Topic: Financial Fair Play - developments in here

[JongWK]

Absolute joke of a penalty for the biggest offenders, so long as they are allowed to compete.

[RedHopper]

I find it slightly odd that you relish the idea of Man Utd being head and shoulders above everyone else in England in perpetuity, but each to their own.

Well that's not the likely outcome though is it. Say in four years time FFP has been implemented, Both Spurs and ourselves have expanded our stadia. (Spurs expect to be in their new stadium by then) You are looking at Man utd, Us, Arsenal, Spurs and Chelsea all being in the top 10 richest clubs in europe even if they aren't in the champions league. A good manager could do a hell of a lot with that level of resources. You're looking at a whole heap of other clubs padding out the top twenty as well. Just below the top twenty, you will find a large number of midsized regional clubs, with 35000 seater stadia, top off pitch infrastructure, and no debt. These clubs are going to be pretty big fish by european standards, and will be able to field very competitive teams.

The other thing is that while man utd are bigger and earn more than everyone else, the Glazers are taking huge amounts of money out of the club. Take 2010-11. They had a turnover of £331 million. They Spent £153 million on wages, and £14 million net according to transfer league.co.uk. that's £167 million on players, and that's 51% of their turnover. They paid out £66 milllion in football related expenses, (20% of turnover) So that meant that the Glazers took the other 29%, or £96 million.  They only spend about 70% of their turnover on football. That's basically what they have done throughout the entire period of their ownership. That means in the world of FFP, where the other clubs are spending exactly what they can afford, you need to need to be 70% as big as man utd to be able to spend just as much money as them. In 2010-11, you only needed to be earning £231 million to be able to afford to spend just as much as man utd. That's not beyond us is it? That's not beyond a lot of teams.

Man utd's motivation to implement FFP is twofold. They're already a huge cash behemoth, who are always going to be 'there or thereabouts'. yes They want to prevent clubs spending huge amounts of money, and providing that form of challenge. but that's not going to prevent the development of very strong, and stable long term rivals. If you think about the era before Abramovich, Man utd were fighting tooth and nail every season with Arsenal, a club who was spending less money than them, and were turning a steady profit. Their biggest european rivals, Barcelona, real madrid and bayern munich are already living well within their FFP requirements.

For them it's mostly because they want to keep down wages. Think of how much less they would be paying Wayne Rooney if Man city hadn't offered him all that money? As a result, think of how much less they would have had to pay van Persie, if Man city and Chelsea hadn't set the Wage packet for a top player at least £9 million a year, which is a huge sum? Money that they have to dish out in Oil money inflated wages is money that they can carry away in a huge dumptruck.

But I don't think that there's that much to be gained by focusing on the motivations of individual clubs, and instead look at the likely effects of FFP on the league as a whole in conjunction with the huge new tv deal. Seriously dampening down wage inflation, and forcing financial responsibility, and long term planning on clubs is going to strengthen the competitiveness of the league as a whole. By opening up the four champions league spots to the clubs that do the best with the resources available to them, rather than having a place effectively bought for them by their owner injecting huge amounts of money, you are enabling clubs that are doing things the right way to grow, and gain european experience, and if they sustain their progress, grow to the point where they can challenge for the title, or for european success.

As mentioned above, imagine the financial impact that Champions league football this season would have had on Spurs and Newcastle? They would have been in a  position to seriously strengthen their squads, and in spurs case, help to prepare to pay for their new stadium. That money would have been used to sustainably improve the competitiveness of two clubs, who are doing a pretty good job of maximizing their available resources. Think of the effect going back through the years on the teams kept out of the CL by Roman's insane spending that had no rational economic basis. Would everton be stuggling under quite so much debt, if they'd made it into the CL a couple of more times? I appreciate that this argument may not appeal to many on here, but the point is that the league as a whole would be more competitive, and while you wouldn't have the superinflated Sugar daddy clubs, every other club would be in a stronger position, and have a clear path to develop their club if they get it right on and off the pitch.

[litliper]

Stan Collymore ‏@StanCollymore
Spoke to senior UEFA guy in Ukraine. They'll kick teams out in years to come, it won't just be fines.

[No666]

The fact they've acted proves they want the measures to succeed - owners will now ignore FFP at their peril:


Europa League winners Atlético Madrid fall foul of financial fair play rules as Uefa withholds prize-money
Uefa has withheld prize-money payments from 23 European clubs over their failure to pay tax or transfer debts — with Falcao’s Atlético Madrid among them.

