The Only Real Financial Fair Play is a True Salary Cap


by Simon Evans on May.19.2014
  1. Trying to bring order to European football's laissez-faire economics is no easy task and inevitably UEFA's first real attempt, 'Financial Fair Play' (FFP) has ended up being an unsatisfactory fudge that could do more harm than good to the game and preserve a self-perpetuating elite of clubs.


    The aim of FFP is honorable - to stop clubs piling up huge debts as they chase success, protect them as community institutions and avoid situations seen at clubs such as Leeds United and Glasgow Rangers where massive over-spending resulted in massive trauma for the fans.


    "Living within your means is the basis of accounting but it hasn't been the basis of football for years now,” said UEFA President Michel Platini when introducing the plan five years ago and it sounds like common sense – after all, who wants clubs to go into massive debt? But it ignores dealing with one of the major factors behind the inflationary wages and transfer fees in Europe – UEFA's Champions League itself and the impact it has had on the game.


    Since its introduction in 1992, the competition has been a huge hit commercially but that very success has had the effect of creating an entrenched elite at the top of the European game with a core of the same clubs competing in the latter stages every year and reaping the cash rewards.


    If you look at last five years of European Cups before the creation of the Champions League, the finals featured teams such as Porto, Steaua Bucharest, PSV Eindhoven, Red Star Belgrade, Marseille, Benfica and Sampdoria. Those are all big clubs, rightly proud of rich histories but only the two Portuguese clubs have been able to stay even close to the elite while the notion of a Romanian or Serbian club in the final is now, sadly, fantasy.


    The elite clubs – the likes of Barcelona and Real Madrid, Bayern Munich, Manchester United and Chelsea – dominate the transfer market and have used their domestic and Champions League successes to become global brands, bringing in fresh revenue from the Asian and North American markets and not surprisingly have little trouble in balancing their budgets.


    Breaking into that group is no easy task. Chelsea did it thanks to Roman Abramovich's millions and Manchester City and PSG, without two decades of near-constant Champions League revenue and the global revenue that comes with it, have been trying to follow suit thanks to wealthy Arab benefactors.


    UEFA's first major 'Fair Play' sanctions hit, of course, City and PSG, which has led to some critics to suggest that FFP is designed to protect the elite and keep out interlopers. I don't believe that is the intention but it unless there is change that will certainly be the effect. FFP is now a major deterrent to new money coming into clubs who have the potential to become part of the upper echelon.


    Take Aston Villa, now up for sale after American Randy Lerner tired of his attempt to take them back into the Premier League's top six. Villa are the main club in England's second city, Birmingham, with a large fan base and an illustrious history. Villa won the old European Cup just ten years before the creation of the Champions League and are seven-times English champions. If you were an Arab, Russian or American investor looking for an underperforming English club with the potential to be transformed into a future member of the European elite, Villa wouldn't be a bad bet.


    But in order to take Villa from mid-table mediocrity in England into the top eight in Europe, you would need to do what the owners of Manchester City did – spend millions on new players and coaches to transform your club into one that can win the Premier League. UEFA's message last week to any potential investors willing to risk millions on that venture is simple – don't bother.


    Another issue is that the Champions League has become effectively a West European competition, with the former communist states of the Eastern part of the continent almost entirely locked out. The only teams from the East that have come close to joining the club, the likes of Shakhtar Donetsk, have done so through the Sugar Daddy route and given the lack of football business revenue in countries like Ukraine or the Czech Republic there is absolutely no alternative to that approach. FFP tells Eastern Europe – sorry, but you can't spend your way in.


    Of course, North American readers, know very well that there is a system which can protect sports clubs from over-spending and eliminate inflationary pressure and which also helps create a more competitive structure allowing 'smaller market' teams to compete with the bigger ones – the salary cap. It is one of the main reasons why the NFL is such a commercial and competitive success where owners would laugh at the idea of losing money on a team.


    Why couldn't European football introduce a similar comprehensive salary cap? It would surely be fairer than FFP and open the door to a more open competition, giving a chance perhaps to the Aston Villas and maybe even one day to the Red Star Belgrades.


    Before FFP was born, that option was looked at but the experts felt that a continent wide cap would be in clear breach of European Union competition and possibly labor law. But FFP is itself a (unsatisfactory) form of a salary cap and is vulnerable to a possible legal challenge which explains why UEFA entered into negotiation over sanctions with City and PSG rather than just slapping a ban or fine on them. So why not look at a comprehensive salary cap instead? 


    Is the only alternative really between an FFP system that protects the 'Aristocracy' against the 'new bourgeois' or an unfettered free-market free-for-all that offers the chance to buy success but carries the risk of clubs spending themselves into bankruptcy?


    Is it really not possible to find a system that places the incentive on clubs producing their own talent and rewards those who are smart with their budgets in the transfer market? Would the game not be more healthy, as well as more democratic, if the scores of other clubs across the continent with rich histories and big support-bases, currently frozen out, had a real chance to compete?


    The core problem is that money is far too important in the modern game. 


    That Villa team that won the European Cup in 1982 didn't cost a billion to build. But, despite the successes of Borussia Dortmund and Atletico Madrid,it is impossible to sustain a leading place in the top European competitions without massive investment and it serves the interests of the established elite to keep the game expensive.


    What football needs, if it is serious about the idea of 'fair play', is some of the 'sporting socialism' that has served American sport so well. It goes against the grain of a sport that since the 1980's has been all about money equalling ambition, but unless we want a football that is dominated for decades to come by the same teams is it not time to consider leveling the playing field?


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