Transfer Window: Day 17
- 17 January 2013 08:29
- Posted by @mccarthy_mcfc
We start this morning with an interesting perspective by sports economist Stefan Szymanski on the subject of Financial Fair Play.
Writing in The Times today, Szymanski puts forward the following.
"Adopting Uefa’s rules will only make it harder for small clubs to break into the elite," he claims.
"Manchester United, Spurs, Liverpool and Arsenal are quietly lobbying the chief executive of the Premier League to limit the spending power of Chelsea and Manchester City. It is no surprise that some of the big clubs advocate the adoption of Uefa’s Financial Fair Play (FFP) rules. Clubs are struggling to be profitable and insolvency is rife.
"Under FFP, clubs have to maintain solvency and must not spend more than their football income — the so-called break-even rule — which restricts the ability of owners to cross-subsidise the team from other business income. According to Uefa, this would “protect the long-term viability and sustainability of European club football”. Worthy goals indeed, but the rules may have less virtuous consequences.
"Given that the more successful teams generate the largest incomes, the only way lesser teams can challenge them is for someone to inject money from outside. It’s no coincidence that the only teams to break the dominance of the established clubs in the past 20 years have been Blackburn Rovers, Chelsea and Manchester City, all of whom had “sugar daddies”. FFP would make it harder for upstart clubs to challenge those already at the top.
"Uefa presents itself as a benevolent regulator with the best interests of football as its sole objective. But it has a financial interest as well. According to its 2010-11 accounts it generated €1.4 billion from the sale of rights, primarily to the Champions League, and paid out €1 billion to clubs, thus keeping 28 per cent to spend as it sees fit. The relationship is analogous to that between a car manufacturer and its dealers, a brewer and the pubs that sell its beer or a newspaper publisher and the corner shops that sell papers.
"EU competition law prohibits companies competing in the same industry from making agreements that restrain competitive behaviour. This protects consumers from conspiracies to raise prices or lower the quality of goods and services, and protects workers from employers ganging together to cut wages.
"Restrictions imposed from above can be good for consumers if they ensure that the product is delivered to them in good condition. Joaquín Almunia, the European Commissioner in charge of competition, appears to have approved FFP, thinking that it will benefit fans. This may be true when it comes to requiring clubs to pay their debts (including players’ wages) and maintain solvency. But by appearing to endorse the break-even rule the European Commission is failing to uphold the best interests of the fans.
The likely effect will be to ossify competition and maintain the dominance of established clubs (ironically, Chelsea and Manchester City may be the greatest beneficiaries, having already paid to join the elite). Less competition will reduce the pressure to spend on players’ salaries. While few may shed a tear for multimillionaire footballers, the quality of competition will also fall, as owners funnel their income into profits, not players.
"The Premier League case seems even simpler. Chapter One of the Competition Act prohibits agreements between undertakings that “have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom” and this applies to agreements that “limit or control production, markets, technical development or investment”. This move by some of the Premier League clubs would appear to be an open-and-shut agreement to limit investment, and therefore illegal.
"To those who say that these rules are necessary to preserve the fabric of English football I would ask how many professional clubs have gone out of business in the past hundred years. Of the 88 members of the Football League in 1923, 85 still exist today, most still in the top four divisions (the exceptions being Aberdare Athletic, Merthyr Town and South Shields). Insolvency and restructuring of the limited liability companies that own football clubs are commonplace but should not be confused with the termination of the club, which almost never happens.
"English football is healthier than it has been for decades — the quality of the game has risen immeasurably in the past 20 years, attendances have almost doubled despite astronomic increases in ticket prices, upwards of £2 billion has been invested in stadiums. The Premier League is a global phenomenon, generating as much money from selling rights overseas as at home. And foreign investors have flocked to put their money in.
"Having thrived in a competitive environment, why on earth should the big clubs now be allowed to end that competition? If they manage to persuade the rest of the Premier League to adopt FFP it will be time to call in the Office of Fair Trading."
Elsewhere, birthday boy Pablo Zabaleta is quoted in various outlets this morning insisting City are confident they can catch Manchester United in the title race.
The fiery full-back, who turned 28 yesterday, told the Daily Star that City are more than capable of closing the gap.
Meanwhile, the same source brings us news that Napoli have reportedly had a change of heart with regard to signing Blues striker Mario Balotelli.
The City defender made the prediction while speaking to Zimbabwe's News Day ahead of the tournament which starts on Saturday.