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Thread: Financial Fair Play

  1. #61
    Seasoned Pro peadar1987's Avatar
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    I'm more concerned about that disgraceful treatment of UEFA stalwarts Cyprus. Not to mention Kazakhstan.

  2. #62
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    Ha ha.

    Whoever looks at that sh*tty badge anyway?

  3. #63
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    Tuesday 18th June, 6pm: debate on Financial Fair Play at Birkbeck College, London. It's just south of Euston in the Bloomsbury area of town.

    Details here:

    http://www.sportbusinesscentre.com/events/ffp2013/
    Last edited by Stuttgart88; 12/06/2013 at 2:07 PM.

  4. #64
    Football hure MariborKev's Avatar
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    Aye, had hoped to attend that FFP discussion but in Dublin for the day for the launch of Heart of the Game. Defo worth going along to if you are interested in the subject.
    Tifo poles, sausage rolls and a few goals.

    The Brandy Blogs, back and blogging the 2010 season

  5. #65
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    Interesting news in context of ownership and financial stress debated recently in the Bundesliga thread:

    http://www.irishexaminer.com/sport/s...te-235488.html

    The cash-strapped Segunda Division B outfit would have been demoted to the fourth tier of Spanish football on administrative grounds had they not settled the debt by noon on Friday.

    However, Iniesta, the largest shareholder in the club at which he began his career, came to their aid, paying the outstanding wage bill out of his own pocket.

    It is not the first time the 29-year-old has come to the rescue of Albacete as he injected €420,000 into the club in 2011.

  6. #66
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    Interesting article in the FT today by Stefan Szymanski, claiming that FFP will only lead to a de facto closed league system, something UEFA has always resisted, so it's kind of ironic.

    http://www.ft.com/cms/s/0/a13db70c-0...#axzz2cGO56uBK

    Stefan is probably the world's foremost sports economist and I have met him through some mutual friends. He is a very free market / laissez faire thinker on football economics and has proposed a closed European super league in the past and has long denied that there is a systemic financial problem in football, so there is no need for FFP.

    I took the liberty of responding via the comment section as I believe he has contradicted much of his best work in some of the claims he makes in the FT.

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  8. #67
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    And this article from Fridays FT is one reason why I think even deeper regulation than FFP is required.

    http://www.ft.com/cms/s/2/2745b0b6-0...#axzz2cGO56uBK

  9. #68
    Banned. Children Banned. Grandchildren Banned. 3 Months. Charlie Darwin's Avatar
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    Not sure I agree with your assessment of Syzmanski's perceived change of heart - the article seems like he's saying the system is superficially chaotic but there are stabilising features (administration, benefactors) that make it basically stable. Still, I think he's overegging the pudding by saying they're moving towards the US system - I think the league system is too developed and too entrenched to fall away even if a European Super League comes into being. And I also think the ossification of the current system is much of a muchness - realistically, the only teams that will lose out from this ossification are the fringe clubs in the top leagues. The elite is already set 90% in stone and it will probably move to 99% once the ESL gets up and running.

  10. #69
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    Have to agree with CD, the big clubs will find a way. A particularly well known club here in Moscow did a great deal last year on naming rights for their stadium. A so-so bank stepped in and agreed to pay quite a bit over the odds for the honour. Now, this would be seen as just mad business and mad sports business, however one of the main sponsors of the team has been another bank, owned by the company who are the biggest sponsor of the team, and this company just happens to be owned by the owner of the club. Now, odd thing is this, the bank who too up the naming rights, just happened to take a deposit from another bank (no names named) which just happened to be within 5% of the same amount they bought the naming rights for.

    All legit, all good. Big clubs will always find a way, the FFP won't work.

  11. #70
    Banned. Children Banned. Grandchildren Banned. 3 Months. Charlie Darwin's Avatar
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    Sounds more or less like what the Abu Dhabi crew are doing in City and others elsewhere. Rules are made to be bent and I don't think any amount of rules will bring about the consensus that exists in US sport. There's too much money to be made in football and the traditions in football are strong enough that the clever moneymen will exploit the history of clubs to get ahead rather than it ever whittling down to a closed system, but what we have is a burgeoning entrechment of the top clubs that is just shy enough of being absolute as to keep it interesting.

  12. #71
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    Just on CDs first point about SS having a change of heart. SS has made a career writing that competitive balance and social mobility are over-exaggerated goals in football. This is because his opponents in academia have cited these as arguments in favour of regulation. Now he seems to be saying that they are a bit more important. So, if you have read his previous work I think there is a contradiction. He has since personally responded via the FT comment section anyway.

