As many of you who may have followed my occasional warbling will have noticed, there is a common theme in which I have bemoaned the arrival of the ‘meddling’ multi-billionaires and oil rich state owned corporations into football, but also I have cast doubt on the equally meddling UEFA and EPL FFP regulations which will try to lamely control these wealthy entities.
Why do I describe these people as meddling?
Well both the multi-billionaires who now own football clubs, as well as the Arab or Eastern European state backed owners, and the state owners of clubs, do not really need to dabble in football at all, and neither do they show much personal interest or enjoyment in the sport itself, but they do clearly have their own agendas in plucking financially struggling clubs and transforming them at a stroke.
The average, and frequently penurious fan may goggle at the nine zeros in a billion dollars, [$1,000,000,000] or 1,000, million dollars, which represents the sort of money (give or take) expended on Manchester City by Sheikh Mansour, and the very similar sums paid out for Chelsea, Manchester United and even Arsenal by the new owners.
For some of the oligarchs, football is a tasteless way of indulging themselves in a personal whimsy or fiefdom, and to play a real life version of FIFA 2012, and to show to the adoring fans how omniscient and clever they are by buying struggling clubs and injecting huge sums of money to enable them to be regenerated and start to become trophy winning giants.
For others, such as Silent Stan, it is a safe vehicle for their financial investment in a major sporting institution, in which they intend to see a rich reward in the medium to longer term.
Alternatively, for the state backed clubs, it is another way to give their countries some reflected glory from their involvement with world renowned clubs, or in the case of the state of Qatar, their purchase of PSG has underlined their credibility in ‘buying’ the World Cup venue and showing their state in a better footballing light.
To prevent the inevitable rampant distortion of the economic football environment, the powers at UEFA, closely followed by the English Premier League owner, have introduced the FFP regulations, which are purportedly to return to a financially level playing field in the European Leagues, particularly the EPL, and to stymie the runaway financial power of the mushrooming oligarch clubs.
That’s good isn’t it?
Well, not for every club, I am afraid.
Let us accept for the sake of this discussion that FFP will work, and then we can look at what the consequences will be for the different level of clubs in the PL.
UEFA decided to act on the inequalities and financial instability of many clubs throughout Europe, once it became obvious that the oligarchs and Arab states were also seriously affecting the footballing environment. They now require all clubs to introduce more discipline and rationality into their club football finances, particularly by decreasing the pressure on salaries and transfer fees, and limiting inflationary effects, by the simple expedient of requiring the clubs to compete only within their generated revenues, and to invest more in their youth teams and their club infrastructures.
Basically, they now require clubs to balance their books or break even. Simple!!
Under this concept, clubs cannot repeatedly spend more than their generated revenues, and they will be obliged to meet all their transfer and employee payment commitments and not build up unsustainable debt, or failing this they will be thrown out of European competitions.
Ok, that is a brief synopsis of the major requirements of FFP, with which we are all too familiar.
So why am I concerned that these seemingly very laudable objectives might achieve exactly the opposite of what was intended and will not result in a level financial playing field?
In large part, this whole concept has come about on the basis of shutting the stable doors after the horse has bolted. Chelsea and Man City have been transformed from also ran, financially struggling clubs who were rocketed up to become part of the prevailing elite, consisting of Arsenal and Man United, by the injection of vast sums of money from their wealthy owners.
It happened and it is not possible to turn the clock back.
The new FFP rules will still permit oligarch type owners to purchase a club such as Wigan or Sunderland, but they will not be able to pour outrageous sums of money into those clubs, and therefore they could not grow to challenge the existing elite. The same block on uncontrolled spending also applies to clubs who have already been bought by somewhat less wealthy owners, such as those at Reading or Southampton, and again they will not be able to challenge the existing elite because of this financial restriction.
Incidentally, should Usmanov manage to acquire the ownership of Arsenal, he too would be restricted as to the sums he could pour into Arsenal, subject to some magical accounting, of course.
What magical accounting you ask?
