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Effects of the Financial Fair Play Regulations

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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?

Transfers

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.

Wages

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.

Youth Setup

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.

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Comments (3)

  1. the Champions League is a curse for the rest of the league, it stacks the deck so in favour of the qualifying teams that it makes a farce of the Premier League.
    None of these regulations will make a real difference, what is needed is a salary cap, transfer fee cap, squad size cap, open and honest accounting with clubs been allowed to spend only 70% of their actual profit, all transfer fees paid up front no more staggered payments, caps on agent fees say 2% of the players transfer fee, and a combined revenue pool used to benefit all the clubs in a division, this is the only way clubs can be competitive and will bring English football back to a competitive league, right now the PL is boring we know before a ball is kicked pretty much who will be champions, bring back the Division 1 of the 1960′s or ’70′s where teams like Derby and Forest were promoted and either won the title or were very very close to it, now the only goal of promoted teams is avoiding relegation, yawn !

    • I really doubt if either a transfer cap or a wage cap will work in football. It isn’t easy to make such a huge jump so fast. I agree on the honest accounting bit and that there should be no ‘undisclosed fee’ in the transfer. Also, why an agent fee cap? It should be eliminated. the agent is a player’s representation, and they earn enough to pay their agents. Football those days was fun with teams coming up and winning the league in their first season. Today’s game rewards consistency, and I don’t find anything wrong with it. It will help if the revenues are a bit even though.

  2. there may be teething pains with a salary cap but it works fine in the US sports that are profitable, look at baseball & basketball that are struggling financially, baseball is like the PL 4 or 5 teams will win it before the season starts.
    If the average PL player wage is say 20,000 per week a salary cap could be 250,000 for the 11 players on the field, it doesn’t mean the star players cannot earn the silly money they do today, it just means that the team picked cannot earn more than 250,000 total. That would force teams to be responsible with the average salaries and limit the number of “star” players on each team. It certainly would make the games more competitive and if players didn’t like it they could go abroad. I believe it would improve english players chances to play and thus improve the England teams options !