    I think UEFA has some authority to face up to gaming the rules via naming rights etc but I agree that how they stand up to abuse of the rules will be key to how successful they are. PSG are clearly taking the p1ss, accounting for a naming rights deal struck in 2012 as 2011 income!

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  14. #72
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    What about Monaco too?

    Incidentally, maybe worth saying have to register with the FT site to view articles. And even then access is a bit restricted.

  15. #73
    Banned. Children Banned. Grandchildren Banned. 3 Months. Charlie Darwin's Avatar
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    I have to admit I have only read a chapter of Soccernomics so most of what I know about him is media reports and some of his other writing. Am I wrong about the slight modification of his position?

    On the whole, I don't think FFP will achieve much. Maybe it's just the Shamrock Rovers fan in me, but a lot of this stuff seems fairly irrelevant to me. People will always throw money at elite football and the rest will be left behind. The horse has bolted and everything else is window dressing. It's not going to make me stop following my team because I didn't get into it for entertainment purposes, and I would hope that when all is said and done there will always be a core of people who will watch non-elite football for what it is rather than tuning into their TV sets for the major stars.

  16. #74
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    Sorry, AB, I'll copy the article later. I thought you can view a small number of articles for free.

    I partially agree with Charlie, but I think FFP will work to some extent. Just like speed limits on motorways don't stop traffic accidents or speeding altogether, they do by and large introduce a safer system of driving. They'd be useless if speeding drivers weren't caught and punished, just like FFP will be toothless if nobody gets punished for breaking the rules.

    I have read a fair bit of Szymanski's academic work because I studied under a rival scholar of his - Ardee Bhoy knows him I think. He is very much a free market economist resisting regulation or intervention. In sport the theoretical underpinning of the case for regulation (and as practiced in the US) is that the league loses its appeal and hence its commercial attractiveness if uncertainty of outcome is low. Stefan has written a lot arguing that there is no evidence in European football that lack of competitive balance has affected its popularity, and I think he has a fair point. But in the FT article my interpretation is that he is bemoaning the loss of competitive balance that FFP will introduce, although reading it again it's probably more about loss of social mobility than competitive balance. Again, though he has written about European super leagues as being the logical solution to the financial chaos.

  17. #75
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    No worries, but thanks. Did you mean SH?

    Interesting stuff, but am very cynical about FFP. No account of the likely corruption or efforts already used to launder dirty money through numerous clubs, inc. the EPL, seems to have been factored in. So looks a lame duck already.

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  19. #76
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    Yes, SH.

    Here's the original article:



    New financial rules herald Europe’s adoption of the US sports model, writes Stefan Szymanski

    This will be the last year of European football as we know it. The “open” system by which the sport has long operated is now coming to an end, and will quickly become a “closed” American-style system.

    This is all down to Financial Fair Play, the new regulatory system adopted by Uefa, European football’s governing body, which will bite next year. Instead of just tallying goals scored and conceded, fans will have to learn complicated rules about “break-even” and club licensing to work out who their opponents will be. Sporting merit will no longer be the sole criterion for success in competition.

    This will be a big change for European football, a defining facet of which has long been the notion that anyone, anywhere, can set up a club and, through the pyramid system of promotion and relegation, aspire to play in the Champions League. Not that this is very likely, but there is still much mobility. Of the 104 teams that played in the top four English divisions between 2001 and 2010, only 26 stayed in the same division for the decade; the same number played at three different levels; and two teams managed to play in all four.

    But this openness has also caused financial chaos. The last time anyone said that English football’s finances were healthy was the 1950s, when the players’ pay was capped at £20 a week and less than half of the population had a television. The same is true across Europe, where many clubs have fallen into cycles of extravagant spending, temporary success followed by financial disaster, retrenchment, frequent changes of ownership and the injection of new money.

    Uefa tells us that in 2011, 63 per cent of clubs in Europe’s top divisions were reporting an operating loss and 55 per cent reported a net loss overall; 38 per cent reported negative net equity, and 16 per cent of club accounts contained a qualification expressed by the auditors as to the financial viability of the company. This is despite the fact that club revenues have grown at an annual rate of 5.6 per cent in the past five years.

    So Uefa’s controls require clubs to break even, or face sanctions that could include exclusion from their lucrative competitions. But the regulations are complex and offer opportunities for litigation by disgruntled clubs. The rules will lack credibility if too many big clubs fail to meet the criteria early on. Will they all be barred? And what of the biggest names? Would any self-respecting fan want Barcelona or Real Madrid excluded?

