Does Money Still Make the (Football) World Go Round?
Financial Fair Play – It’s one of the latest ‘buzz’ phrases in football, but what is it, and what does it actually mean for the Football League clubs looking to make it to the bright lights of the Premier League?
October 17th, 2013
Financial Fair Play (or FFP for short) has been on the lips of many football chairmen since it was first discussed in 2010. UEFA’s plan to make clubs more financially stable is a welcome one, as I feel clubs more often than not overspend to achieve short-term success, often at the expense of the fans in the long run. We only have to look at the example of Portsmouth, who only five short years ago won the FA Cup, but in the past four years the Fratton Park faithful has been subjected to possibly the most heart-breaking decline of a football team; seeing their club enter administration twice and relegated three times with seven managers taking charge along the way due to poor management of the club.
Now playing in League Two, the future is looking brighter for Portsmouth. In April 2013 the club was taken over by the Pompey Supporters Trust, and they now look to build for the future under manager Guy Whittingham. Micah Hall, Portsmouth’s engagement manager, said: “We are fans. We are also business people. That’s a powerful combination”, and I couldn’t agree more. I know from my own club that this is a winning formula. Dean Hoyle, chairman of Huddersfield Town, has helped propel them back into the Championship after 11 years in League 1, and despite a nervy final day clash against fellow strugglers Barnsley last season, managed to stay there. This season, under the guidance of Mark Robins, Huddersfield lie 13th in the Championship after a much more solid start to the campaign.
Hoyle was this week critical of many top clubs in The Championship, stating their behaviour regarding spending is ‘horrendous’ and ‘unbelievable’. His focus was on those who have come down from the Premier League, along with the likes of Leicester who have had recent foreign investment. Hoyle, a lifelong fan and successful businessman, has helped stabilise Huddersfield’s finances. They have reduced their wage bill to £9 million, and he facilitated the £8 million sale of Jordan Rhodes to Blackburn, whose managing director this week admitted that the club may face a transfer embargo due to them not being able to comply with the FFP rules.
It’s not hard to see why clubs would want to get the Premier League though, especially if they’ve just been relegated. In the 2011/12 season, the lowest TV rights payment was nearly a staggering £40 million. To put that into perspective, that’s nearly one Mesut Ozil, 3 and a half Christian Eriksen’s, or 66.6 James Vaughan’s. With parachute payments in excess of £15 million as well, it’s easy to see why the likes of QPR are excessive in their spending.
As long as money in the Premier League makes the world go round, clubs will spend ridiculous amounts to get there. This doesn’t make it right however. Admittedly, QPR have offloaded some of their high earners (Taarabt, Remy, Samba & Granero), but many remain (Mbia, Barton, Hoilett, Cesar and many more) as well as adding people such as Charlie Austin, Nike Kranjčar & Assou-Ekotto.
Even though FFP aims to level the playing field, I feel more should be done to aid Championship clubs. The Premier League could state that parachute payments are only to be used to offset current wage bills rather than being used to bring in more players, unless they are able to offload a sufficient amount of these high earners through sales to other clubs.
For now though, FFP is the only solution. So what does it state? First punishments will come into place in December 2014, with the maximum loss limit reducing over time from £8m in 2011/12 to £3m by 2015/16. If clubs break the rules, then transfer embargos are put in place. In Leagues 1 & 2, there are no restrictions on losses, but rather wages have to be a maximum of 60% and 55% of turnover respectively.
This is all well and good, and despite the fact I like the idea, I can’t help but think this will put Championship teams at a huge disadvantage when they get promoted. Whilst the Premier League teams do have restrictions, there are an abundance of wealthy investors willing to offset losses. If, for example, a team such as Burnley were to get promoted again, they would not have the financial clout to compete, even with the TV money.
Whilst it’s not perfect, I am glad that UEFA and the Premier League and Football League are trying to curb some of the ridiculous spending, as I think it’ll not only benefit the fans, but also the English game through the development of academies, which is not a cost included in the FFP rules. We will just have to wait and see whether the sanctions imposed on clubs who are breaking the rules are strong enough.
For more information on how FFP affects the Football League clubs, you can visit here.