Financial Fair Play, Salary Caps & The Polarisation Of Footballs Financial Model

Ian

Ian began writing Twohundredpercent in May 2006. He lives in Brighton. He has also written for, amongst others, Pitch Invasion, FC Business Magazine, The Score, When Saturday Comes, Stand Against Modern Football and The Football Supporter. Ian was the first winner of the Socrates Award For Not Being Dead Yet at the 2010 NOPA awards for football bloggers.

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15 Responses

  1. Steve says:

    If Manchester United can make a lot of money then really you just have to accept that and given the money they have why shouldn’t their players look to secure a large proportion of it for themselves? To say a player there is limited to a certain wage but the owner can make what he wants seems wrong.
    The problem financially is that there are clubs that are paying players more than they can afford and that needs to be stopped. Clubs must be sustainable.
    Clearly this raises the issue of competition but I’m not sure that you can address that by penalising players who are generating big money for top clubs. Clubs without those incomes are just going to have to accept that they have to over perform on their budgets or not win a trophy.
    It isn’t great but that is where the game is, at least until the ridiculous amounts of money floating around football at the moment find something else to interest them.

  2. Ian says:

    I certainly think that you have to accept – and, as a body, “we” always have accepted it, I think – that there are some clubs that are bigger, more successful and popular than others. The question is where the line is drawn on trying to rein in the gap as it gets bigger and bigger. It’s not an easy question to answer.

  3. Neal Cannell says:

    Surely the best way is to enforce regulations of revenue versus expenditure ratios. If the rule is based upon debt levels, clubs such as Manchester City who spend mountains of cash but receive it all from a sugar daddy are unlikely to be affected because they aren’t actually in much debt. But if their wage expenditure is limited to being a given percentage of their revenue they will only be able to spend big if they have a consistent fan base who buy merchandise and season tickets.

    I also believe in standard clauses in players contracts. These should be drafted such that in the event that TV money does dry up or diminish, or the club is relegated the club’s wage commitment automatically moves in the same direction. This will hopefully help to avert further Pompey-esque situations in which former owners have committed them to massive wage expenditure regardless of player performance. It would also help to ease the impact of the ongoing farce whereby multi-millionaire players are treated as priority creditors over the Inland Revenue (i.e. you and I), St Johns Ambulance, small catering businesses etc.

  4. SW says:

    Unsurprisingly clubs with massive revenues are going to suggest spending must be linked to revenues, so that they can continue to outspend anybody else. And even more unsurprisingly, fans of those clubs are going to suggest that this has to be the only fair way to proceed.

  5. Johnno says:

    If the cash from the new TV deal doesnt end up in the pockets of a few megastar footballers the Chairmen will be happy, because it will end up in the pockets of a few faceless Chairmen instead. Self interest is at the heart of the game. Always has been, always will be.

  6. dsn says:

    “clubs such as Manchester City who spend mountains of cash but receive it all from a sugar daddy are unlikely to be affected because they aren’t actually in much debt. ”

    And the problem with this is…?

    Either Financial Fair Play (Euro + Premier League) is put in place to stop Portsmouth/ Rangers/ Leeds-type situations, so it should be linked to debt levels (like Utd could ever agree to that..) or it’s acutally there to preserve the biggest clubs’ stranglehold on the bulk of the money, and their dominance continues in perpetuity.
    At what point are we going to allow any organisation anywhere tell me how to spend my money???

  7. Dave says:

    Strange that we never heard any of these issues when the cartel of the Sky4 which had existed for over 10 years was in existence

    United when they only had the financial might of Chelsea to contend with they seemed happy with the status quo but now that City have arrived they are upset

    The United owners are ruining their club and they havent got the wherewithal to compete Clearly it is in their interest to have a revenue v expenditure ratio as they are they have been the biggest club in the UK since the premiership years and a whole generation have been brought up with United success

    But why should any club be denied the ability to reach the top in football. Surely a better ratio to measure is debt v income. Provided an owner is not saddling a club with unsustainable debt then even if that owner walked away the club would not go into freefall

    It would not stop rich owners putting their own cash into the business and ensure the future stability of the clubs and allow for competition

  8. Neal Cannell says:

    There’s no easy answer. As a Cambridge fan my club isn’t over burdened with either massive revenues or cash spouting sugar daddies. But as a common sense approach to football at all levels it makes sense to reward those with proper sustainable business plans rather than encourage a sh1t or bust approach of borrowing good money to throw after bad, or finding a faceless billionaire who doesn’t give a toss about football to blow away the competition with a stack of free notes.

    It’s happening at all levels of the game – the last two promotees from the conference have been propelled by sugar daddies (Crawley and Fleetwood – multi million pound budgets with tiny attendances), and clubs such as Chester with good history and heritage have folded due to throwing money they didn’t have at chasing the dream of a league football return.

    If only a sensible long term view of investing in local home grown talent could be taken that doesn’t involve smaller clubs having to relinquish promising young players for nothing then the game would be in a much more sustainabke place at all levels, and would help clubs to feel closer to their communites that they represent in name.

  9. Matt says:

    Football shouldn’t be a game of “who’s owner is the richest?”, which since Abramovich then the Sheikh, is what it’s become.

    No club should be able to operate with losses of £197m. It’s unsustainable and it’s not fair competition.

