Financial Fair Play

[geysir]

Personally I thought bonnie was taking issue with opinions and the way they were presented. I didn't see him complaining about any facts or alleged facts.

I have read the article again and I find the perceptions here are off the mark.
What Early doesn't appreciate fully is the return on the investment in coaching structures and the value of such a bountiful return.
Efficiency on the use and distribution of financial resources by some German clubs is way ahead of other models but it's incredibly naive to ignore the role of corporate sponsorship in that. It's not as if Germans have suddenly developed efficiency, but the recent upsurge in corporate sponsorship of clubs like Dortmund and B Munich is phenomenal and is a major factor. Early is not saying that the rise in profile German football is down to the increase in money in their game, he outlines that it's happening. He doesn't go into the important detail of the better use of those considerable financial resources and the fact that the books balance with Bayern and Dortmund.

[geysir]

Are you now implying that I have an agenda and am not objective the same way you inferred I had an issue with the 'facts' as Ken Early presented them?

There is a clear tone that I, CD, and Stutts and I'm sure many others have picked on that was my main criticism. There is a decent article in there waiting to jump out and in fact if Ken chose to write from the POV of "Look the Germans have loadsa corporate cashmoney as well and they are spending it wisely" then maybe it would warrant more consideration as an article.

The money and the systems bring through the talent and so on and the cycle will repeat itself, no one on here ever assumed it was all down to one or 2 variables that puts the Bundesliga above everything else.



No, I do not have issue with the facts. Where did I ever say I did or accuse Ken of falsehoods.

POSH, get in here.



Yip, that was my issue.

And you correctly didn't see me complain about facts.

Yes Bonnie, facts, once you have your facts, then it's just a matter of the quality of opinions about those facts.
Early got it spot on Bonnie, Dortmund and Bayern in particular are being front loaded by corporate cash, but it's not from shifty foreigners or fly by night betting scammers. It's local and it's stable.
But it's still just lip stick on a pig

[BonnieShels]

Yes Bonnie, facts, once you have your facts, then it's just a matter of the quality of opinions about those facts.
Early got it spot on Bonnie, Dortmund and Bayern in particular are being front loaded by corporate cash, but it's not from shifty foreigners or fly by night betting scammers. It's local and it's stable.
But it's still just lip stick on a pig

You still singularly fail to grasp what my main issue was. It is a horribly written article not fit for publication. That Early said nothing wrong is irrelevant.

Who ever doubted that German football wasn't awash with corporate cash?

[Stuttgart88]

Geysir, my point was that Early appeared to be saying that those who scoff at the EPL model but hold up the Bundesliga are missing the point, because BL clubs also have an unfair subsidy, from their local companies. I did say that maybe the headline contributed to the tone, and headlines are often written by sub-editor not the journalist.

I think there's a chicken and egg element though. If German football wasn't doing the right thing on so many levels maybe corporate sponsorship would be less forthcoming. It's a very attractive brand to be associated with, with good brand values. The EPL brand is much more bling and in your face, and in any event I think the whole German model of how they organise their society deserves success.

[geysir]

There's a lot to appreciate about the functionality of the whole German social system but I will beg to differ on how they go about the organising of such efficiency.
One day I will tell you the story of how I nearly brought down the German postal system in the late 1970's because I placed my stamps some mm away from the proper location on the envelope and not always straight.

[Stuttgart88]

Save that one for when I'm next in Reykjavik!

I think Germany has played the euro crisis well for its own ends and has managed to escape a lot of deserved blame for how things panned out, and for how austerity is being rammed down the throats of the club med countries. None of that is anything I support.

That said, I just think their broader economic model is very commendable. In the week that much scrutiny has been applied to Maggie Thatcher's record I think it's worth noting that the German model of, for example, industrial relations was a path she could have chosen. Instead she chose to slash and burn. I don't think Germany would ever have squandered its natural resource assets to fund tax cuts for the rich and influential.

[Stuttgart88]

I can't post links to the Guardian - my browser and the Guardian website have issues. There'sa bug that means my internet connection closes. Either that our I'm being censored at work against looking at anything left wing.

David Conn was interesting this morning: Scudamore and the FL arguing over financial affairs, parachute payments and interference.

With regard to the whole issue of parachute payments etc., why has the idea of "contingent contracts" never been discussed seriously (or has it?)?

Quite simply, as I see it, football clubs have two buckets of revenue: self-generated (matchday & commercial) and externally-generated (basically anything that is centrally distributed, be it TV money, prize money etc.).

