The criticisms of FFP are incorrect – only a single modification is necessary.

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As Premier League leaders initiated talks about modifying financial regulations, an official made a sarcastic remark. Football officials tend to only consider their own interests when it comes to regulations, rarely taking into account the impact on the sport as a whole. This has resulted in some skewed perspectives, as evident in recent events.

Eddie Howe expressed frustration over the lack of support from other teams in the transfer market for loan deals to help alleviate the impact of Profit and Sustainability restrictions on Newcastle United. Meanwhile, his superiors were vocally voicing their concerns about this regulation being shared by other clubs. Following Saturday’s 3-2 loss to Manchester City, there were even murmurs about how these rules allowed the champions to easily acquire Kevin De Bruyne, while hindering a similar state-owned project from building a similarly strong team. “That’s the disparity,” was one complaint.

It is quite ironic, considering that City has always believed that the initial regulations were created to maintain the dominance of established clubs, often expressing this belief in a confrontational manner. Interestingly, these rules may actually benefit Pep Guardiola’s efforts in winning the title this season. Arsenal, on the other hand, is looking to invest more than £80 million in a striker to compete with the champions. However, they are unable to do so as they are nearing their limit for Profit and Sustainability (P&S) over the past three seasons. According to Premier League regulations, clubs can only incur a maximum loss of £105 million during this period.

One of the main reasons for the slow pace of the January transfer window is the fact that numerous clubs are on the verge of breaking financial limits. Aston Villa is also experiencing similar constraints, as many clubs are eager to make transfers but are unable to due to budget limitations.

An immediate reaction to this would be to question the actions of these clubs and how they have utilized the funds that have led them to the brink of breaching. How much of the money has been squandered on salaries? Is there a limit to what is considered sufficient?

There is a common trend in discussions about state-owned clubs to focus solely on the top players and their extravagant plans. This narrow viewpoint is concerning because the actions of those at the top have a disproportionate impact on everyone else. When officials act irrationally, their behavior can spread and negatively affect smaller clubs in the pyramid. The pressure to keep up with the financial demands at the top often leads to misguided decisions for survival. This is where the discussion becomes more about the existence of clubs rather than their ability to win leagues. Unfortunately, there is a short-sighted focus on individual interests rather than considering the broader implications.

Other clubs, like Newcastle, have also believed that Financial Fair Play (FFP), previously known as “the regulations,” primarily targets them. This includes early adopters like Chelsea, followed by City and Paris Saint-Germain. As a result, the established powerful clubs, often referred to as the “cartel,” are now expressing concerns about the impact of FFP on them, citing various cases as evidence.

It is unusual for such a mundane issue to elicit such strong emotions. However, if those sentiments are now coming full circle, it is crucial to revisit the origins of FFP and the reasons behind its implementation.

After the 1996 Bosman ruling, football became largely unregulated, leading to excessive spending with little oversight. The increase in broadcasting contracts and player wages resulted in a competitive frenzy among clubs, putting many at risk of financial ruin. Player salaries often exceeded a concerning proportion of club revenues. Instances of clubs failing to meet payment deadlines for players and other clubs were common. This was the inspiration for the term “Fair Play,” aimed at preventing clubs from making costly player purchases they couldn’t afford.

In 1999, Uefa had initially planned to implement a strict limit on player salaries. However, the leadership at the time, which was focused on technical efficiency, recognized the importance of establishing a legal structure beforehand. They gathered information and developed the club licensing regulations, outlining requirements for stadiums, financial responsibility, and necessary personnel positions. These regulations included reasonable expectations such as having a supporter liaison officer in order to participate in European competitions. The goal was to ensure responsible management of clubs, which formed the basis for Financial Fair Play.

During this time, the entire industry experienced a sudden inflation that was unexpected. Chelsea was purchased by Roman Abramovich.

The inclusion of this information sparked strong emotions despite the dry financial nature of the discussion. Karl-Heinz Rummenigge was furious that a prestigious club like Bayern Munich, with four European Cup wins under their belt, could lose a star player like Michael Ballack to a newly wealthy team like Chelsea. However, the consequences extended far beyond just the upper echelons of the sport. Chelsea’s extravagant spending on transfer fees and wages significantly raised the financial standard for all clubs. In order to acquire and retain players, other teams had to pay significantly higher prices. This shift in the financial landscape often goes unrecognized, but it had a significant impact, particularly for smaller clubs lower in the league hierarchy. This was simply how the system worked. The creators of Financial Fair Play (FFP) were aware of similar stories from other leagues, such as Ireland and the Czech Republic, and even lower divisions in English football, where players were struggling to make ends meet and provide for their families. It seemed unjust in an industry with such vast amounts of money. As one official reflects, these stories have stayed with them even 15 years later.

Introducing a new source of inflation, such as oligarchs and sovereign wealth funds, had detrimental effects on those without control. Football clubs were unable to handle the increased competition.

This is why anyone who supports the pyramid must also support some type of cost management. The top cannot be separated without affecting the rest.