By Matt Scott11:28AM BST 11 Sep 201232 Comments
The Colombian was the star turn in Atlético’s 4-1 European Super Cup win over Chelsea last month, scoring a hat-trick. But his club’s failure to pay their share of €1.35 billion in tax and social security debts Spanish football clubs owe to their government has finally caught up with them.
According to the Spanish daily El País, Atlético Madrid is paying 4.5 per cent interest on the outstanding €115 million they owe Spain’s treasury, amounting to an annual payment of €15 million. But although a deal has been struck with the tax authority, the debt means last season’s Europa League winners fall foul of Uefa’s financial fair play rules that demand clubs keep up to date on tax payments.
“The [Uefa] Club Financial Control Body’s investigatory chamber has identified that important overdue payables towards other clubs, and/or towards employees or social/tax authorities existed in 23 cases,” said Uefa in a statement.
“[Therefore] 23 clubs involved in 2012/13 Uefa club competitions have seen the payment of their prize money temporarily withheld pending further investigation.
“This [withholding] measure will remain in force until all identified balances have been settled in full or until a final decision by the CFCB adjudicatory chamber is taken.”

There have also been reports in the Spanish sports daily Marca that Porto claim Atlético have failed to keep up to date with instalments on the transfer fee for Falcao, who moved between the clubs in July 2011. Atlético reportedly admit money is outstanding but say they will soon pay up.
Whether the situation will force Atlético to sell their prize asset is unclear. A significant proportion of any fee raised would in any case flow to the Quality Football third-party-ownership fund controlled by Peter Kenyon and Jorge Mendes at the time of the transfer, since it owns a stake in his registration rights.
Intriguingly, Málaga, the Qatar-owned club whose extravagant spending propelled them into this season’s Champions League, is another Liga club to have prize-money payments withheld over outstanding debts.
Among the mostly Bosnian, Croatian, Romanian and Serbian clubs on the Uefa list, the names of Sporting Lisbon and Russia’s three-times Champions League participants Rubin Kazan also stand out.
All 23 clubs have until 30 September to update Uefa on their progress in settling the debts.

[Mashy-rawr!nooo]

Not good for Atletico considering the rest of the clubs under investigation are a level below them.

[Slick_Beef]

Swiss Ramble had a good article on Atleti recently. It looks to me like they are in huge trouble. The debt they are in is unbelievable.

[PhilV]

Not good for Atletico considering the rest of the clubs under investigation are a level below them.

Malaga and Sporting Lisbon are same level I'd say.

Not sure what Sporting's offense is, would like to know.

[Paul-LFC]

I think this is an important step. Shows they actually want to implement this. I see this withholding of prize money as a "don't do it again" punishment - later ones will hopefully be more severe for repeat offenders. Of course, it remains to be seen what will happen if United, City, Madrid, Barca etc break the rules.

[Fair Play Falsehood]

It's not so much about being in debt, as it is being self-sufficient.

Why can't we all be like Dortmund...

Is that the Dortmund who were saved from bankruptcy by a loan from Bayern Munich in 2003?

[rafathegaffa83]

I think this is an important step. Shows they actually want to implement this. I see this withholding of prize money as a "don't do it again" punishment - later ones will hopefully be more severe for repeat offenders. Of course, it remains to be seen what will happen if United, City, Madrid, Barca etc break the rules.

Indeed

Not sure what Sporting's offense is, would like to know.

I think the clubs who have had prize money withheld today have either a) not paid taxes or b) still have outstanding debts to other clubs

[Twelfth Man]

I think this is an important step. Shows they actually want to implement this. I see this withholding of prize money as a "don't do it again" punishment - later ones will hopefully be more severe for repeat offenders. Of course, it remains to be seen what will happen if United, City, Madrid, Barca etc break the rules.

How the fuck do City and Chelsea get away with it? I don't get it.

[Twelfth Man]

I think the clubs who have had prize money withheld today have either a) not paid taxes or b) still have outstanding debts to other clubs

In other words hit the poorer clubs struggling to stay viable, let-off  the sugar-Daddy teams who have caused crazy wage inflation which has put many sides in their current place.

[Fair Play Falsehood]

How the fuck do City and Chelsea get away with it? I don't get it.

Because these fines are just to do with the non payment of fees, salaries and tax to various people/companies. Chelsea are not behind with any of their payments.

The FFP regulations for break even (potential trouble for Man City and Chelsea) start with the publication of accounts next season.

[Fair Play Falsehood]

In other words hit the poorer clubs struggling to stay viable, let-off  the sugar-Daddy teams who have caused crazy wage inflation which has put many sides in their current place.

