Effort to bring fiscal sanity to game an important, but small, step
UEFA unveiled plan to ask teams to not spend more money than they make
Implementing fiscal rules across different countries will be hard with different laws
New potential rules from UEFA are light on details and largely conceptual in nature
We knew it was coming sooner or later. Michel Platini, president of UEFA, had said as much. And now we're one step closer, after UEFA approved what it calls the "concept" of "financial fair play."
It's a fairly fuzzy idea, but the basic notion is that clubs who wish to compete in UEFA competitions -- such as the Champions League and the Europa League -- will have to meet a set of requirements aimed at ensuring that "they live within their means."
Generally speaking, that means expenditures on transfer fees and wages will be linked to revenues. The more you make, the more you can spend. And for those clubs who currently carry debt, they will have to work to reduce it over time. The "penalty" for not meeting the new requirements -- which, once they are laid out, should be introduced from 2012 -- will be exclusion from UEFA tournaments.
Of all of Platini's ideas thus far -- some very good, some a little more questionable (though, generally, well-intentioned) -- this is easily the most ambitious, because it forces clubs to effectively be run as businesses, breaking even or making a profit over time.
In many ways, that's antithetical to the way many have operated over the years, with some wealthy patrons happy to lose money in exchange for public recognition and other owners taking huge (and often irresponsible) gambles which see them accumulate large quantities of debt in the pursuit of short-term glory. Of course, when those gambles don't work, they either let the clubs go bust or asset-strip and let them fall down the divisions.
It's called "fair play," but that's only part of it. The "fair play" part concerns what some have called financial doping. The most extreme examples in recent years saw Lazio, which won an Italian title, and Leeds United, which reached the semifinals of the Champions League, both were on the verge of bankruptcy largely because they spent money they didn't have and, realistically, were never going to recoup. Like conventional doping, the "victims" were the clubs who lost out to Leeds and Lazio. The fact that both clubs have since been "punished" (Leeds tumbled down to the third flight of English football, Lazio nearly went bankrupt and is now severely hamstrung financially) is scant consolation to the players and fans who missed out.
It's hard to argue against Platini on that point. But there are more implications and issues UEFA will need to wade through if this concept is ever going to work. And some of them make you wonder if it's fair or even desirable to go down this road.
First of all, accounting standards, local regulations and tax laws vary tremendously across Europe. UEFA can't force individual countries to change their laws, so any kind of system implemented will have to tread some complicated terrain. If they make it too rigid, some nations will be unfairly penalized. Make it too loose and it all becomes toothless.
Second, UEFA plans to rightly distinguish between spending on players and long-term capital investment on things like stadiums, youth academies and other non-playing squad spending (which won't be capped). The problem here is policing and enforcement. Paying players off the books for tax reasons has long been a tradition. If the tax authorities, with their powers to audit, can't bring clubs into line, how does UEFA hope to do it? And if overall club revenues determine spending on players, how do you stop a wealthy owner from inflating his club's revenues?
(A simple example: A club buys a plot of land for $10 million with the idea of building a new training ground. It then changes its mind and sells it to the club's owner for $50 million, arguing that real estate prices have gone up. Presto! There's $40 million in profit to spend on players! You can police this for a few clubs, but does UEFA have the resources to investigate the 200-odd clubs who enter European competitions every year?)
Third, the risk of a legal challenge is real. A restriction of trade argument is easy to make; whether the European Court of Justice upholds it or not is another matter, but, remember, nobody gave Jean-Marc Bosman a prayer either, and we know how that turned out.
Fourth, if the rules are implemented, one side-effect is that the rich will stay rich and the poor will stay poor. Clubs with the biggest revenues will still be able to radically outspend those with lower revenues and the imbalance will remain. The only difference is that with expenditures capped, tall clubs will be all but guaranteed to turn a profit every year. There is no question that this is favorable to the club owners (many of whom are already ridiculously wealthy men), but what about the players? Aren't they the ones who are generating the wealth? And do we really want to reinforce a situation where Real Madrid will always be able to spend 30 or 40 times as much as, say, Almerķa?
Finally, the new rules will limit the ability of men such as Roman Abramovich and Sheikh Mansour to make the kind of massive investments they made to turn Chelsea and Manchester City, respectively, into overnight juggernauts. That's fine, the fast rise of those clubs has annoyed many who accuse them of "buying success". But it's worth noting that they "bought" that success with cold, hard cash. Between them, they spent more than one billion (with a "b") dollars, money which came from outside the game, and was, ultimately, distributed to clubs all across the world. Are we sure it's desirable to discourage this?
Platini's heart is, no doubt, in the right place. I just hope UEFA thinks this one through very, very carefully. It could be the single biggest decision it ever takes.