However, there were inconsistencies within the system. Another aspect that frustrated Rummenigge, who also served as the head of the European Club Association, was the fact that the Bundesliga had stricter regulations compared to other European countries. While this was beneficial for the financial stability of their clubs, it also put them at a major disadvantage in the market.

Rummenigge was able to find understanding from a former teammate, Michel Platini, who is now the president of Uefa. Platini was aware of the strict regulations in his home country, enforced by the Direction Nationale du Controle de Gestion [DNCG]. He urged Uefa staff to implement similar regulations across Europe. Platini also gained support from Joaquin Almunia, the Competition Commissioner and an Athletic Bilbao fan. Almunia’s perspective was valuable as Athletic Bilbao has prioritized self-sustainability more than any other club in Europe.

Restructuring regulations to prioritize financial caution led to the decision to connect expenditures with earnings, specifically the revenue generated by the game. Platini personally presented this concept to team owners rather than team executives. Even wealthy figures such as Abramovich and Internazionale’s Massimo Moratti recognized the benefits, partly because they understood the detrimental effects of the wage competition. However, they were hesitant to be the ones to inform fans that spending would be limited, so they found it convenient to refer to Uefa’s guidelines.

Several significant events coincided during this time. It was during Platini’s efforts to gain support in European football that Abu Dhabi purchased City in September 2008. And when FFP was made public in the summer of 2009, City went on a massive spending spree, contributing to further inflation.

At the start of the 2011-12 season, the Premier League implemented their own rules in response to a significant increase. This change occurred due to Qatar’s acquisition of PSG, coinciding with the introduction of Financial Fair Play regulations.

In 2014, both the French club and City were among a small number of teams under scrutiny for potential violations, after their accounts for recent seasons were examined. This sparked a feud in European football that persists to this day. Uefa’s investigation focused on sponsorship contracts with state-linked companies, among other issues. Based on the evidence gathered, they concluded that the two clubs had committed significant breaches and should therefore be banned from competing in European competitions. These conclusions were made well before the revelations from Football Leaks in 2018, which prompted further investigations. The clubs responded aggressively, leading to pressure and the threat of legal action. As a result, Uefa’s general secretary Gianni Infantino became involved, even though the process was supposed to be independent of the federation. Eventually, the governing body reached “settlements” with both clubs, resulting in €20m fines and a reduction in Champions League squad sizes from 25 to 21 players. This decision was made despite the fact that the original regulations did not account for such agreements.

The purchase of Neymar for €222m by PSG three years later was highly controversial in European football, leading to widespread discontent and resignations from investigative committees. Critics argued that the results of such deals only benefited the extremely wealthy and did little to discourage similar actions. The impact of this transaction on the football market is still being felt.

The implementation of FFP led to a rapid increase in wages, exacerbating the issues it was meant to resolve. This has resulted in continued frustration among clubs, sparking ongoing debates in the Premier League, particularly regarding the City case. Arsenal is among the clubs whose executives frequently mention City and Newcastle when discussing the topic.

However, these two teams and PSG continue to argue that the regulations simply maintain the current state of affairs. This is despite the fact that both the English and French champions have achieved unprecedented levels of dominance in the past decade.

The current situation suggests that a broader perspective is needed to address the issue, rather than just self-interested viewpoints. It is worth considering that the current rules may be restricting football too much and there is an argument for more flexibility. The rules can be adjusted if necessary. It does not seem fair that Everton could potentially face double consequences in this case. Clubs should not be penalized twice. For instance, the EFL could replace the annual limit with subsequent evaluations after charges have been made. These are small details compared to the larger issue at hand.

The focus should not be on increasing investment, but rather on redistributing resources. The game has an abundance of money. Some argue that it is beneficial for regulations to steer managers towards relying on football strategies rather than the transfer market. However, the main counter-argument has a major flaw.

If someone were creating a new sport, it is highly unlikely that they would consider it a wise decision to rely on oligarchs, sovereign wealth funds, states, or private equity groups for competitiveness. This goes against the true purpose of football and it should not rely on such sources of income. There are numerous risks involved, not to mention ethical concerns.

In scenarios like this, it can be beneficial to envision a different scenario. How would the game appear without any similarities to FFP? It would most likely be less competitive as the wealthiest individuals could simply invest however they pleased, and everyone would rely on the financial resources of their owners. This could result in more clubs going bankrupt in an attempt to keep up.

The argument against the abolishment of P&S rules suggests that it would have a counterproductive outcome. This highlights the need for improved regulations on redistribution to be implemented alongside FFP from the beginning.

The current economic state may be too damaged to be resolved through redistribution of funds alone.

This highlights the importance of redistributing talent, similar to what is seen in American sports. If clubs were limited to only 25 professional contracts and three loans, larger clubs would not have the ability to dominate all of the top young players. This would result in a more balanced competition throughout Europe. In other words, there would be a more even distribution of players. This would also prevent excessive wage discrepancies. Overall, football would benefit from a wider perspective and increased regulation rather than less.

Source: independent.co.uk