Or you could look at it and say that UEFA have said "What you do not have enough money to pay your debts? Right we are not giving you money that you could use to pay off these debts and therefore will have more trouble paying them off in the future"

A bit like you owing a mate £100 and having no money however he owes you £300 but will not give it to you until you have paid him first.

[walkerman32]

I hate FFP. So many loopholes with teams able to sneak out of it. We need more stringent regulations.

[Slick_Beef]

Not sure what Sporting's offense is, would like to know.

They owe Barça money for Jeffrén Suárez, and I suspect there are other transfers they owe money for (e.g. i have heard that they owed some money to Braga too). I've also seen a few articles over the last couple of years about them not paying wages (sometimes being 5 months behind etc).

I hate FFP. So many loopholes with teams able to sneak out of it. We need more stringent regulations.

What do you think the loopholes are mate? I'm no expert at all but having read a lot of the document, I thought the regulations  were pretty thorough and that if FFP fails, it'll be because they are not enforced properly by uefa rather than teams finding loopholes.

[The Flying Pig]

Be crazy if Atletic have to sell Falcao to one of the mega-rich clubs!

[redtel]

Or you could look at it and say that UEFA have said "What you do not have enough money to pay your debts? Right we are not giving you money that you could use to pay off these debts and therefore will have more trouble paying them off in the future"

A bit like you owing a mate £100 and having no money however he owes you £300 but will not give it to you until you have paid him first.

Nothing like that at all.

The clubs do not owe money to UEFA who are holding onto prize money. The clubs owe third parties such as the government or other clubs.

If Atletico cannot afford to pay their tax bills they shouldn't have bought Falcao. It's the Portsmouth model.

I see your location is :  working out ways to cheat the rules

Suggest you apply to Chelsea or City for a job. 

[Fair Play Falsehood]

Nothing like that at all.

The clubs do not owe money to UEFA who are holding onto prize money. The clubs owe third parties such as the government or other clubs.

If Atletico cannot afford to pay their tax bills they shouldn't have bought Falcao. It's the Portsmouth model.

I see your location is :  working out ways to cheat the rules

Suggest you apply to Chelsea or City for a job. 

What if the majority of the clubs who have had prize money held back owe less than the prize money they are due to receive? Surely this would not make sense?

I agree with the comment about Atlético, they owe more (to their equivalent of HMRC)  than the amount that ended Rangers even after selling Aguero, yet went straight back out and bought Falcao.

[Mizerooskie]

I can write more about this later, but it depends on how "hard" the cap is. The NBA still has large disparity between the haves and have nots. The NHL cap has enabled smaller teams to retain key players and has introduced more parity, but is currently eating itself due to loopholes involving the length of player contracts and dumping stupid contracts in the minor leagues to minimize the hit. The NFL has more parity, but unlike say the NHL, contracts are largely performance based and not guaranteed. Thus if you release someone in the NFL you're not stuck with a massive bill, unlike in the NHL. You also tend to see older players accept the minimum wage for their "age bracket" (in most of these leagues there is a minimum salary based on how long you have been in the league and a maximum for rookies) in order to try to win something.

That said much of the parity in these sports is possibly driven by the fact they are won via knockout competitions and thus the best team on any given day could win. However, you do have teams big and small that despite the cap are terribly run: For example, the Toronto Maple Leafs and New York Islanders in the NHL or the Miami Dolphins in the NFL are all mismanaged in various ways and haven't taken advantage of the cap or figured out how to best exploit it.

Very good summary.

It should be noted, however, that in order fro American sports league to receive anti=trust exemption from the government, the players' unions and leagues must collectively bargain to set their financial rules.  The salary caps come from the Collective Bargaining Agreements, and aren't just set by each league's governing body.  I'd be interested to know what sort of legal ramifications would come from the FA/UEFA/etc. trying to set a salary cap, and if those ramifications could be avoided through some sort of collective bargaining.

[redtel]

What if the majority of the clubs who have had prize money held back owe less than the prize money they are due to receive? Surely this would not make sense?

I agree with the comment about Atlético, they owe more (to their equivalent of HMRC)  than the amount that ended Rangers even after selling Aguero, yet went straight back out and bought Falcao.

Yeah Atletico owe 1.35 billion !

If the majority of the 23 owe less than the prize money earned it would make sense for them to get a bridging loan and pay off the debt. Then they would make a profit by receiving the UEFA prize money.

The fact is they probably owe a lot more and that is why the debt is outstanding.

I can't see why people are defending/sympathising with  clubs who play in European Comps against maybe us, yet don't pay their way as we do.  eg Pay tax, NI, Insurance etc etc.  It's not fuuur.

