The final instalment of my analysis on the Financial Fair Play regulations and its presumed effect on the footballing landscape.
Continued from "FFP Part 1"
The corruptive power of infinite financial wealth has been personified by players and clubs who have tried to take a stranglehold on their own club or another’s.
For instance, clubs’ knowledge of the financial muscle and desperation for short-term silverware by owners in the previous article, imposes negative externalities on all other clubs in the transfer market. Football clubs such as Portugese side Benfica expect exorbitant transfer fees as a subconscious (or conscious) reaction to the Los Galacticos (and the byproduct of other similar club’s) strategy. Benfica’s demand for some £40million for 23-year-old David Luiz was nonsensical. Such a fee would have put the player on par with Gianluigi Buffon’s £40million transfer from Parma to Juventus and the 8th largest fee in the history of the game. But as hindsight reveals, that was Benfica testing the water, dipping a finger to determine the Chelsea’s intent, whether it was a signing instructed by Abramovich’s golden fist, or one plotted by Ancelotti, ultimately culminating in a £23million transfer.
This kind of behaviour has been at the forefront of transfer windows in recent seasons and is all the result of public representation and image created by clubs. In this sense, I can use the signing of Everton’s Joleon Lescott to City for some £24million in 2009. To be fair, Lescott is a decent player and has been an England international since 2007, but his performances at the time nowhere near justified the same fee Inter Milan paid Barcelona for Brazilian Ronaldo – touted as one of the best strikers in the history of the game. But when City made it abundantly clear they wanted Lescott, Everton took control of the transfer ship and sailed it into a pot of gold. This approach has become all to common by City and is analogous to a consumer going to buy a product, telling the sales person they are willing to pay any price because they so desperately want the product, but then trying to negotiate. We all know it doesn’t work that way, and coming from a salesman, I can tell you it doesn’t. Everton capitalised on City’s riches and evident desperation and refused to negotiate down. The result? Everton reaped the same reward Barcelona received for Ronaldo, put £19million in the bank and paid a mere £5million for replacement Sylvain Distin who still serves the Toffees to this day and whose performances have warranted interest from Arsenal in the offseason.
However, such spending will expire in the near future, as clubs will be required to balance their books and become completely transparent in their dealings. UEFA’s Financial Fair Play Regulations (FFPR) will prevent owners such as Abramovich and Sheik Mansour from injecting more than £12.3million into their clubs annually until 2015, and then only £8.2million thereon to assist in balancing the books and supporting their club’s finances. Clubs such as Manchester City and Chelsea will have to establish a sound financial structure prior to the implementation of such regulations in 2012, or risk being barred from the most financially rewarding tournament of all, the Champions League. Such a penalty will only send clubs without a UEFA licence, needed to get into the tournament, into further disarray through the loss of an average £25million payday from TV rights and ticket sales reaped from the tournament
So what are the consequences?
World class players wont attract exorbitant fees in coming years, meaning their transfers will become less frequent then the ‘anarchy’ – as Michel Platini puts it – we have seen in modern times. Whilst individually these transfers may take place, overhauls of clubs as we’ve seen through Chelsea, Manchester City, Malaga and most recently Liverpool, won’t occur as the cost of such programs will need to be balanced with the revenue streams over a number of seasons. Players with immense potential may be restricted to clubs in poorer quality leagues or teams and clubs will have to allow players to leave more frequently on free transfers or at undervalued prices in order to obtain any value from a player sales.
And the benefits?
The rise and progression of football clubs in a traditional manner will return. Clubs will be more inclined to have to play their way to the top and to silverware, rather than out-spend their opponents. The regulations will bring back a commonality between clubs, a more level playing field where the most money won’t always win. Smaller, or less financially fortunate clubs will not be priced out by billionaires using teams as part-time play-pens as clubs will become more stringent with balancing their finances. Furthermore, the FFPR will force teams to restructure and become prudent regulators of their transfers and player wages, with the likelihood that youth development and scouting will become a pivotal role of any club’s recruitment policy in the long term. Moreover, players will be forced to play and earn their wages, which may help team performances and the overall quality of football, as management will look to sell under-performing stars to fund other moves or might be willing to take the ultimate action and to players’ dismay, look to cut their wages. As many footballers today are egocentric hotheads, a threat to their hip-pocket could cause the end of player revolt, ransoms and transfer request fiascos seen by the likes of Wayne Rooney and Carlos Tevez in 2010, all with an undeniable pursuit of greater riches.
UEFA’s Financial Fair Play Regulations give hope that starting in 2012, the focus on the ‘World Game’ will return to the quality on the pitch, rather than the quantity spent off it. Football clubs will no longer be toys for members of the Qatari Royal Family or other Billionaires who want to prove their status as a polymath. The market for players will once again return to an equilibrium that is undistorted by incredible wealth and attention will once again hopefully return to prudent tactical management rather than the depth of a team’s wallet.
Read the first part if this series: "FFP Part 1"