A player signing a contract can be told that his remuneration can contain a fixed amount, budgeted by his club in line with expected self-generated income. The effect of relegation is presumably less draconian on gate receipts than TV money. I'm told that in several cases, such as Southampton, season-ticket sales even rose after relegation as fans grasped the financial reality threatening their club.

A club can then commit to paying an additional amount, taking estimated total comp to the flat figure a player would be offered today. However, this contingent part can be subject to an "adjustment factor":

"New" central distributions / "Old" central distributions

Obviously the devil is in the detail and there'd be a thrust towards maximising the fixed part of the player's comp, but a simple FFP-style cap on self-generated income being spent on wages isn't beyond the wit of man.

I can't see any labour law or EU impediment to this, as there is wrt nationality quotas for example. If the players' lobby argues against it, well tough - and the same clause can be applied to lower division clubs: get promoted, earn MORE money. This symmetry ought to curry favour with those outside the elite. The EPL / FA / FL / UEFA can just say it's for the systemic good and force it through.

Clubs satisfied in their ability to retain their current status have nothing to fear, it assists those with cause for concern over relegation or Champs League non-qualification (it might even allow them to take more risk in player acquisition), and assists those seeking promotion who are threatened by parachute clubs having more financial muscle. Financial stability and competitive integrity are all enhanced.

I can see Scudamore complaining that it'd curtail bottom-half EPL clubs' ability to attract talent, but I'd argue that point. It would even make players more keen to embrace the FA Cup, League Cup and Europa League - the more they progress, the more they'll get paid (existing bonus agreements notwithstanding). It would 100% protect clubs from an ITV Digital / Setanta scenario, or even a Karen Murphy-style "shock" to the whole way rights are sold.

Anyone got any views?

[Stuttgart88]

That said, I just think Germany's broader economic model is very commendable. In the week that much scrutiny has been applied to Maggie Thatcher's record I think it's worth noting that the German model of, for example, industrial relations was a path she could have chosen. Instead she chose to slash and burn. I don't think Germany would ever have squandered its natural resource assets to fund tax cuts for the rich and influential.

Sorry to quote myself(!) but an article I read in today's Guardian uses German football as an analogy in explaining the superiority of their broader economic and social model over Britain's. "While we obsess about the EU, Germany focusses on Education".

Once I open the link my web connection crashes though, so I can't post any quotes but maybe someone can post the bit about German football?

[BonnieShels]

Here you go Stutts

http://www.guardian.co.uk/football/2...chute-payments

[Stuttgart88]

Thanks. I was thinking you'd be interested in the German article posted in post 48 above. Basically it's saying that German football is reaping the rewards of long-term strategic thinking, focus on owership models and youth development instead of relying on oligarch funding and an instant gratification culture. This applies to Germany at large too, whereas Britian leaves everything to markets, lets its industry fall prey to big M&A deals, neglects skills and spends its whole time moaning about Europe and welfare spongers (I added that last bit myself).

[ArdeeBhoy]

Very true. So what's new?

[Stuttgart88]

I bet you're great fun in the pub.

[ArdeeBhoy]

Well, was agreeing with you for one...

[BonnieShels]

Thanks. I was thinking you'd be interested in the German article posted in post 48 above. Basically it's saying that German football is reaping the rewards of long-term strategic thinking, focus on owership models and youth development instead of relying on oligarch funding and an instant gratification culture. This applies to Germany at large too, whereas Britian leaves everything to markets, lets its industry fall prey to big M&A deals, neglects skills and spends its whole time moaning about Europe and welfare spongers (I added that last bit myself).

Just rread it there. I think it sums up everything we assume about Germany. I remember heading there for the firswt time when I was 12 and just marvelling at the place. I then returned nine years ago for NYE and I was amazed that after the revellers had left Hannover's streets the cleaning crews began. They were just waiting...

That summed up Germany for me.

Geysir will no doubt blame the efficiency of the German street cleaning operations on the large corporate donations they receive. Front loaded with all this cash they can't wait to rid the streets of grime. No shame.

[Closed Account 2]

A player signing a contract can be told that his remuneration can contain a fixed amount, budgeted by his club in line with expected self-generated income. The effect of relegation is presumably less draconian on gate receipts than TV money. I'm told that in several cases, such as Southampton, season-ticket sales even rose after relegation as fans grasped the financial reality threatening their club.

I think it would be a better approach than the current system of FFP which is being attempted. It's all very hazy at the moment anyway, it seems that clubs can be punished if they have an unpaid debt (as in Malaga being banned from European football due to not playing players or taxes) yet other clubs with irregular debt structures (Man Utd and PIK loans, Barca with the loan they got to cover wages a few years ago) dont seem to be in trouble, and other clubs (like Madrid) have had their debts cancelled via agreements with a local council.

