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FFP: The legal challenge begins

By Tony Attwood

As we’ve mentioned on Untold before the issue has not been whether someone will take Uefa to a European court, but whether it would be a club claiming that Uefa has gone too far in laying down the code of practice, or another saying that Uefa has not gone far enough in dealing with an obvious transgressor.

Now we know, and the answer is “neither”.  The first case of a legal challenge in the European courts over FFP comes from a players’ agent who will argue that FFP unfairly restricts the amount of money his man can earn.

Daniel Striani is registered in Belgium as an agent and he has lodged a formal complaint with the European commission against FFP rules.

The lawyer who has taken on the case is Jean Louis-Dupont, who has form in this area, because it was he, in 1995, who challenged football’s contracts on behalf of … Jean-Marc Bosman.    The result was that all players now have a freedom to move at the end of their contracts.

Dupont argues not so much that the rules themselves are against EU laws and European Commission ruling, but rather that the implementation of the rules will inevitably have a range of outcomes which will be anti-competitive, primarily because investment which is there and available for clubs won’t be put into the club, because the clubs’ losses are limited by FFP.

That is obviously the big one, but the other points argued are important too.  The second argument in the case is the suggestion that smaller clubs will have less chance of breaking into the stranglehold on success that the bigger clubs have.  Thus the leagues will be less competitive.

The argument is that Manchester City have broken into the top layer of English clubs, as did Chelsea before it, and as PSG have done in France, with Monaco coming up behind.  But from now on the already wealthy clubs will continue to dominate.

This argument is powerful but there are counter-views that can be expressed.  Liverpool’s fall from grace, for example, shows that top teams can fail to gather the right type of investment and so fall from a superior position, leaving a place vacant at the top table which others such as Tottenham will quickly scramble towards.

The third argument looks to be open to debate as it suggests that FFP will reduce players’ wages and the inevitable rise of transfer fees and thus is “anti-competitive”, and therefore a breach of European law.

Here the argument is particularly interesting in that it is said that FFP will lead to a “reduction of the number of transfers, of the transfer amounts and of the number of players under contracts per club”, and will therefore deflate salaries.

But at this point the argument begins to look rather sticky because FFP only applies to those clubs that accept the offer of a place in the Champions League or Europa League.   There is nothing in the regulations to stop clubs building up their team, and then building up the income of their club with a larger stadium, higher prices and more sponsorship money, and in the meanwhile not accepting a Champions League spot for the first couple of seasons.   It should not take more than a year or two to do this, as long as there is no FFP in the individual leagues.

Of course Manchester C and Chelsea have not acted in this way, because there was no need for them to speed up the process, but they could have changed tactics had FFP been in place.

Dupont’s argument is that FFP stops the free movement of capital, of workers and of services, the last being a reference to the agents.  He also argues that Uefa could instead run a system in which money from the rich clubs is “taxed” and then shared out with the smaller clubs – presumably by a tax on expenditure rather than a tax on profit.   Thus for every player who is transferred there would be a tax, the money from which would be shared out.

A £30 million transfer might result in £5 million of that money going to smaller clubs in the league of the country in which the player played before the transfer – or even the country where he first started playing.

The arguments look clever, but the European Commission has already given encouragement to FFP, although the EC is not allowed to break its own rules.  But this is not the first time the EC has been so accused.  Back in September 2009 the EC was accused of helping to fund the Irish referendum on the Lisbon Treaty – although no case was brought against the EC.

Uefa’s response is that the new FFP rules are supported by Europe’s clubs and players’ unions, and the EC itself.  Since it has been long established that sports activities are different from other everyday activities, not least because whereas you or I could start up work tomorrow as a plumber and compete with all other plumbing firms, we could not form a club and enter it into the Premier League.  It is the nature of sport that means that different rules apply to sport.

Uefa’s response  statement says, “The rules encourage clubs to ‘live within their own means,’ which is a sound economic principle aiming to guarantee the long term sustainability and viability of European football.  Uefa believes that financial fair play is fully in line with EU law and is confident that the European commission will reject this complaint.”

The Bosman case of freedom of movement at the end of a contract was won because it did not affect any aspect of the actual organisation of football with entry into leagues being restricted on artificial bases.   This challenge to FFP looks to be on less sound ground because its arguments are of a different type.

But with football, as with European law, one never quite knows.

The books…

The sites from the same team…

17 comments to FFP: The legal challenge begins

  • avatar Marcus

    Whatever is going on, Sir Alex has retired, (which was predictable given the tantrums he threw when MU lost in his last attempt on the European Cup).

    Has he retired because of his cholic and gout, or because some big derailment that is coming in the world of football?

  • avatar Mike T

    Tony

    Interesting but how about this but your defence is too narrow for instance say a multi mult billonaire purchased a non league club in year one and immediatley ploughed x million into players and as a resut won the FA cup this club would without doubt fail FFP so would not be allowed to compete in the EL so its not about leagues its about entry into Eureopean competitions
    As it happens I totaly disagree with your take on compliance with Eureopean law but at the end of the day it will probably come down to how the courts view FFP impact and not the commision

  • avatar Adam

    Mike T, did you get my e-mail?

    Bit unfair on Plumbers Tony. I have to renew my qualifications every 5 years, register every year, have public liability insurance up to my eyeballs, last year a plumber got 12 years custodial sentence for negligence, and I don’t meet many people willing to work on pressurised steam, 160 degree’s @ 6bar and that’s medium pressure, cut you in half that will. I wish I got a footballers wage for my job (taken offence, I have).

