If you believe in the football pyramid, you must stand up for Financial Fair Play

Eddie Howe says Newcastle do not have “friends in the market”  (Getty Images)
Eddie Howe says Newcastle do not have “friends in the market” (Getty Images)

As Premier League executives started to agitate for changes to financial control rules, it led to a pointed quip from one official. When it comes to any kind of regulation, those in football are utterly incapable of looking beyond how it affects them alone. They almost never think of the wider game. It has led to some distorted positions, as the last few days have made clear.

Eddie Howe bemoaned how Newcastle United do not have “friends in the market” willing to do loans to ease pressures on the team from Profit and Sustainability restrictions, at the same time as his bosses were loudly letting it be known that other clubs shared concerns on that regulation. There were even mutterings after Saturday’s 3-2 defeat to Manchester City about how the rules facilitated a situation where the champions could just bring Kevin De Bruyne, and that they were restricting a similar state-owned project in building the same sort of force. “That’s the difference,” was one grumble.

There’s a huge irony to that given how City have long felt the original regulations were devised to keep established clubs in power at their expense, often asserting that in an aggressive tone. In fact, the rules may indirectly aid Pep Guardiola’s in this season’s title push. Arsenal want to spend £80m-plus on a striker as they feel this is what a challenger now needs to match the champions. They can’t, however, because they are close to their P&S limit over the last three seasons: Premier League clubs can only lose a maximum of £105m over that period.

The fact so many clubs are close to breaching has been one of the main factors in a surprisingly slow January transfer window so far. Aston Villa have had similar constraints. Many clubs want to spend but can’t.

One obvious response to this is asking what all these clubs have actually done with the money that’s brought them so close to breaching. How much waste on wages has there been? What is ever enough?

The top-down view

Another observation is how so much of the focus in these sorts of discussions is on the very top end of the game. That’s especially true with state-owned clubs since they invariably want to spend the most and have the grandest plans. That singular focus is a much more concerning irony, given that it’s what those at the top do that disproportionately affects everyone else. Anyone acting “irrationally”, in the words of one official, has a hugely contagious effect that gets worse the lower down the pyramid you go. There’s a financial stretch from the top, that forces clubs into ill-advised decisions to stay afloat. That’s also where it gets existential for clubs, rather than whether or not you can win a league. A short-sighted solipsism conditions the entire discussion, with few looking around at the wider effects.

Newcastle are far from the first club, after all, to think Financial Fair Play [FFP] - as the regulations used to be called - is mostly about them. Chelsea did at the start. City did shortly afterwards. Paris Saint-Germain did next. We’ve now come full circle in how the established powers, the so-called “cartel”, complain that it is disproportionately affecting them due to the outcome of a number of cases.

The story of the rise of Financial Fair Play regulations

Rarely can an issue so dry have provoked such emotion. If those feelings are now going full circle, though, it makes it essential to go back to the start of FFP and why it was actually introduced.

Football’s near-total lack of regulation after the 1996 Bosman ruling fostered a situation where there was almost no control over spending. The payment of players’ wages, accelerated by the explosion of broadcasting contracts, created an arms race that brought many clubs to the brink of destruction. Salaries were often ominously high percentages of revenues. There were numerous examples of clubs who didn’t pay players or other clubs on time. That was actually the genesis of the “Fair Play” name. It was to stop clubs from agreeing to buy players when they knew at that point they could only afford the first instalment.

Uefa had actually wanted to introduce a hard salary cap in 1999 but the technocratic Nordic leadership of the time realised the need to create a legal framework first. They set about accumulating info which became the club licensing rules, setting out criteria to be met such as stadium conditions, financial discipline and various key roles they needed to employ. This amounted to fair demands like having a supporter liaison officer to play in European competitions. The idea was the prudent running of clubs, which was the foundation of Financial Fair Play.

It was while all this was being done that the entire industry was suddenly inflated in a way no one imagined. Roman Abramovich bought Chelsea.

When Roman Abramovich bought Chelsea it changed the football landscape (Getty Images)
When Roman Abramovich bought Chelsea it changed the football landscape (Getty Images)

That did fire considerable emotion amid all the dry financial details. Karl-Heinz Rummenigge was livid that a club like Bayern Munich, who had won the European Cup four times, could just lose a star like Michael Ballack to some nouveau riche outfit like Chelsea. The effects did go way beyond that self-interested top end, though. By paying so much in transfer fees and wages, Chelsea drastically raised the financial threshold. Other clubs didn’t just have to pay more to get players, they had to pay much more to keep them. It’s a crucial dynamic often overlooked. This was the real effect, and it usually got worse the further down you went in the pyramid. This was the nature of the system. Those involved in crafting FFP were conscious of stories from leagues like Ireland and the Czech Republic, let alone the English lower divisions, where players couldn’t afford Christmas presents for kids because they hadn’t been paid. It felt wrong in an industry that had so much money. As one official says now, “those stories have stuck with me 15 years later”.

The introduction of any new source of inflation, particularly in the form of turbo-charges like oligarchs and sovereign wealth funds, was utterly ruinous for this without control. Clubs just couldn’t cope due to the upward drag that football’s competition creates.

It’s why anyone who believes in the pyramid has to believe in some form of cost control. You can’t just detach the top. It’s all connected.

