Financial Fair Play, we’ve heard a lot about that over the last year or so haven’t we? All without really knowing what it is, what it covers and more importantly: whom it protects.
On April 11 2013, 14 out of 20 English Premier League teams voted to ratify the new Financial Fair Play laws but what might surprise you are the teams that voted no. In February 2013, there was a similar vote and six teams said no with one club (Reading) abstaining from the vote.
The six clubs in question were: Fulham, West Bromwich Albion, Aston Villa, Swansea, Southampton and Manchester City.
Since then one club has changed its vote from no to yes (believed to be Swansea, thank you to SkySports journalist Graeme Bailey for the information).
When Financial Fair Play began to rise as a serious piece of legislation within the game of football, everybody was quick to jump on the "well, Manchester City and Chelsea are done" bandwagon but actually if you look at the rules it’s all very apparent why some of the 'smaller' teams (in terms of income, and league position) have decided to vote NO to Financial Fair Play.
Here are the Premier League’s Financial Fair Play rules:
- No team may post losses of over £105m over three years.
- No team’s salary should exceed £52m, if it does, it can only be expanded by £4m a year until the 2015/16 season (this means the cap will be £60m, eventually).
- Wage bills must be supplemented by income that comes separately from that garnered on match-days or from commercial revenue.
- Losses of £5m or over the £105m threshold will need to be guaranteed against the owner’s assets.
- If teams fail these guidelines then they, according to Richard Scudamore, will face the harshest penalty any Premier League team could want: a points deduction.
All sounds fair enough, and in-fact there are currently 13 Premier League teams whose salaries actually exceed £60m. Moreover there are teams such as Manchester City, Chelsea, and Aston Villa who would fail the losses of £105m over three years test.
Except it isn’t quite as simple as that.
You see, the 'cap' of £52m a year in salary only pertains to the amount of money each club can spend from their share of the Premier League’s whopping £5.5 billion in TV rights. If they can supplement their wages in other ways then they are free to spend essentially what they like on wages.
Also, the losses of £105m over three years doesn’t really matter either, because as long as the trend is that the teams are 'cutting losses', there will be no punishment (kind of like your zero tolerance approach with respecting referees, eh Mr. Scudamore?)
No wonder some of the smaller clubs voted no to Financial Fair Play, they rely on being able to spend that television money and for some it could even be their biggest source of income barring transfer fees.
In England, the television money is very evenly balanced out between the teams. There is a ratio of about 1.5:1 with the top team earning £60m and the bottom team earning £40m. For the top teams £60m is nothing, a new player perhaps or maybe two. For teams like Swansea, Aston Villa, etc that is a very large sum of money.
This is why the Premier League is so strong top to bottom. The smaller clubs are receiving vast sums of money to help their income, to support them, to help them grow. One of the reasons Spain’s La Liga is such a joke (especially when people are scoring 60/70 goals a season) is largely due to the ratio the television money is shared out.
In La Liga, the top team gets €140m and the bottom team gets €12m. That’s a ratio of about 11.7:1, incase you were wondering. How are teams supposed to grow if they’re receiving no help?
The rich clubs don’t really have to worry about any of this because they have a stream of outside revenue that is consistently going to keep the wage bills supplemented and they have rich, clever owners who can hide debt away in the depths of their other businesses.
Couple this with the fact that spending on improving your stadium and youth academy/training facilities are eligible to be offset, thus not even counting towards your 'debt'.
The only teams this affects are the mid to lower level income teams, the teams who can’t afford to not play the game, who cannot afford to have a chain of megastores or hotels attached to their stadiums with bars and restaurants scattered around it.
If Financial Fair Play works the way it is on course to, the English Premier League will start to look more an more like Spain’s La Liga, except it will have a big four, not a big two, and then the rest.
Salary caps (although this isn’t strictly a cap) do not work. Look at Major League Soccer in America. It is not growing at the rate it should be because players can earn more money elsewhere – if you’re the best soccer player in America coming out of college but you’re also a decent wide receiver in football, chances are you’re going to take the money that comes with football.
The designated player rule is equally stupid. A player who is a designated player can be paid whatever the team desires to pay him and dependent on their age the team only has to put anywhere between $100,000 to $350,000 towards the salary cap.
Yes, if a team can afford to pay Thierry Henry $4.5m a year they can, and only have to put $350,000 of that towards the teams overall salary cap. However if Portland Timbers can only afford to pay their designated player $750,000 a year and he’s the same age as Henry, they still have to commit $350,000 to the teams overall salary.
The situation may be slightly different, but the outcome is essentially the same – the richer teams will find ways around it because they can afford to.
Financial Fair Play will hurt more teams than it will help, and contrary to popular (or wishful) thought, it will not be the likes of Chelsea and Manchester City. It will be the Evertons, the Southamptons and the Swanseas of the world. Teams that play good, entertaining football, but are essentially lower income sides that rely on television money to stay afloat.
It is not 'Fair Play' to tell these teams that they need to sell their star players because they need to supplement their wage bill from something other than television money.
Once the Premier League starts down that road look for the Bundesliga to be the preferred footballing destination of the world’s top players, not the English Premier League.
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