    Anyway, there has got to be something we are all missing, with regards to this case, as you could argue that certain restrictions the EU have placed on farmers were a restriction of trade and yet they still passed legislation, yet the agents and lawyers are somewhat removed from competing football clubs, so shouldn’t be directly considered when decisions of this sort are made.

    When governments cut expenditure to armed forces we see soldiers loss their jobs, they don’t run off to the EU complaining.

    These agents and lawyers are freelance/self-employed people, they’re reliant on the ebb and flow of industries, similar to how plumbers or any trades person is reliant on the economy doing well, so they can trade unencumbered.

    As for the little clubs, agree that solidarity payments should be increased.

  • avatar Mike T

    Adam

    Alas no email.

    I am off in a while to SB but will be around tomorrow

  • avatar ARSENAL 13

    “Tax on expenditure”. Haha…..can that man guarantee that the clubs/agents will show the actual figure (say 30 million) in their transfer documents.
    What if they officially sell the player for 2 million and then pay the rest 18 millions by what ever illegal process they possibly can……

  • avatar Adam

    OK? maybe Tony has put this up for debate? so we have a platform to discuss.

  • avatar Stuart

    Since I read somewhere that because of FFP transfer fees will be reduced, things will be anti-competitive I can’t take this legal bid seriously. If I was in the court and that was presented to me as a fact / view, I would have to laugh and ask how something that brings transfer fees down to a level that more teams can afford is anti-competitive?

  • avatar Adam

    Stuart, I cannot get my head around this thinking either?

    Example, Manchester city or any of the oilers have to live within a certain budget so they have spent all they can for a certain transfer window, all that will happen is the other clubs will be able to go shopping without them artificially inflating prices, so the argument is flawed. Is it not?

    As, can be argued the truth is, the norm is an artificially inflated market and all that’s happening, is a return to normality? Or am I missing something?

  • avatar Rufusstan

    There are days that I wish I was less cynical.

    The person who sees FFP as such bad thing that they go to law to prevent it is an Agent. His arguments against FFP are the features that:

    A). Help to regulate finances over the long term and slow down the wages/transfer arms race.

    B). Will mean he ends up making less money.

    Hopefully this challenge gets thrown out, and since the first is so self-serving, it helps to make following challenges harder.

  • avatar It's Grim Oop North

    What a great day to be a City fan :)

    Fergie gone, if FFP gets thrown out, City get to invest more on players, FFP passed, City get no competition from clubs outside Champions League places, it’s a win – win folks!

    Personally, I don’t want my club to become part of a cartel stopping others from having a go, but hey, what can you do?

    Only spanner in this particular works is the appointment of David “Gollum” Moyes at OT, our bogey team’s Manager going to the Trafford Buccaneers :(

  • avatar robl

    @ It’s Grim Oop North, all you need now is a decent manager and you’ll be sorted.

  • avatar It's Grim Oop North

    Got no appetite for a new manager thanks very much robl, had enough of that over the last thirty years!

    ScarfAce will do very nicely for me, looking forward to the Cup Final on Saturday:)

    Getting shut of perfectly good managers is pretty dumb in my view, and I agree with the sentiments of Untold re Wenger in this respect :)

  • avatar Adam

    Grim,

    Would you take Wenger, if given the chance?

  • avatar robl

    @ Grim, fair point but I just don’t rate him – I think with the squad you have someone else could get more consistancy from them.

  • avatar It's Grim Oop North

    Adam,
    I would have snapped your hand off for him when the takeover happened, and I wasn’t over the moon to see Hughes sacked, but Mancini is a fresh start, perfectly capable and qualified, he seems a good fit for us – now I’d say no thanks, for the same reasons, don’t want more instability at a time when we’re expanding on all fronts so rapidly. The grass isn’t always greener etc..as they say, or more attractive “coos” in neighbouring fields as Lord Ferg once babbled :)

    Wenger is Arsenal thru and thru, I hope Mancini will build his own dynasty at City in a similar fashion, he’s well on his way :)

    Second place (hopefully), FA Cup winners (hopefully), won’t be a disastrous season by any means, and another year’s experience under the squad’s belt won’t hurt.

    You could argue Wenger has been at Arsenal too long, but as far as I can see he’s working miracles with the budget at his disposal, which is dictacted by the costs of the new stadium and has been since the move – give him an extra £50 million per annum to keep up with City, United and Chelsea, then you’d see silverware again, I’d put money on it.

  • avatar Adam

    I think there will be many ambitious clubs next season, after today’s news.

    Will be a massive test for United fans next season if they don’t get off to a flying start under new management. Which I hope they don’t.

    Anyway, I’m supposed to dislike you lot with a vengeance, but I find myself being nice to you. I think David Platt is important for Mancini and the club.

  • avatar Rufusstan

    Grim, I can see the attraction of a stable manager (obviously), but I’d be careful about getting your hopes up with Mancini in Europe. You probably know his record better than I do, but a guy who couldn’t take Inter beyond the quarters is not a good recommendation (especially as Jose won the thing with basically the same squad).

    At least Wenger showed he had the potential in 06. I also agree with more money we’ll start competing again. If only we could raise our revenues by say £90mil a year somehow…..