Some suggest that FFP will be linked to wages-to-turnover ratios, so a cash cow (like Man Utd) will be able to have a bigger wage bill than a rich man's play-toy club (like Anzhi) but again it's not at all clear how this can be inforced. For a start from a legal point of view it seems to be a restriction of trade - it could be difficult to prevent the rich man from spending as much of his money as he wants if he "gifts" it to his club. He could argue that there is no similar restrictions on other industries, for example look at airlines. If a billionaire decided to take over Lufthansa and then financially blew all other European airlines out of the water they could. If they decided to bulk buy numerous A380s and 787s configure them in an all-business class layout (so every seat would have infinite leg-room) and then sell every ticket for every destination for €1 (irrespective of when you booked it) then it would be very hard to stop him if he was spending his own money. Yes in terms of monoplies you could stop him taking over other airlines (e.g. buying KLM) and perhaps you could prevent him from subsidising his passengers air tax but it would be very difficult to stop him from throwing his own money away on a vanity project.

Even if FFP laws are passed and even if they are not sucessfully challenged in a court of law it's very hard to see how the likes of Chelsea / Man City / Anzhi etc won't fudge it. Man Utd are always crunching these "superlative" commerical deals (Chevrolet are to pay them something like £50mln a season), what's to stop Abramovic / Mansour / Kerimov setting up puppet companies simply to channel more of their money into the club? If Man Utd can get £50mln from Chevrolet, City or Chelsea could just set up a series of bogus deals of similar values with puppet companies and who can really leagally argue what fair value is. Could anyone argue if Etisalat paid City a similar amount?

Your idea of having performance related wages is more realistic in the long term. If you win the CL and domestic league you'll get prize money but also your players will get more in terms of bonus payments. If it's done correctly even the rich-owner clubs would probably agree to it, if they did it would be far less likely to be challenged legally. As you say it would be more even in the long run as a team won trophy after trophy year after year then their wage bill would be higher during this time.

[Stuttgart88]

Just a few points on Edmundo's post:

Malaga was punished mainly because of unpaid tax debts. That's a mortal sin for UEFA, whereas overspending is a couple of Hail Marys - for the moment.

I would see "contingent contracts" as sitting alongside rather than replacing FFP.

Wrt bogus sponsorship deals UEFA is aware of the issue and can insist - to the extent it can be proven - that commercial deals are at arm's length (Man City's Etihad Stadium naming rights - as one party said "what was the next highest bid?) and has vowed to be firm. I'm not sure what real impact this will have other than making sure teams don't take the p1ss.

Is it enforcable? The infamous Jean-Marc Bosman lawyer has just mounted a challenge based on 5 complaints, one of which is that the agent he is acting for will make less money!

Is it a restraint of trade? The general rule of thumb as it relates to sport in interpreting EU legislature is that there is no carve-out or exception for sport that gives sport carte blanche to act indepentently of EU labour and competition law, as it used to do. That said, the EU (via the ECJ) does appreciate that sport is different and therefore if "rules" are introduced that on the face of it breach principles such as restraint of trade, movement of labour, abuse of monopoly power etc. but which can be shown to be important to help the sport adhere to recognised principles then these rules will be allowed by the ECJ as long as they are justifiable (e.g., to restore financial rationality and continue to foster fair competition), and proportionate (i.e,., they're not a sledgehammer to crack a nut). That's why, for example, collective TV rights sales are allowed. That would be classic cartel behaviour in non-sporting industries but it's allowed in football to retain competitive balance, and because cash intake is maximised and also passed on "down the pyramid" to grassroots.

I'm not sure you're right in saying that FFP will be enacted by way of wage-to-turnover ratios. Under FFP, such ratios act as a sort of "covenant" (if anyone's familiar with corporate loan clauses), the breach of which allow UEFA to step in and ask tough questions about strategy and impose remedies - basically an early-warning signal that the financial situation is deteriorating. I've often wondered why FFP didn't simply take the form of wage-to-turnover ratios and as far as I can tell it's because FFP deduct "useful" spending such as facilities upgrades, youth development and community outreach. FFP is generally less prescriptive than wage caps.

[geysir]

Just rread it there. I think it sums up everything we assume about Germany. I remember heading there for the firswt time when I was 12 and just marvelling at the place. I then returned nine years ago for NYE and I was amazed that after the revellers had left Hannover's streets the cleaning crews began. They were just waiting...

That summed up Germany for me.