    Even so, this all brings Europe a little closer to the US, whose leading sports leagues have developed hugely successful championships based on a shifting bargain among franchise owners. Rules for sharing revenues and limiting player pay are designed to maintain a competitive balance between teams. Entry is strictly limited – buying into the National Football League or Major League Baseball will cost you upwards of $1bn today – and the rewards of this exclusivity are also huge. The leagues mostly give the fans what they want, and profit royally.

    Europe is not there yet. Uefa has studiously denied that maintaining competitive balance between clubs is an object of FFP. Its plan, it says, is not to make sure that humble Crystal Palace has a chance to compete at the top of the English Premier League against Manchester United. And for good reason: the new rules are actually likely to ossify European competition and limit the potential for big clubs of today to be challenged.

    Similar regulations are creeping in at national level. England’s Premier League now has a rule limiting wage bill rises to £4m a year for clubs already spending more than £52m. Of the league’s 20 clubs, 14 spend at or below this level, while the “big six” spend more than £100m – there are no plausible mechanisms for the smaller clubs ever to close this gap and compete.

    But such ossification is a first step to a closed system – for which there are advantages. Well-matched teams are usually more attractive to watch than David and Goliath contests, however much we like fairy tales. There is more chance to see the biggest stars play each other in a closed system, and more potential for investment, whether in player training, stadiums or broadcasting.

    But this is not football’s tradition. The open system of promotion and relegation has a romantic appeal, and makes for an intensity of competition US leagues sometimes lack. Moreover, financial chaos may have caused owners to lose money but almost never leads to the demise of clubs. As a system, the open model has been stable and attractive largely because of the gyrations of the individual clubs. It also limits the capacity of wealthy owners to leach large profits out of the game: no one is safe from competition.

    It is ironic that Uefa, and many of those who lobby on behalf of fans, see the US system as anathema but seem to be doing everything possible to ensure its adoption. The Premier League welcomed another American owner last month, bringing the total to six, all of whom understand the two systems very well and are fully committed to the new regulation. They, at least, know where they are heading.

    The writer is a professor at the University of Michigan and co-author of ‘Soccernomics’

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  21. #77
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    Hmm, strange logic from yer man there. Think he's over-estimating the 'parity effect'.

  22. #78
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    According to Stefan
    'This will be the last year of European football as we know it. The “open” system by which the sport has long operated is now coming to an end, and will quickly become a “closed” American-style system'

    later on he takes a few steps back when he states

    'Even so, this all brings Europe a little closer to the US'.

    Then he states

    'It is ironic that Uefa, and many of those who lobby on behalf of fans, see the US system as anathema but seem to be doing everything possible to ensure its adoption'

    ??
    He does admit that ALL of what Uefa is doing is bringing Uefa a LITTLE closer the US system and yet he manages to get his knickers in a twist about that "little" as Uefa doing everything it can to adopt entirely the US system.

    Also, since when is the argument about an open league system versus a closed league system, the core issue for european leagues and increasing inequality?
    Yet he appears to be in favour of the Americanised closed system??
    On his line about 'regulations are complex and offer opportunities for litigation by disgruntled clubs'.
    Litigation by disgruntled clubs shouldn't be an threatening issue, all clubs sign on to arbitration.

    Actually Stefan, doesn't present any argument at all, this is a very poorly presented article.

  23. #79
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    Yes, and his editor should get a slap on the wrist for letting it through with so many contradictions etc.

  24. #80
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    Decent article on the Dupont challenge to FFP here:

    http://www.bbc.co.uk/sport/0/football/24333604

    Putting aside whether we think FFP will ever work or not, I think from a pure legal argument perspective UEFA is still on a strong footing. Remember the restraint of trade represented by FFP could be allowed by the EU / ECJ if the objectives were both legitimately justifiable and a proportionate measure.

    UEFA has cited financial rationality, up-to-date tax bills, community outreach and infrastructure investment as FFP's goals. These probably will be judged to be legitimate given what is actually happening in football.

    But are they proportionate - do they only go as far as needed and no further? Is there no less "interventionist" measure?

    Dupont is challenging the proportionality aspect. He claims that a luxury tax would be a less restrictive measure.

    If I was UEFA I'd argue that a luxury tax might put some dent on sugar daddy funding and pass on some money further down the game, but it would still fail to address the systemic consequences - the industry-wide arms race for talent which damages the middle tier particularly badly.

    I still think UEFA is on solid ground and they wisely consulted the EU when drawing up FFP. They were also wise not to include competitive balance as an objective - the legitimacy of this could be challenged by Dupont.

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