[rafathegaffa83]

 

In other words hit the poorer clubs struggling to stay viable, let-off  the sugar-Daddy teams who have caused crazy wage inflation which has put many sides in their current place.

Not really. These clubs, some of them who are very big (Fenerbahce, Sporting Lisbon, Atletico Madrid) are not paying taxes and outstanding debts to other clubs. It's the Portsmouth and Rangers approach minus the collapse and we aren't talking just a million here and there that they owe. In Atletico's case they are a club with around a turnover of €100m, who in 2011 owed €215m to the tax authorities, €55m to other clubs and €52m to players. If clubs want to be in European competition, they need for the sake of their own sustainability and that of other clubs to begin to be run properly. 

I'd be interested to know what sort of legal ramifications would come from the FA/UEFA/etc. trying to set a salary cap, and if those ramifications could be avoided through some sort of collective bargaining.

I think the problem is that the economies of world football are so diverse, it would be impossible to impose one cap. A bit different with North American sports when you are dealing with one or two countries, whose economies are intertwined.

[Max_powers]

No Chelsea or PSG or City? 

[rafathegaffa83]

No Chelsea or PSG or City? 

Because this case didn't have to do with them. It had to do with clubs being withheld prize money for outstanding debts to other clubs or unpaid tax bills.

[rob1408]

No Chelsea or PSG or City? 

As has been said, they don't owe anyone any money and their accounts, regarding break even, won't be under consideration until next year. 

[MBL?]

It seems to me that legally these are the easiest clubs to go after because it is down to tax and non payment to other clubs. It's a whole different story going after the sugar daddies.

[SP]

It seems to me that legally these are the easiest clubs to go after because it is down to tax and non payment to other clubs. It's a whole different story going after the sugar daddies.

The clubs in that much debt can't afford the kind of legal representation that would make mincemeat of the regulation...

[Paris Saint-Germain]

there are talks of a new shirt sponsorship for us, starting next season, from a Qatar bank
Around 100 million euros a year

a bit more than the 3.5 we actually get from fly emirates

Boom, in your face financial fair play

[Slick_Beef]

there are talks of a new shirt sponsorship for us, starting next season, from a Qatar bank
Around 100 million euros a year

a bit more than the 3.5 we actually get from fly emirates

Boom, in your face financial fair play

There is actually a regulation relating to deals like that. I can't remember the exact wording but uefa are able to remove unrealistic sponsorship deals from the break-even calculation.

[Paris Saint-Germain]

guess it isn't unrealistic, maybe some other teams like barcelona and co have this kind of deal already

it supposedly includes the naming of the stadium as well

[Slick_Beef]

guess it isn't unrealistic, maybe some other teams like barcelona and co have this kind of deal already

it supposedly includes the naming of the stadium as well

It seems the highest shirt sponsorship deal is soon to be Man Utd, when they start their new 56M€ per year in 2014. Man City get 12.5M€ per year from stadium naming rights which I think is also currently the highest, so you would be with the biggest deal, but it will be interesting to see if Uefa think that is acceptable or not.

[moxey]

^^

Good on them, however they can hardly talk, they've spent fucking shit loads to win numerous titles in the past an all the daft bints.

Veron, Berbatov, Nani, Anderson, Ferdinand, Rooney, van Persie, van Nistelrooy, fuck it I can't be arsed I'll be here all night.

Thing is so have us and we`ve won fuck all titles in the same time.It`s designed to stop the sugar daddies of Chelsea and Man City.The sooner it comes in the better.It will benefit the real big 3 teams Liverpool,Arsenal and United who have generated their own income and not had it handed to them on a plate

[No666]

Dortmund telling it like it is.

http://www.telegraph.co.uk/sport/football/teams/manchester-city/9584125/Manchester-City-should-be-thrown-out-of-the-Champions-League-says-Borussia-Dortmund-chief-executive.html

[Agger]

Dortmund telling it like it is.

http://www.telegraph.co.uk/sport/football/teams/manchester-city/9584125/Manchester-City-should-be-thrown-out-of-the-Champions-League-says-Borussia-Dortmund-chief-executive.html

He's spot on.

[scatman]

They are in very good financial health there, seems like revenue is growing fast too.

[AirConGipsyRed]

It looks like FFP is going to be challenged which I always thought it would.

