Crossroads

Football, the most popular sport in the world is at a crossroads. The divide between teams when it comes to finance is getting bigger and bigger, and a sport that has for generations been run on the basis of sustainability now has teams willing to spend over the odds of what they make in an effort to win something and in the process they are not only artificially inflating transfer fees, but they are driving wages to unsustainable levels.

UEFA in its belated wisdom finally acknowledged that this was not the way that the current direction that football has taken may not be in the best interests of the European game. Aspects under which some teams operate and not only in themselves anti-competitive, but they also affect the balance under which the game of football has operated ever since its inception as a professional sport.

The Financial Fair Play rules have the best interests of the game at heart, but even this early there are doubts as to whether or not they will actually ever come to play. What possible penalties are there for UEFA to consider when it comes to teams that cannot spend within the specified limits, what options are there for UEFA to follow if teams challenge the Financial Fair Play regulations?
The Financial Fair Play initiative may be a bold move, and many will even argue that it is a fantastic move for the world of football but surely, one cannot assume that a single blanket solution what is needed in a European game where leagues operate in a different manner and each league has its own unique challenges. A good example would be a comparison between the English and Spanish leagues: In England, each team gets an equal share of the lucrative television revenue and that somewhat levels the playing field when one considers a guaranteed basic income. Differences only emerge when it comes to match day revenue, commercial deals that different teams strike, and regrettably, how much a team is willing to spend over and above what it makes. In Spain, there is a different problem; the top two teams i.e. Real Madrid and F.C. Barcelona make almost half of all television revenue, and Athletico Madrid make the third highest amount which tops what any English team makes from its allotted quota of the same. This accompanied by the fact that Barcelona and Real Madrid have been keen on spending money they don’t have has led into a league that can only be described as a horse race that that two horses and eighteen donkeys.

The best way for the Financial Fair Play to be implemented would be to go the way Germany went. It is a move that forces every team to spend within a given limit and it is a move that can be implemented without as big legal challenge compared to a similar move by UEFA. Where UEFA would come in would be as an overseer that the process is being handled well and that all leagues and involved teams within Europe are living to both the letter and spirit of what the regulations stand to achieve which can be enumerated as:

a) The biggest problem brought about by the reckless spending that teams like Chelsea, Real Madrid, Manchester City, Inter Milan and to some extent Barcelona have brought upon the system is the inflation pressure that has come from such moves; player valuations, transfer fees and salaries have risen faster than team turnovers. It is true that no one forces a team to pay a player more that what he is worth, and any team that collectively spends more than it can make has only itself to go on and blame. True as that statement is, reality is that football just as any business is a playground where talent, good talent needs to be well compensated lest it be lost to another player. In most cases, it has meant that teams are paying some of their best players rates that are competitive enough to keep them and in some cases, to the detriment of the team’s financial state. Financial fair play will not cap what player valuations, player fees or player salaries should be, neither should they seek to achieve that, what they will do, is that they will force teams to live within a set limit unique to each team with regard to financial year turnover. It will bring back the risk associated with a player transfer, and the salary the player commands something that should never be delinked from any sport e.g. Manchester United have had to endure Luis Nani’s inconsistent performances for almost two and a half years because of the fee that they had paid out for him; they had to take their time and further develop his talent into what he is today because the financial risk they had taken was huge. Contrast that with Manchester City that operates on a no risk basis when it comes to player fees paid, and salaries involved e.g. Emmanuel Adebayor was brought in from Arsenal in a move that more than doubled his wages from £80,000 to £170,000; but there was no risk involved because if he did not fit the system all a manager would do is bring in another player. The Citizens did that when they brought in Mario Balloteli, Edin Dzeko and recently Sergio Aguero all for big money, and most on gargantuan salaries.

A model, any model that encourages a risk delinked model in business, sport or any walk of life is a flawed model. In football it is flawed for the mere fact that it forces teams living within their limit to compete with teams operating above it without risk. The teams that have made the effort to continuously spend over the odds each passing year when they have not the turnover to support that spending know that they are by design limiting chances when it comes to competing for players on the transfer market, and somewhat, they are forcing the hand of other big teams when it comes to the salary scale. It is not by mistake that Wayne Rooney and John Terry were able to engineer huge salary increases when they threatened to leave their respective teams with City heavily believed to be after their signatures; it is not by mistake that Samir Nasri almost tripled his salary when he moved to the same team. It is by design that Manchester City have made losses ever since they were taken over culminating into the record loss that they posted, that Chelsea have not made a profit since Roman Abramovich took over, Inter Milan have their debt issues and both Real Madrid and Barcelona are deep in debt despite their overly lucrative television deals. These teams, and others like Malaga and PSG that were also bought up recently are structured purposely to limit competition by design, and football will do well if this as a practice is stamped out.

b) Financial fair play will force teams to do some long term planning as opposed to the short term planning we see; Chelsea are the best case study of what short term planning can be in the world of football. Roman Abramovich came in and splashed the cash, he went on to get a good team that could not only compete in England, but a team that came as close as any to winning it all in Europe. The problem with the way the team bought was the fact that they brought in a huge amount of players that were in the same age bracket, they peaked most at the same time and its effects were there to be seen, but they are also ageing at the same time and father time has caught up with their investment. This coupled with the fact that Chelsea were always on a “win now” mode and the constant changes in coaching personnel each coming and living under pressure to win something on the current season had the adverse effect of none of the managers really paying attention when it came to development of young talent that would be the mainstay of the club for years to come. The team is now at a time where a new investment cycle is needed with Didier Drogba, Frank Lampard, John Terry, Florent Malouda, Ashley Cole, all at the final stages of the career. Raul Meireles is somewhat a stop gap signing that buys them a bit of time when it comes to purchases in midfiled, but they also have a need to go out and replace the departing Nicolas Anelka, and Alex if he does leave. Add that to the fact that they have no one else to play at left back behind Cole, one finally realizes the amount of investment that this team needs if it is to stay competitive after the 2012 – 2013 season. Do I think that Manchester City is any different? Absolutely not: The benefit they have is the fact that they have a lot of young players already playing at a high level that will be the mainstay of the team for years to come if they are not forced to get rid of them once regulations to curb spending come into place, but that said, are the better part of these younger players not on the same age bracket?

