who isn't. A club that's not
satisfied can take the matter to the Court of
Arbitration for Sport (CAS), but that's it. No
more appeals.
I'm not a lawyer, but I can imagine the only
possible legal challenge would be with the
legality of FFP itself rather than a specific
judgement. I guess anything is possible, but
given that both the clubs and the European
Commission are behind FFP, UEFA feels
pretty confident that it can't be successfully
challenged. And, even if it is, the case would
likely take years.
Q: So if these rules are coming in and
wealthy owners won't be able to rack up
huge losses year after year, how do you
explain the massive spending of Chelsea,
Manchester City, Paris St. Germain and, most
recently, Zenit, with its $100 million swoop
for Hulk and Axel Witsel?
A: I don't know. I guess they have a plan to
massively increase revenue down the road.
Because that's another point that people are
missing. If you read Annex XI of the FFP
regulations (boring, I know), the suggestion
is that as long as clubs are moving in the
right direction and have some plan to reach
break-even, they'll be OK. Ultimately, it's all
at UEFA's discretion.
Q: A-ha! And the fact that Zenit is sponsored
by the Russian conglomerate Gazprom,
which also happens to be a major UEFA
sponsor, or the fact that PSG is French, just
like Platini, means it'll get an easier ride
from UEFA?
A: Some make that argument. I don't buy it.
First, Platini explicitly said the rules will
apply to PSG exactly like they apply to every
other club. His credibility is at stake, and
remember, he has ambitions beyond UEFA.
As for Gazprom, it's a big company and it
sponsors plenty of things. But it's not as if it
owns UEFA or, indeed, that its sponsorship is
that crucial to the organization that it would
do Gazprom's bidding. Unicredit has a
similar sponsorship deal with UEFA, and it's
actually a part-owner of Roma (mainly
because of the debts piled up by the previous
owners), yet nobody has suggested that Roma
has been allowed to run roughshod over
UEFA rules.
Q: OK, but surely Platini won't have the
courage of telling huge clubs with huge fan
bases like City or Chelsea or PSG they can't
play in the Champions League, will he? I
mean, the sponsors and broadcasters who
paid good money for the rights would never
stand for it, would they?
A: I think what everybody forgets is that
these FFP rules were negotiated and agreed
with the European Club Association, which
represents clubs across Europe. Among the
biggest proponents were big profitable clubs
like Bayern and Manchester United. Now,
they have their own reasons for backing FFP,
namely they're already profitable, so if some
of their competitors have to curb their
spending, it's to their advantage.
But what will happen is that if Platini doesn't
enforce FFP, some of Europe's biggest clubs --
which have got their financial house in order
-- will be furious.
The bottom line is that FFP has the backing of
most of the big clubs in Europe and, if they
see the rules aren't being enforced, they
won't stand for it. They might even threaten
to walk out. And if you think not having City
or PSG in the Champions League would hurt
broadcasting and sponsorship revenue, well,
that's nothing compared to not having
Bayern and Manchester United.
So many have focused on exclusion from the
Champions League as a punishment for
violating FFP. And, sure enough, it's the
ultimate sanction. Not participating in the
Champions League means a huge loss of
revenue and, just as important to some of the
vainer owners, loss of prestige. But I think
that will only come down the road, if at all.
UEFA will give clubs every chance to comply.
And, to be honest, if somebody insists on
overspending year on year, I think there's
another way it will be handled.
Q: Really? What's that?
A: Well, the next level down of punishment
is fines. And I think that's the direction we're
headed, mainly because it suits everyone. I
could see it working a bit like the luxury tax
they have in the NBA or Major League
Baseball. Imagine you have losses of, say,
$50 million when you're allowed losses of
only $20 million. You might end up paying a
fine of one dollar for every dollar that you go
over the limit. So, in this case, you'd pay
UEFA $30 million in luxury taxes. That
money could be used in different ways.
Some could go to grassroots initiatives or
UEFA-backed charities. Some of it could be
distributed to other Champions League clubs.
And some could go into prize money.
That way, a guy like Sheikh Mansour or
Roman Abramovich could still spend as
much as he likes, but there would be a major
disincentive to doing so. And his spending
would end benefiting other clubs.
It's just one scenario. UEFA is extremely
cagey when you bring this up and insist that
it's confident that everyone will meet FFP so
there's no need to even contemplate this. But
I don't fully buy it. As I see it, if you're going
to have FFP, this is the only viable
compromise.


http://soccernet.espn.go.com/feature/_/id/1151697/marcotti:-trying-to-understand-financial-fair-play-?cc=3888
Jason Morrison
Jason Morrison
Cult Hero

Posts : 1600
Join date : 2012-01-08
Age : 28
Location : Cape Town

View user profile

Back to top Go down

Back to top

- Similar topics

 
Permissions in this forum:
You cannot reply to topics in this forum