Geysir will no doubt blame the efficiency of the German street cleaning operations on the large corporate donations they receive. Front loaded with all this cash they can't wait to rid the streets of grime. No shame.

A blind person can appreciate some of the aspects of German society. And like many municipalities around Europe, they do clean the streets in a timely fashion.
A German is efficient in the workplace as long as there's somebody to tell them what to do. A duty requiring initiative and imagination would leave many a German stumped. Perhaps that's why there are a host of decrees for the citizen to abide by. However, I did wonder where the happy Germans live.


You do remember, whilst most of you bailed out (with legs of jelly) and thought Dortmund had past their peak when limping past Malaga, a middling Spanish team, I thought they would still have the measure of Madrid.
There are some very admirable aspects in German football, amongst which, the traditional fan centric club structure and the change in emphasis on football education.
German football are belatedly doing what other countries have been doing with academies for years. Certainly, I had my doubts about the merits of the German model when I saw their u21 team (with Hummels, Badstuber, Schieber and Muller) get hammered 4-1 by Iceland's academy graduates in a do or die 2011 Euro qualifier. Nevertheless, those players (perhaps with the benefit of corporate cash in their back pocket) have emerged to the top standard.


Bayern are a club apart because of their history and money. We'll see how the other clubs get on in European competition over the next few years.

[Stuttgart88]

Good article on the legal challenge to UEFA's FFP rules here

http://www.independent.ie/sport/socc...-29278255.html

The last full paragraph is key: UEFA ought to be able to argue that the 'breach' of competition and free movement rules are justified - in fact I doubt that their justification will even be challenged - but UEFA must also prove that they are not overly restrictive, i.e., that they don't go too far. If the lawyer can get the ECJ to agree that there is a less restrictive way of ensuring financial stability then FFP could be in trouble.

My recollection however is that UEFA did not identify integrity of competition / competitive balance (or 'ensuring a level playing field' as the Indo writer, an Irish lawyer, argues in last paragraph) as an objective when it set out its vision for a new licensing landscape (and introducing FFP) a few years ago. This is where I think the Indo guy's article is incorrect. UEFA's reason for introducing FFP is to restore financial rationality to European football. Alongside a paper explaining their licensing /FFP 'vision' as a precursor to the actual rules they also published a pretty frightening report on football finances (linked below*).

Therefore I still see UEFA being on very solid ground. If you want clubs not to incur too much debt just make sure they more or less break even. I can hardly see it being argued that being made to break even goes too far in its goal to restore financial sanity to football.

UEFA was very clever not citing competitive balance as a reason to introduce FFP as that aspect probably could be challenged on 'proportionality' grounds.

* Here's the licensing benchmarking report UEFA published in 2008

http://www.uefa.com/MultimediaFiles/...5_DOWNLOAD.pdf

and here is the full licensing requirement, including financial fair play regulations

http://www.uefa.com/MultimediaFiles/...2_DOWNLOAD.pdf

On page 2 section 2 UEFA sets out the rationale for FFP. Only in Section 1 does it say that licensing is, among other reasons, to protect the integrity of UEFA competition. But it would appear to me that Section 1 deals with "pre-FFP" or "legacy" licensing requirements, such as grounds being adequate, various infrastructural and governance mechanisms being in place etc.

I don't think the broad licensing regime is under challenge, only the financial rules, so I stand by my opinion that competitive integrity / balance is not a stated objective of FFP, so the legal questions to be asked are:

(1) Are the objectives set out in page 2 section 2 legitimate concerns and is the FFP regime objectively justifiable? I'd say almost certainly based on the evidence of the licensing benchmark report.**

and

(2) Are the FFP measures proportionate in achieving these objectives? Although they may breach EU competition, trade and freedom of movement rules, do they only go as far as necessary to achieve the desired result? Is there no other less interventionist measure that would also achieve the objectives?

** For example, take this (badly written) extract from p64 of the 2008 benchmarking report:

"just under half of European top division clubs (47%) reported net losses in 2008. 37% of larger clubs and 55% of smaller clubs reported net losses. Nearly half of the clubs that reported losses, 22% of all clubs, reported losses that were significant, equivalent to more than 20% of income. Smaller clubs were more than twice as likely to report significant losses as larger clubs.”

[Stuttgart88]

Looks like Malaga and a few others have had their sanctions lifted:

http://www.uefa.com/uefa/mediaservic...nces+decisions

[BonnieShels]

That seems pretty clear cut.

Only noticed as well Ireland's insignificance in the new UEFA logo. Drat. Not that it's relevant.

NEW


OLD



I'm intrigued to know how this will evolve pending full implementation. We are entering into the unknown.