The new FFP rules are with us but the PL is still in financial crisis

The new Financial Fair Play regulations are now with us: overdue payments will be checked four times a year, clubs can lose €60m over three years (which is double the old amount, which is perhaps not a very progressive move, and which explains why the issue isn’t being talked about much) and then can lose another €10m after that if they are in “good financial health”.  Hmmm – not much of a salvation from chaos then.

For by and large the new rules mean clubs can lose even more than before, without being penalized in any way.

Breaking the rules could mean penalties, such as fine, non-registration of players, points reductions and cutting the squad size down from 25 – but note it is only “could mean”. 

Interestingly there is also a mention of putting more energy into spotting the old trick that Manchester City are said to have made a specialty – which is reducing the cost of a transfer as revealed publically, while boosting the amount of money that is paid from supposed sponsors (we’re back in the land of the official Manchester City tractor sponsor).

The possibility of such transactions can be seen when one source that is often used to cite historic transfer figures, such as Transfermarkt has transfer fees recorded that differ widely from those published in other outlets such as the Manchester Evening News. 

That story is here but in short, we can think of it this way: in the allegations that have been made club A sells player B to club C for £100m.   However, the contract says that the sale price is only £50m.   Then in separate contracts Club A buys a load of fertiliser and agricultural machinery from Business Z at double its market price, and half of that money finds its way back to Club C.

So club C buys from Club A at £100m but on the books it only looks like £50m.  And to be clear there are lots of other diversions and re-routing of money often with Panama and other countries involved, each taking a cut for washing the money.  Can Uefa track fertiliser sales?  Can it investigate Panamanian finances? Certainly not.  Meanwhile local newspapers report the club’s version of events rather than those of outside analysts, so supporters have a version of reality they like.  Which is not to say who is right and who is wrong, rather it explains why there are two stories out there. 

The problem is enhanced if some of these financial deals go through countries that are not known for having rigorous checks undertaken by an individual financial authority which operates separately from the government and senior government officials. 

Now I must admit Revenue and Customs in the UK is hardly my all-time favourite government institution and I have had three long and bruising runs-in with them (which fortunately for me my company won each time, hence I am still here writing this), but they can be challenged and investigated and forced to provide the data on which their conclusions are drawn.  That, in my view, may not be the case for the Federal Tax Authority of the United Arab Emirates, although I stress I am saying “may not” and that I have no evidence that can be produced to prove wrongdoing or financial manipulation.

Of course, none of this will help smaller clubs catch up with bigger clubs, but it could hamstring even further big clubs like Real Madrid and Barcelona which have been spending money they don’t have and then accounting for it in terms of earnings from future years.

But there is a good reason to overhaul the whole financial structure of football, in that it is estimated in several quarters that “European football lost €7bn in revenues in 2020 and 2021. Some €4.4bn of revenue was lost from gate receipts, €1.7bn in commercial and sponsorship income and just under €1bn from lost and renegotiated TV deals.”   What makes this a particularly big problem is that as this money was lost to football, player wages went up, and transfer costs went up.  

So there is a big problem as the money pouring into football is declining and clubs are putting up the price of their players who are for sale, in order to cover this.   

And here’s the main point: the Saudi money has arrived just at the time when the clubs need it most – which is worrying everyone, because that could mean clubs start to become dependent on Saudi transfer cash, just as Newcastle are, and just as Manchester City have been with the money Sheikh Mansour can pass their way.

If the money from Saudi Arabia continues to arrive and bail out football then effectively Saudi Arabia will own English football without owning any more clubs.  What is needed is for the PL clubs to be stopped from spending money on players that they don’t have.  Until now that cash has allowed one club to bail out another, but eventually such a system must fail – assuming of course the new FFP system is made to work.

And that is when Saudi Arabia like the UAE before it, moves in and takes over.