Well, this is a little digression from my theme, but there is a major difference between owner investment and owner personal loans. Loans can build up and will need to be repaid at some time – just ask the Portsmouth fans, whereas owner investment means to inject capital into the company usually by way of additional issued share capital in exchange for cash, and this can be extended to fan ownership too, as in Germany.
Anyway, so happy were Arsenal, Manyoo, Liverpool and even Spurs, with the provisions of the UEFA FFP that they sent out a joint message, on an Arsenal letter head, to all the other clubs, (which I am showing below) proposing that the Premiership should introduce their own version of FFP.
Last December, partly as a result of this letter and some arm twisting negotiations, the EPL FFP provisions were passed, much to the delight of the main proponents, and to the chagrin of clubs like Man Citeh, Fulham, Southampton, Reading etc, all of whom objected but were outvoted.
[Oddly Abramovich, against all reason, agreed the proposal – which he could have blocked].
The effect of this agreement is that all EPL clubs have to submit their financial accounts not only to UEFA for audit, but also to a Premier league appointed Investigator for certification.
OK, I can hear you say, so what?
[this is the Arsenal letter mentioned above]:
Here comes the rub with these FFP proposals.
Clubs like Arsenal and Manure have the biggest stadia and the highest revenue streams, although Manyoo are really in a league all on their own, and can only benefit from linking expenditure on transfers and salaries to a percentage of turnover, which in turn means their transfer chests will, over time, become bigger and give them the greatest chance of buying the best players.
I can hear you thinking, so if Arsenal is likely to be one of the big beneficiaries of the new regime, why am I not happy with the outcome of FFP?
Well, Arsenal’s inclusion in a small group of clubs that will benefit, if as seems likely, the oligarchs and the state owned clubs are not permitted to ‘invest’ whatever monies they wanted into their clubs, is also balanced by the exclusion of the ‘lower’ clubs, such as Newcastle, Villa and West Brom etc, who will forever remain cannon fodder for the ‘elite’.
In effect, if a new oligarch happened along, as mentioned earlier, all they would be able to do is to maintain the status quo, with the elite group expanding their clubs profitability and influence, whereas those with smaller revenues will only be able to watch them disappear into the distance.
Silent Stan must be rubbing his hands with glee that Arsenal now stand a very good chance of getting back to near the top in the medium term, which will not do his investment any harm, and I don’t suppose he will much care that it will be at the expense of our club submitting to the financial ‘power’ of Manyoo, who will, in all probability, win the Premiership every year, as they become unassailable.
There is another imperative downside to FFP, and that is the cost to all the loyal fans of clubs throughout the EPL, if these more stringent rules result in clubs failing to keep within them, or if sponsorship income dries up, or if player wages continue to increase, despite efforts to curtail them, there will be only one way to recoup additional funds, and that will be by charging fans even more for tickets to watch their teams.
As I hope I have shown you, what is a very well intentioned change in the administration of the game by using FFP to try and impose a level financial playing field, could very easily result in the exact opposite, with the establishment of a rigid regime that will prevent any clubs, except the privileged few including our own dear Arsenal, from having even the smallest chance of winning the Premiership, and making Manyoo into the sole English Galactico in the process.
I believe in freedom.
Freedom to allow people to do what they want, within the Law, even if this means allowing all football club owners, whoever they may be, to spend as much or as little money as they want, on the clubs that they own, or to borrow what they, as businessmen, deem necessary.
A freedom, which will permit the Arsenal owners, should they wish, to stick rigidly to their policy of pursuing a self sustainable finance model.
A freedom, where perhaps eventually a small, well run club in the ‘lower’ echelons of the Premiership could emulate the success of the CL semi-finalists, Borussia Dortmund, who themselves, in 2005, accepted external short-term funding, from another wealthier club, Bayern Munich, which enabled BD to survive and prosper.
That freedom will not be permitted in the future because the whole premise of FFP is flawed and just downright wrong.
This is a simple choice – Freedom for the clubs to pursue their own rainbows, or statutory regulation forcing all clubs to strictly adhere to a straight jacket within a fundamentally unbalanced new system.
I vote for freedom – how about you?
Written by: Red Arse.