It will be interesting to see how it goes..

http://www.soccernomics-agency.com/?p=454



“Today, 6 May 2013, Mr Daniel Striani, player agent (registered with the Belgian Football Association), represented by lawyer Jean-Louis Dupont, lodged a complaint with the European Commission against UEFA in order to challenge infringements to fundamental principles of EU law caused by some provisions of the UEFA “Financial Fair Play” regulation (FFP).

Specifically, this complaint challenges the restrictions of competition caused by the “Break-even rule” (article 57 of the UEFA FFP regulation).

The rule imposes on clubs that participate in the UEFA Champions League or in the Europa League the obligation “not to overspend” (the expenses of a club cannot exceed income). In effect, a club owner is prohibited from “overspending” even if such overspending aims at growing the club.

The “Break-even” rule (which, according to article 101 of the Treaty on the functioning of the EU, is an “agreement between undertakings”) generates the following restrictions of competition:

-   Restriction of investments;
-   Fossilization of the existing market structure (i.e. the current top clubs are likely to maintain their leadership, and even to increase it);
-   Reduction of the number of transfers, of the transfer amounts and of the number of players under contracts per club;
-   Deflatory effect on the level of players’ salaries; and
-   Consequently, a deflatory effect on the revenues of players’ agents (depending on the level of transfer amounts and/or of players salaries).

At the same time, because of the aforementioned restraints, the “Break-even” rule also infringes other EU fundamental freedoms: free movement of capital (as far as club owners are concerned), free movement of workers (players) and free movement of services (player agents). Consequently, such restriction of competition and violation of EU fundamental freedoms cannot be justified by the objectives put forward by UEFA (long term financial stability of club football; and integrity of the UEFA interclub competitions).

Moreover, detailed legal and economic analysis shows that, even if the “Break-even” rule may appear initially a plausible concept, the rule is not able to achieve efficiently its objectives as presented by UEFA (whereas other means are available to attain such objectives. For additional information, see The Wall Street Journal op-ed published 25 March 2013 – http://online.wsj.com/article/SB10001424127887324077704578357992271428024.html

As far as the integrity of the UEFA competition is concerned, in order to avoid the risk that club X would jeopardize the smooth running of the competition because its owner stops mid season providing funds (the “overspending”), it is not necessary to prohibit such “overspending” (as implemented by the “Break-even rule”), when it is sufficient to require “overspending” to be fully guaranteed (for instance, by means of bank guarantees) before the start of the competition and for its whole duration.

In short, the current prohibition – even assuming it to be justifiable (quod non) in the light of the pursued objective (i.e. integrity) – is in practice illegal because the rule is not proportionate (since it can be replaced by another measure, equally efficient but less damaging as far as EU freedoms are concerned).

In conformity with article 101.2 of the Treaties of the European Union, the complainant requests the European Commission to declare that the Break-even rule is null.

It is important to note this complaint does not at all question the legality of the UEFA rule (also included in the FFP regulation) that states that any club participating in the UEFA competition must prove – before the start of the competition – that it has no overdue payables towards clubs, players and social/tax authorities. In our view, this rule is justified in principle for the attainment of the integrity of the football competition and proportionate to this objective).

A copy of the complaint has been provided to UEFA.

[Arcadian]

What the actual fuck... Is going on with FFP?

I don't get it. It's utter horseshit isn't it? Someone just say it is. It's horseshit.

[Earl of Dingleberry]

What the actual fuck... Is going on with FFP?

I don't get it. It's utter horseshit isn't it? Someone just say it is. It's horseshit.

No, it's dog turd.

[ManchesterBlue]

It's the logistics of FFP that render it horse-shit. If you have a club that made profits of £30m, £40m and £50m over a 3-year period, they'll obviously pass FFP. Let's assume a scenario that this club were taken over and loaded with unsustainable debt and in the following financial year recorded a £30m loss. They'd still be showing an aggregate profit of £60m over 3 years so would pass the FFP test.

In the next financial year, let's say they reported a £40m loss, meaning their 3-year aggregate was a £20m loss. They'd still pass FFP. In the third year, let's say they reported a £50m loss. They'd fail FFP but it's clear the problem would have been in place for 3 years, since they turned a £50m profit into a £30m loss. Questions should have been asked at that point, not 2 years later once they'd failed the current test.

[RedHopper]

well then you just make it impossible for owners to borrow the money to buy a club and then load it on the club. It's that simple. There's not much you can do about the situations that are currently in place, but you can prevent it happening in the future. Remember that this is also an anti debt measure. Clubs will still be allowed to borrow money to build infrastructure, and to cover cash flow issues, but they are supposed to stop running up debts as a result of spending too much in wages and fees. Banning LBO's is a natural extension of this.