By Tony Attwood
When the concept of Financial Fair Play was laid out it was self-evident that the issue of finance in football had a central core (self-sustainability) and two issues – debt and loss making.
Uefa chose to look at loss making first, because it was the more insidious of the two issues standing in the way of sustainability: clubs from the earliest days of the Football League had a habit of spending more than they earned up to the last minute, and then going bust.
The rescue, when it came, as it did with Woolwich Arsenal, came in the shape of a benefactor. Arsenal first had George Lawrence and then George Leavey but after Lawrence died, and Leavey ultimately decided he couldn’t go on funding Woolwich Arsenal, the club sank until Henry Norris took over in 1910. Although his reputation has come remorselessly under attack since then by both supporters or rival clubs and by those who subsequently took over Arsenal and re-wrote its history, it is only in the last ten years that it has become apparent that the stories told about him have by and large been manufactured by these rivals.
So with a long history of league clubs failing through never having proper financial models, or benefactors who die or run out of money (or get deposed in revolutions) it was always reasonable for Uefa to start there, but also always inevitable that it would ultimately turn to have a look at sheer indebtedness. And this is where it is now starting to look.
Of course we have known from the start that clubs that have benefactors who have given donations argue that they are not the problem. They say that it is clubs that live with huge debts, but who survive – for now – because of their huge incomes from gate receipts, player trading, TV, and in two very particular cases, worldwide marketing, who are the problem.
But the truth is both models add huge fragility to what is always a fragile business being based, as it is, by long term success and the whim of TV companies, sponsors and supporters.
Man City in particular have done some finger pointing as when the chairman Khaldoon al-Mubarak said, “We have a sustainable project today, in Manchester and across the board in the City Football Group. We have zero debt. We don’t pay a penny to service any debt. For me, that is a sustainable model.”
And one might answer, sustainable unless the benefactor changes his mind, or there is a revolution, or an invasion of your home territory by Islamic State. .
Anyway the general secretary of Uefa, Gianni Infantino, has opened the gates to part two of FFP – accumulated debt – and said it is time to take a look.
Now one can argue that debt is an issue that is under control if one looks at overall figures. Infantino pointed out that losses of clubs within Uefa’s sphere of influence had been reduced from €1.7bn in 2011 to €800m in 2013. But the spectre of Man U and Real Mad as alternative models to Chelsea, PSG, Monaco and Man C is worrying.
Man U, as we pointed out from the very first Untold article on finance in football, has been getting away with crippling debts because of its worldwide appeal. Real Mad has that but also is engaged in a land deal with the local authority which is under investigation by EU commissioners. If the EU rules against them, they are in trouble and that is besides the investigation into the role of the banks in Real Mad gets going. (Incidentally Barcelona have moved from indebtedness into the world of the Qatari sponsorship, but has taken in trading in children en route, and has other problems now that it is facing).
Man U have a debt of £350m, which would destroy the club if it ever suffered any collapse in its fortunes, such as that which happened in the early 1970s when it was relegated.
Although I think all moves in this direction of expanding FFP are to be welcome, it does appear that Man City have been very successful in their personal lobbying of Uefa to get rules changed for their benefit. There has for example been a PR campaign waged constantly since Man C got into the Champions League, to change the system by which clubs – particularly Arsenal, Real Mad and Barcelona are seeded.
This now looks to have been successful, and it is always particularly worrying where a campaign by one club should be able to change rules that affect everyone in a competition.
In this case Arsenal, Real Mad and Barcelona have been rewarded for their long term ability to get into the Champions League year after year, by being seeded in the top group in the Champions League draw each year. Now, after constant pressure from the Man C board and most recently Manuel Pellegrini, the system is being changed so that the top seed in each group in the Champions League group stages will be the winner from the previous season, and the league winners from the seven top leagues currently considered to be Spain, England, Germany, Portugal, Italy, Russia and France.
Long term success will no longer count.
However while that change comes into effect quickly, the change in terms of FFP Part II will take several years to establish, and is likely to be phased in slowly, just like Part I. But in the end, with luck, they will be there.
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