By Tony Attwood
In February 2015 Daniel Striani the man who helped run the Bosman challenge to football regulations in Europe, got together with Man City and PSG to promote his latest legal escapade heard in court.
The case was run in Belgium and was centred on the notion that the requirement of FFP that clubs head towards breaking even, was in breach of article 101.2 of the EU Treaty. This article prohibits cartels and other agreements that could disrupt free competition and, therefore, have an impact on consumer protection.
The European Commission (which really decides such matters) had already rejected examining the complaint, on the grounds that it had approved FFP on the grounds that competitive professional sport is different from your everyday capitalism.
A joint statement was made by the Uefa President and the EU commissioner for competition, emphasising the consistency between the rules and objectives of financial fair play and the policy aims of the EU commission in the field of state aid.
But some people never give up, and so the matter was heard by a court Brussels on 26 and 27 February 2015, Belgium being Striani’s homeland.
That court referred the case to the European Court of Justice and imposed an interim measure aimed at stopping Uefa from introducing phase two of the rules to cut the deficit clubs are permitted from €45m to €30m this season. So no attempt by the Belgium court to overthrow FFP, but simply an interim move to stop the reduction in the level of losses.
However, Uefa immediately appealed, and pointed out that under judicial rules its appeal “automatically suspends the ruling of the lower court” and that this “means that Uefa can proceed with the next phase of implementation of FFP.” And that’s where we are at the moment. With the EC having said it is not interested it is hard to see quite where the ECJ goes with this.
As Uefa said, “Uefa remains fully confident that FFP is entirely in line with EU law, and that the European Court will in due course simply confirm this to be the case.” As indeed it has done before.
But there is a continuing onslaught, particularly by Man City and its fans, to try and get FFP overthrown so that Man City and other clubs sponsored by unimaginable wealth can do pretty much what they like.
It is a story that has been pretty much ignored by the papers as a sequence of events, with them instead giving a little space to each individual part of the process with little or no context. This is a growing tendency in reporting – akin perhaps to the issue of focussing on one player in a team or one result in a season, rather than the overall effect. “I don’t think our readers will be interested,” is the view.
So of late the media has moved and has been running another story, to the effect that Manchester City have had their FFP restrictions on transfer spending lifted. A sub text usually says that the restriction on player numbers in Champions League games has also been lifted. But this, like the belief that FFP has been defeated in the courts, is only true “up to a point”.
Matters FFP were made even more confusing when Uefa itself announced earlier this year that it was changing FFP rules and many of us feared that, as their propaganda says, Man City had won the fight against FFP and Uefa were giving up under the legal pressure.
But in fact what Uefa has done is modified the rules slightly for new owners taking on clubs – there is no benefit for the likes of PSG and Man City where the ownership deal has long since been done.
Man City have always been the most contentious of the clubs caught up in FFP, because when Uefa found them guilty of breaking the rules, as they so flagrantly and obviously were, the club broke ranks with all the other guilty parties and for about a week refused even to communicate with Uefa.
Eventually of course they were forced into line, had to use only 21 players in the Champs League and had their spending on new signings capped, with their wage bill restricted to the same as the previous season. And they had a fine to pay.
Now they have been removed from the restrictions, along with PSG, but judging by the way that some papers have written about it, one might once again imagine that they have single handedly overturned the whole of FFP. But no, they just have to obey the rules this time – with the added knowledge that if they break them again, next time the punishment will be a lot harsher.
So, with no time scale established for Uefa’s appeal against the Belgian court ruling, and no move by the EC to look again at the issues it has already given its approval to, the updated FFP rules are in place and are running. If Man City do read the papers rather than the legal judgements, and think they can spend what they like, they will be hauled up before Uefa just as they were last year.
In fact under the new rules clubs can spend up to €5 million more than they earn this season as a general rule. Certain issues (most famously the building of a new ground – which don’t apply to Man C since the state gave them the ground at a peppercorn rent) are excluded and owners can put in a donation to keep the club going.
The limits on investment are now reduced to €30m for assessment periods 2015/16, 2016/17 and 2017/18.
In order to promote investment in training facilities, youth development and women’s football (from 2015), all such costs are also excluded from the break-even calculation.
If a club is not in line with the regulations, it will be Uefa’s Club Financial Control Body (not the courts and not the EC) that decides on measures and sanctions.
Non-compliance with the regulations does not mean that a club will be excluded automatically, but depending on the circumstances of the case they could be warned, reprimanded, fined, have points removed, have money from Uefa competitions withheld, be prohibited from signing new players, have player number restrictions or financial restrictions imposed, be disqualified or have a previously won title withdrawn.
In effect Uefa tends more towards discussing with clubs a way route forward rather than a heavy handed approach.
So the issue is still – how much money can the owner pump into the club? The rules on sponsorship deals with a company to which the owner is related have been tightened and sponsorship will be considered against Uefa’s “fair value” estimate.
In short if a related company pays over the odds, then the sum above the “fair value” is taken out of the calculations of allowable investment.
What’s more, future investors looking to conclude a voluntary agreement with the Club Financial Control Body that handles such matters. will be expected to commit funds in advance.
And there are some teeth in all these regulations: six clubs have been denied access to the UEFA competitions because they have not paid wages to players or fees to other clubs for transfers and one club has been excluded from UEFA competitions due to a failure to comply with break-even requirements.
Of course in objection some people will always argue that it is not fair that the bigger clubs like Arsenal and Man U, who earn their profits legitimately, can stay big and are trying to make little clubs stay small.
But as Uefa says in its explanations of the regulations, “The aim of financial fair play is not to make all clubs equal in size and wealth, but to encourage clubs to build for success rather than continually seeking a ‘quick fix’. Football clubs need an improved environment where investing in the future is better rewarded so that more clubs can be credible long-term investment prospects.
“By favouring investments in youth and stadium infrastructure and by setting the acceptable deficits in absolute million € terms and not relative percentage terms, the break-even assessment has been structured to be less restrictive to smaller and medium-sized clubs. In time, more smaller and medium-sized clubs will have potential to grow.”
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Anniversary of the Day
7 July 2010: Laurent Koscielny completed his move to Arsenal from Lorient for whom he had played 35 games for £8.45 million. Arsene Wenger stated in 2015 that he felt this was his best value transfer of the past ten years.
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