Compare and contrast that with say a Barcelona that though mismanaged under the Joan Laporta era have the best core of young players yet to make a break into their first team. Their youth team’s demolition of Bate Borisov was a testament of just how good their youth development program is, and how much depth they have. Going forward, this is a team that needs minimal investment, and a coach that can put his trust and belief that if given time, most of the young players in that academy have the potential to become world class players. Oriol Romeu, Nolito, these are two players that have the talent to play in almost any top team, but could not make a break into the first team with the talent available at Camp Nou at current moment. Closer to home, Arsenal is the quintessence of long term planning is; they took the risk of building a new stadium with the vision that they could not compete with Manchester United at Highbury. The Emirates, with a bigger capacity was the long term tool that they would use to compete when it was all paid up for. They took a huge gamble when they took payment on most of their commercial deals upfront, but in the past few years, they have paid a huge amount of their debt, stayed competitive and this season, sorted out most of their depth issues. This is one team that is two maybe three players away from becoming a force they used to be, and they have the wanted experience they need that is good for the medium term, and a good young core that can/will only get better with more games. At Manchester United, Tom Cleverly, Phil Jones, Chris Smalling, Danny Welbeck, the Da Silva’s, Nani, Rooney, these are a good talent set that United can build upon for the short and medium term while they remain confident that they have a good foundation upon which they can build on in the long term.

In short, teams that are thinking of the long term also bring something into football that isn’t seen in most teams interested only in the present. Talent building, it is something that seems to be happening a lot in Germany with teams not only forced to spend within their means, but also forced to have an academy set up. Germany as a nation, and as league by default is also benefitting from this association by the development of some terrific young players like Mesut Ozil, Mario Gotze, Mats Hummels, Marco Reus, Marco Marin, Toni Kroos, Shinji Kagawa, Renato Agusto, Nuri Sahin, Robert Lewandowski et cetera are but a few glowing examples of a huge talent pool of young players that gets bigger and better with every passing year.
Every player that makes it big, becomes a world class player, does so because someone took the time to develop their talent, it is something that every league and every team needs to go out there and embrace……………it is something that Financial fair play will indirectly enforce. Germany has shown the way, it would be folly for it not to be embraced across the world.

As a parting short, some have argued that financial fair play will only return the impetus to the established clubs; while it may be true, the world of football has come to the point where the hard decisions have to be made and once all the pros and cons are taken into consideration maybe going back to where we were is the lesser of two evils. Roman Abramovich, Sheikh Mansoor, these are owners who have transformed the teams they own into contenders for the title, something that might not have been possible before these teams were bought out. Chelsea for one might have gone the Portsmouth or Leeds United route with all the debts they had. These two teams are in a good place to go on and accrue a good amount of talent with their owners lavish spending, and they bring in a good amount of talent from other leagues into England, and that in all regards, is fantastic. However, they way they conduct themselves and the way they run their finances means that they are better placed to get almost any player they want from a direct rival, and they are with intent limiting the players their rivals can get because of the fees they inflate and the salaries they grossly dish out. Bad as giving the impetus back to Arsenal and Manchester United is, and bad as somewhat weakening teams like Inter Milan, Real Madrid, Barcelona, Manchester City, Chelsea, Malaga, PSG, the benefits of having better competition within what a team earns seems a better way to go rather than have a few teams bought out by billionaires wreaking havoc onto a system that though not great worked well for decades. Manchester United, Arsenal, Real Madrid, Barcelona, A.C. Milan, Bayern Munich and a few other clubs that get a huge turnover every passing financial year, have earned that right because if the success they have had. They have built their reputations and fan base over time, they are the epitome of what hard work over time can get you. They also have to pay back any debt they have, and write-off any losses they make using their revenues.

Europe will undergo a banking crisis sooner or later because banks hold way too much when it comes to bonds, interbank lending has gone down, and will continue to go down. Credit will become harder and harder to come by for a lot of teams that are living beyond their means and don’t have the billionaire benefactor. If there ever was a time to get clubs to spend within their means, this is the time. Crossroads, that is where football is at, but one has to ask, who as the willingness to go on and make those hard decisions?

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Posted on December 20, 2011, in Football Analysis. Bookmark the permalink. 4 Comments.

  1. Nice article, but do you think uefa will go all the way?

  2. sorry Niles…..still getting the hang of the dashboard. dont think there will be a problem with poepple posting from now on.

    As for UEFA, they can only go as far as teams allow them to go. if teams take up the Financial fair play initiative as a plus, then it will be smooth sailing, but chances that it goes that way are minimal with some teams spending way above what they should spend without showing a willingness to slow down.
    Malaga, Manchester City have wages higher than turnover, how do they dump the contracts they have when most teams cannot afford the fees and salaries their players are earning?

    • No problem. I think we should try as much as possible to stick to our model like the catalan club has done, though I know they do overspend sometimes.

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