Effects of the Financial Fair Play Regulations
On the 27th of May 2010, UEFA announced the approval of the Financial Fair Play(FFP) regulations. The aim of these regulations is to make the football clubs self sufficient. With the advent of these sanctions, every football club has to break even i.e. spend what they earn.There have since been numerous discussions about this so-called game changing announcement,but what do these sanctions actually mean?
Over the past couple of years, exorbitant transfer fees have been the trend. With the sugar-daddy owners, clubs almost have a bottomless pit of cash to spend. The FFP will surely curb this wont it? Not quite. There may be a marginal decrease, but with the fees being calculated over the length of the contract, the effect on the expenditures is not substantial. For example, a player signed on a 5 year contract, for a 20 million pound fee, will cost the club 4 million pounds a year. Not very much is it? Thus, clubs will look to tie players up with longer contracts.
The biggest contributing factor to a club’s expenditure are staff wages. This is bad news for the the players, as clubs in an attempt to reduce their wage bill may not be willing to offer their players the astronomical amounts of money currently doing the rounds. This could also see clubs looking to the younger generation more than before.
The FFP does not include expenditure on the youth set-up. Owners may thus be tempted into spending heavily on their youth academies, in the hope of finding the next superstar at the club, consequently doing away with the transfer fee requirements.
Champions League or Bust
The Champions League will assume a greater importance for clubs now than in the past. It is a well documented fact that the Champions League is a major money spinner for the participating clubs and with the new FFP rules, clubs will be looking to every opportunity to increase their revenue.is no longer just about the prestige of being a part of the competition.
Clubs do have some time on their hand, as the the FFP comes into action from the 2012-13 season. Moreover, the FFP does give the clubs some leeway by allowing them to gradually reduce their losses over the next three or four years. Certain things, however have to change before these regulations come into play. For instance, the television revenue distribution has to be evened out between the clubs, especially in Spain, where Real Madrid and Barcelona account for a huge majority of the revenue. This curbs the growth of the other clubs in the league, and makes the league less competitive.
The FFP regulation does look into some of the more pressing issues and is a good start to putting right some things which are wrong with today’s football world. However it remains to be seen if the billionaire club owners will find a way around these regulations.