  10. blueknight says:

    How much debt do city have ?? OOOOOOOOOO
    hOW MUCH DEBT DO mufc HAVE? 500 MILLION

    So whats the problem clubs with DEBT should have a penelty clubs who INVEST should be OK

    failing that players can have outside contacts so say city sign a player & his pay is paid via Abu Dharbi and city the club run at a proft that would be Ok

  11. Daddy says:

    As all comments reflect their clubs best financial position, so will mine.

    As debt seems to be the eventual killer of clubs, shouldn’t that be restricted to a multiple of turnover, thereby allowing owners of clubs such as MCFC & Chelsea freedom to do what they want with the money they are given as opposed to the borrowing undertaken by clubs such as MUFC, Real Madrid & Barca who owe fortunes & have to service the interest payments allowing money to leak out of the game

  12. Boris says:

    No club should be able to operate with losses of £197m. It’s unsustainable and it’s not fair competition.

    It’s only unsustainable if it’s debt, not if it’s investment from an owner that can afford it.

  13. CitzenSid says:

    I agree that there is a rediculous amount of money in the premier league and that clubs should be trying to work within their means, however, FFP is a false economy that allows clubs with huge debts to continue to rule the league as long as ther “operating costs” are within their revenue streams. It doesnt take into account the debt. United are the perfect example, huge revenues that cover the wages etc so therefore they wont be affected by FFP even though they have a redculous amount of debt. And before you all cry “bitter City fan”, i dont agree with our stupid wage structure and yes, i think any business that spends more than it earns is taking a risk, but lets have a level playing field, FFP should be about clubs making profit, not covering up debt!

  14. It's Grim Oop North says:

    Why are we all so scared of football clubs going bust?

    Ok, plenty of clubs go into administration and bankruptcy, but usually they are bought out by a wealthy person or group of wealthy persons (same as sugar daddies, just more polite way of naming them) for a pittance, and start from the bottom as a penalty for being crap at football and business.

    Who out there would say Rangers won’t be back on top of the Scottish pile in a couple of years time?

    Name me one decent size team in this country who have disappeared entirely, never to return, in the whole history of our football?

    All this hand-wringing about financial doping is a load of tosh – if Man City somehow manage to blow this fantastic opportunity and lose the owner and become bankrupt, someone else will step in, and the fans will keep on supporting them in droves – history has proved this once (without the bankruptcy bit – close ‘tho).

    Football will carry on, no one will get killed, nor will the sport, which is our national pastime bar none.

    All this Financial Fair play fuss is just a desperate ploy by the established European elite like United and Real to keep them at the top, nothing else.

    Teams like United and Real whored themselves over the globe, touting for new markets, and when real football enthusiasts like Sheikh Mansour took an interest, it was inevitable people like him would want a piece of the action – how did they not see that coming????

    These greedy planks at Old Trafford don’t give a monkey’s about a level playing field, they don’t want competition, they prefer the money first, then the Glory, and sod the national teams and sod the national leagues – when did the richest club in the world ever offer to hold a benefit match to raise funds for the little teams around them slipping into administration?

    Correct – never.

    What have Manu ever done for English football apart from not take part in the FA cup that season at the behest of the FA to promote some crappy world super club cup, which was so successful noone can now remember what it was for, and why it doesn’t exist now.

    Football has always been about the money, and the best supported clubs have generally always been successful, but United have taken the business side to an entirely different level, and now they’re squeeling like stuck pigs when a couple of teams now have more disposable income than them, despite twenty odd years of milking Sky TV money and Champions League revenue, and the huge disparity in fanbase and marketing revenues they’ve garnered over the decades.
    The gap between the Sky 4 and the rest was almost insurmountable, and that’s how United and Arsenal wanted it – how ironic that their desperate trawling for global recognition and wonga has opened up the Pandora’s box of Billionaire foreign owners who are genuine, long term football fans, and prepared to put their investments where their mouth is – anyone care to argue that Roman Abramovich isn’t a committed owner – he’s been there ten years now – longer than United’s current owner eh?

    Sheikh Mansour is ploughing billions into Man City and East Manchester, and has a ten year business plan, which I’m sure he’d love to keep on improving on – any serious football analyst will tell you he’s the real deal and in it for decades, not just until the cash cow dries up.

    In summation, at this stage of the development of English football, we cannot hope to compete with the big Spanish two, Bayern, PSG, the Milans and Juventus, without matching and usually bettering the wages and transfer fees, without further investment in infrastructure, players and marketing of the English game globally. To turn our backs on the inbound investment from the likes of Mansour and Abramovich would be suicidal. Where else would we find the billion pounds these two alone have invested over recent years in our double dip recession? Arsenal’s “sustainable business model” wouldn’t look so healthy without the sales of K Toure, Adebayour, Samir Nasri and Gael Clichy – something like £70 odd million less well off by my reckoning, same as Everton and Villa would be to a lesser degree.

    Until United and Arsenal back a motion to evenly distribute TV and league placing money throughout Europe, so that the team that wins the Champions League gets exactly the same cut as the team that finishes bottom of the (now) third division, then you know they don’t care about a level playing field for all – the rest is just greed and self interest, just as they’ve been doing for at least two decades since the inception of the Premier League.

  1. September 12, 2012

    […] 200 Percent: Financial Fair Play, Salary Caps & The Polarisation Of Footballs Financial Model […]

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