Financial Fair Play: Wishful Thinking or Reality?

A recent report from a UEFA event in Geneva has the footballing world buzzing over potential systematic changes in European domestic leagues. The governing body that oversees European football recently announced plans to look into combating problems that are seemingly ruining the modern game. One of the most important issues the group of 100 plus delegates discussed was that of economic stability, specifically the growing questions surrounding the financial integrity of club football.

What is this system that UEFA is hoping to clean up? With the current rules in place, anyone with a large sum of money can seemingly buy a team. But why is this a problem and does not this happen all the time here in America? Yes, in the United States, takeovers happen sporadically. The difference in Europe is that once the team is in control of an owner, that individual can spend any amount of cash fiscally imaginable on every aspect of the club. There are no guidelines or system of checks and balances. These finances extend anywhere from a new stadium, board of directors, and most importantly and controversially, players. To put this into perspective, in America, players are traded and or signed off of free agency, whereas in Europe, players are bought for fees known as "transfers". The issue UEFA has with this is twofold. One, the richest owners can purchase the most expensive, best players, which only contributes to the increasing gap between rich and poor clubs. Secondly, domestic talent is not being developed, but instead, finished products are being bought from abroad. This is ruining some countries youth development systems and structures. Another key issue for the governing body is addressing the exorbitant wages most super stars have relative to, not only players on their own squad, but to players in similar leagues on less lucrative teams. UEFA intends to implement a policy in which clubs cannot repeatedly spend more than their income. Many clubs with ridiculously rich owners are actively ignoring aspects of business that would make most levelheaded people cringe, such as turnover and profit. I recently wrote an article condemning the spending of Manchester City. These new claims by UEFA are extremely exciting to the knowledgeable football fan for a reason. Ideally, European football will be played on a more level playing ground in a variety of aspects. This week, I decided to analyze and respond to a post by Bleacher Report author Stefan Vasilev. His intriguing write-up is titled, "UEFA's Newly Considered Regulations in Favor of Arsenal's Policy." I responded and commented on Mr. Vasilev's thought-provoking article which can be found by following the link below.
"UEFA's Newly Considered Regulations in Favor of Arsenal's Policy."
Comment

Mr. Vasilev,

I was more than pleased when I stumbled across your piece on UEFA's Financial Fair Play workshop. As an avid football fan and fellow Gunner, I find this topic to be one of the more riveting and pertinent debates in the modern game. You do extremely well to convey and outline the various points recently discussed in Geneva. You are right to question the "rich people who ignore the actual turnover of the club and take all financial issues in their own capable hands." I firmly believe that these men are ruining the game we have come to love and cherish. The likes of Roman Abramovich, Sheikh Mansour bin Zayed al Nahyan, and Florentino Perez (amongst many others) all possess good intentions and a solid interest in their specific teams, but do contribute to the growing inequality in contemporary football. These are extraordinarily savvy businessmen that have come to dominate their respective industries. In doing so, as you mentioned, they buy teams with little to no concern for the financial well being of their newly acquired clubs, nor the mindfulness for the wherewithal of the smaller teams in the league. What do you pose would happen if one of the aforementioned owners decided to abruptly sell the club? What kind of consequences might the team and players face? Do you pose there should be a salary cap similar to many American professional sports? UEFA is finally opening their eyes. In doing so, they are realizing the financial bedlams most of these clubs and leagues are experiencing. I only hope that it is not too late to correct this current mess.

Now that UEFA finally recognize the growing call for modification to the current system, the question of what can be done to improve the financial structure of European domestic leagues must be answered. In the article by UEFA, there is a claim that teams will need to "balance books" and will be given guidance on "salaries and transfer spending" as well as "sustainability of debt" and "to honour commitments on a timely basis." How might you suggest that UEFA oversee this and will they actually implement such a process in the near future? Most importantly I think this initiative by UEFA will address a few things that you failed to mention. By putting an emphasis on the future instead of the here and now, there is a hope to "stimulate long-term investment in youth development and upgrading facilities." Ideally, clubs will not only develop and maintain their domestic talent, but will create a strong financial basis for investment opportunities in new areas like stadia, sponsorship, branding, and marketing. But this begs the question, with income rising yet spending increasing at an even higher rate, how might these teams finally turn a profit in these struggling economic conditions? Surely UEFA cannot help each and every team, in every league, in a reasonable amount of time. I believe that this is an extremely big step from UEFA, but I question the financial rationality of such a wishful plan.

An Interesting Courtship

With the recent controversy surrounding the foreign purchase of Portsmouth Football Club, many fans are questioning the integrity and identity of English football. This is the latest team to be bought up and controlled by an individual who does not call England home which pushes the number of foreign owners in the twenty-team English Premier League to exactly half. This explains why this bid holds more significance than any of those in the past six years. With that, Portsmouth or Pompey, as their supporters affectionately call them, suffered a rather intriguing few months.