It wasn’t all consistent, though. Another element of the system that aggravated Rummenigge, who was also head of the European Club Association, was that the Bundesliga had much tougher regulation than most countries in Europe. That was to the benefit of their clubs in terms of financial health, but it represented a huge disadvantage in the market.

Rummenigge found a sympathetic ear in a former playing contemporary, new Uefa president Michel Platini. The French official was conscious of how his home country had the strictest regulation of all in the Direction Nationale du Controle de Gestion [DNCG]. Platini basically told Uefa staff to try to recreate this at a Europe-wide level. He also found crucial European Union support from Competition Commissioner Joaquin Almunia, who was an Athletic Bilbao supporter. It afforded a crucial vantage point since the Basque club had prioritised self-sustenance more than any in Europe.

Such a move towards regulatory prudence ensured it made sense to link spending to income, and the money generated by the game itself. Platini began to pitch this directly to owners over chief executives. Even figures like Abramovich and Internazionale’s Massimo Moratti saw the sense, in part because of how destructive they realised the wage race was. They just didn’t want to be the ones to tell the supporters they were stopping spending, so it was useful to point to Uefa.

How state-owned clubs changed the game

A number of crucial moments overlapped from there. It was as Platini began to secure consensus in European football that City were bought by Abu Dhabi in September 2008. It was then as FFP was publicly announced, in the summer of 2009, that City went on their first huge spree and caused another inflation.

The Premier League inevitably followed with their own regulations, when there was another huge spike. That was at the start of 2011-12, which was the first season covered by FFP, when Qatar bought PSG.

Qatar buying Paris Saint Germain singalled the start of a new era (AFP via Getty Images)
Qatar buying Paris Saint Germain singalled the start of a new era (AFP via Getty Images)

By 2014, after the accounts for those seasons had been looked at, the French club and City were two of a few clubs to have been investigated for prospective breaches. It was this period that essentially started a cold war in European football, that continues until now. Uefa’s investigators looked at sponsorship contracts with state-linked companies, among a few issues. From the information gathered, they eventually came to believe that the breaches by the two clubs were so great that they warranted bans from European competition. This was long before the revelations from Football Leaks in 2018, which led to further investigations. The clubs responded aggressively. Such was the pressure and threat of legal action that then Uefa general secretary Gianni Infantino got involved, even though the processes were supposed to be independent of the federation. The governing body eventually came to “settlements” with both clubs of €20m fines and reductions of Champions League squads from 25 to 21 players. This was despite the fact that the original regulations made no provisions for such agreements.

It caused huge unrest in European football, and resignations from the investigatory bodies. One argument was that the outcomes represented little more than tariffs for the super-wealthy. This was seen as no deterrent whatsoever. Three years later, PSG bought Neymar for €222m in a deal that is still destabilising the football market.

It immediately caused a huge escalation in wages, which accelerated the issues that FFP was brought in to address. Many clubs remain furious about those years, and it informs huge discussion within the Premier League today, especially about the ongoing City case. Arsenal are actually one of those clubs where some executives bring up City and Newcastle all the time.

On the other side, those two and PSG have constantly put out the argument that the regulations just preserve the status quo. That is despite both the English and French champions achieving unprecedented levels of dominance in the last decade.

Sheikh Mansour bin Zayed Al Nahyan bought Manchester City (Getty Images)
Sheikh Mansour bin Zayed Al Nahyan bought Manchester City (Getty Images)

Such a situation only points to how the whole issue warrants a broader look, beyond self-interested perspectives. There is actually considerable merit to the idea that the current rules largely lock football in place. There’s an argument that there should be more nuance and flexibility. Rules can certainly be tweaked. It does not look right that Everton can potentially suffer from an element of “double jeopardy” in the current case. Clubs shouldn’t be punished twice. Once charged, as one example, the EFL substitute the annual limit for subsequent assessments. Those are still micro details within a macro issue.

What we should be really talking about here, though, isn’t more investment but more redistribution of resources. The game has almost limitless money, after all. There’s even an argument that it’s a good thing the regulations force managers into purely football solutions rather than the transfer market. The biggest flaw is in the main counter-argument, though.

If anyone was devising a sport from scratch, absolutely no one would think it was a good idea to outsource competitiveness to oligarchs, sovereign wealth funds, states or private equity groups. That’s not what football is supposed to be for, and it should never be dependent on that kind of income. There are too many risks, before you get to bigger moral debates.

An alternative solution

That’s why it’s helpful in such situations to imagine an alternative situation. What would the game look like if it didn’t have anything resembling FFP? It would probably be far less competitive due to the richest just pumping in whatever they wanted, and everyone being dependent on the wealth of their owners. More clubs would go bust trying to keep up.

It would have the opposite effect than what those calling for the abolishment of P&S rules are arguing now.All of that is also why FFP should have been complemented by much better regulations on redistribution from the very start.

We’re now in a situation where the economics are arguably too far gone, and that redistribution of money wouldn’t even be enough.

That’s why there needs to be greater redistribution of talent, as is witnessed in American sports. If clubs could only hand out 25 professional contracts with three loans, the big clubs would not be able to monopolise all the best young players, which would increase competitive balance right across Europe. Put simply, more players would be spread around. The wage race would not be able to wage the same level of destruction. Football needs that broader view. It actually needs more regulation, not less.