For starters, the team sits dead last in the Premiership (at the time of writing this entry). Moreover, Portsmouth possesses an amount of unmanaged debt unprecedented in the league, something that brings a huge question mark to their chance of survival. Simply put, there is chaos on the South Coast. The outfit recently revealed shocking news of their lack of ability to pay players, staff, and agents, amongst many others involved in the massive organization. This inability is something that the upper echelons of modern British football have never seen. Portsmouth has been in a catastrophic state, which has raised many eyebrows across the country. As if these problems were not enough, the club is welcoming its second owner in as many months. With its purchase at the hands of the wealthy Ali Al-Faraj, Pompey was thrown a life preserver, one that may keep them afloat in the Premier League. Though debt is not unheard of in the rest of Europe, why are so many of these English teams turning to investors from abroad instead of handling the problem at home? The Portsmouth situation brings about another sensitive question. What does the future hold in terms of ownership in the Premier League? While multiple fans and figureheads around England realize the positives and negatives associated with a foreign owner, it would appear from reactions that either something is being lost or everything is being gained.
Foreign ownership in the English Premier League has undoubtedly had numerous positive effects. One positive correlation appears to be titles and foreigners. Winning has become a habit for several of these cash-injected clubs. Championships and global popularity have increased immensely over recent years. Multiple teams are household names in many parts of the world and include the likes of Manchester United (American), Manchester City (United Arab Emirates), Liverpool (American), and Chelsea (Russian). The teams listed previously are some of the most successful clubs of this decade with Manchester United and Chelsea combining for seven of the last nine Premier League titles. Liverpool and Manchester United have collectively won two Champion's League titles this decade with English teams being involved in the last five finals (Chelsea being one and Liverpool losing out on one occasion). There is no doubt that, despite the ownership issues, England has dominated the competition for Europe's most sought after trophy. In these economic times, as demonstrated by the Portsmouth calamity, international investment has been instrumental in keeping many teams alive. Other clubs such as Chelsea FC have flourished under the watchful eye of their passionate owner, as noted by Giancarlo Abete, the President of the Italian Football Association, "The foreign owners have kept the clubs profitable and expanded their global outreach even if they have failed to win over the confidence of all their English fans." Chelsea, once a perennial underachiever, became a superpower because of Mr. Roman Abramovich and his dream. The charismatic, success-driven Russian billionaire purchased the club in 2003. Since then, he has bought hoards of players for top dollar. With that, very few Chelsea fans are questioning their influential owner and Premier League titles. By implementing a set of guidelines for owning a club known as the "Fit and Proper Persons Test" and the "5-step Ownership Test," the English Football Association is adapting to the times and encouraging owners of the highest moral fiber. Surely the profit and praise flowing in from around the world is enough to keep the mouths of rebellious fans closed. Former Birmingham City FC (potentially the next team to be purchased from abroad) Chairman, David Gold recently commented, "People cast new foreign investors into bogeymen, as if they are coming in to rape and pillage our wonderful game... I look at foreign owners coming in and I don't see any damage. I see the sophisticated leadership" Mr. Gold is right to a certain extent, unfortunately a large group of nationalistic fans do not appear to agree.

Many near and dear to their football squads feel foreign ownership takes a certain something away from the tradition of their beloved teams. Several clubs have been around for over a hundred years. Naturally, the fans have a unique, deep relationship, with their organization. Through foreign ownership, there is a sense of a loss of not only identity but also integrity, and at least some supporters perceive these changes as a sellout. Instead of operating from within, the clubs become headed by corporations and billionaires from without. Multiple Premier League teams were owned by either the fans or were passed down through generations of families, thus perpetuating an element of English nationalism and pride. These squads include the likes of Blackburn Rovers, Bolton Wanderers, Burnley, Everton, Hull City, Stoke City, Tottenham Hotspur, Wigan Athletic, and Wolverhampton Wanderers; with Arsenal possessing some form of minority English ownership. Managers are even speaking out against this trend in modern football. Arsenal FC boss Aresene Wegner, himself French, elaborates, "What was traditionally true in England is that the people who were the owners were the supporters... That was really reassuring for the fans because the heart of the owner was like their heart."

Another Frenchman, UEFA President Michel Platini recently took a jab at England, "I like people to put their money in their own leagues. You English can put in rules so you have no more foreign owners, like in Germany where no foreign owner can have more than 50 per cent of shares in a club." The most recognizable leagues around Europe possess little to no foreign owners. In France, a majority of the cities own their clubs. In Spain, the fans own most of the teams. Italy provides for an interesting example. Not only did Italy win the last World Cup with a squad that contained players that plied their trade exclusively in their home country, Italians owned all of these teams in the top flight. This is the model that several English supporters hope to emulate. Another issue is the problems facing the youth system. By encouraging foreign ownership and, consequently, foreign talent, many youngsters are being pushed out and underdeveloped. This has hurt the Three Lions (English National Team) in recent years with their last major trophy coming in 1966. The loss of the youth system and increase in foreign ownership has had its fair share of negative effects.
I acknowledge the financial benefits that many foreign owners have brought to the beautiful game in England. However, these businessmen are a manifestation of a problem that is much larger than ownership. English football is on the rocks in many ways. There appears to be an identity struggle that not only has fans from within, but also those abroad, asking difficult questions. Where has the soul of the game, which originated in the British Isles, gone? As mentioned before, numerous countries in continental Europe take pride in the fact that their owners are native sons or daughters hailing from the nation in which domestic league is located. In England there is a different mentality, which appears to suggest a loss of dignity at the hands of investment opportunities. Mr. Wegner concedes, "This tradition has gone. It looks as if we have gone from one period to a new one with more people who look at it as an investment where, of course, they want to be paid back quickly." Is this tradition lost forever? These next few years will surely tell us a lot of about the future of the English game, but my hope is that the Arsenal model, though itself under strain, represents the most promising path forward. That is to say, it is important to balance domestic and foreign ownership in conjunction with steady finances, for the well being of the club and its future. Now that half of the teams in England are owned from abroad, there is finally a sense on the home front that this is a pressing issue jeopardizing football. With Portsmouth struggling and many of the lower league teams begging for a cash influx, financial opportunities for foreign owners are constantly increasing. The tradition of English football is in peril. If something is not done swiftly, fans will surely lose their spirit, and with that, club leaders will lose integrity, and organizations will struggle with identity. Not all is lost, however clubs are coming to realize the importance of domestic owners, as seen at Arsenal and at teams across the country, which will hopefully recapture the pride and character that once defined English football.