FFP- What Next?

The recent court ruling has from the Court of Arbitration for Sport (CAS) has cleared Manchester City of any wrongdoing on the breaches they were deemed to have failed previously by UEFA and it’s appeals committee. While there has been a fine (albeit a substantially reduced fine) for with holding information (a charge which Manchester City accepted liability for) the main substance of the accusation was overturned by CAS. The ramifications, even in a short space of time that have passed have been eye catching, with Jose Mourinho now wanting clarity, Jurgen Klopp expressing concern (and questions abounding about the impact it has on Liverpool’s recruitment model). The normally quite conservative BBC head of sport journalist describing Financial Fair Play (FFP) as “lying in tatters” leaving many in football to “what kind of deterrent it sets” and ultimately how “difficult it is for UEFA to impose it’s rules”. This is a significant and striking moment in recent football history. There is no easy or short summary to such situation though overall for both football and Manchester City the verdict should be welcomed as an important move away from a reply flawed structure.

The first point that should be made on any discussion around FFP is an acknowledgement of the social and material base for some legislation. Football in an inherently unequal game, and ultimately sporting competition benefits from the it’s game being as equal ergo fair as possible. While I am personally on the fence on the need for legislation in that process having both an instinctive distrust for free markets but also a weariness about bodies that exist as legislature in their own desire to enshrine egality into their thought processes. However, from quite early it was hard to avoid the conclusion that the debate around FFP shouldn’t just be reduced to a pro v anti position on legislation. The question ought to be really be framed as whether bad legislation has harmed the game more than no legislation.

What was interesting regarding FFP was early into the discussion on FFP it was proposed they could either go down a wage cap route, or develop a bespoke set of rules for football. To me this symbolised an initial key question on the debate, and was an initial but important first mistake when UEFA elected to move away from the model of a wage cap. Where rules exist over spending, in headline American sports, in Rugby League and Union in this country, to an extent previously in football with the maximum wage level- they were centred around the concept of a wage cap. While no such system is perfect, and there is certainly fraying around the edges (see the Saracens debacle in rugby) as a core system it works in helping sustainability and cultivating a more equal playing field. To my knowledge, I am unaware of any sports that operate a set of regulations that look anything remotely resembling what football now has. The level of complexity, when compared to a wage cap is astounding, and as UEFA are finding with greater complexity ultimately comes greater loopholes to be found. There is no consistency in complaining (as some have) about Manchester City finding loopholes in the system but trying to defend the rules themselves when one is a concrete end point of the complexity of the other.

While for many organisations, the fear of doing something that seems wholly without precedent, either historically or in comparable sports in your own country (or equivalent global sports based in America) would appear as a major red flag. The obvious question would be if what we are building is so good, why is nobody else doing it? In unique examples you create something that is revolutionary for the wider sporting marketplace, but the majority of times if you do something without any precedent it is normally because it is a bad idea. Given it’s been operational for 10 years, and I cannot think of a single sport that has shown any interest in emulating the approach tailored by UEFA, it is very clear where it fits on the above continuum. To me though, the mixture of arrogance and ineptitude as displayed by footballs governing body is an important axis to approach to understanding how the flawed legislation came to pass.

The common belief is that the rules were devised with a sole interest in protecting the established clubs under pressure from them. I am more a believer that was a consequence of the rules. Undoubtedly some of the pressure levied upon them by the G14 clubs had some role, but at a cultural level the desire to create something new and innovative rather than be seen to copy other sports I believe was a key factor. To follow other sports would be to acknowledge football had perhaps got it wrong in not regulating earlier. At a more concrete level, UEFA and football governance in general is a big bureaucracy that needs things to do to justify it’s existence, and going down a complex rabbit hole thinking they were creating sporting nirvana would likely justify the existence of multiple people within the organisation. Sometimes things that emerge are as simple as that, people within organisations taking choices that they know can justify their salaries and employment for a prolonged period.

I always had concerns when it first came in. It was not radical enough in key areas such protecting youth development, and in all honesty it reminded me of the old adage of a camel being a horse designed by committee. It was hard to see what one purpose or point it had, and aspects of it seemed to contravene the central principles of european socio-legal thought. They seemed to have taken quite a simple problem (spiralling inequality and wages/costs) and developed a bulky and untargeted set of rules that did very little to combat these twin evils. Some people nailed their colours to the FFP mast which I find strange to this day, as unless you were directly involved, it’s very clear what a mess the rules are. By all means take a position that legislation is important, but that seems a world away from defending the particular interpretation we were given by UEFA.

The point about not fitting into the legal/economic framework that govern our society is also a critical one. The bizarre justification appeared to be that sporting rules could in some way trump legal principles if clubs signed up to them. This has no basis in even a cursory understanding of legalism. Of course private members clubs (which both the PL and UEFA are) are able to set up their own rules, but if they contravene the legal law they will crumble very quickly when challenged.

One of the big areas where this became apparent with FFP was around shareholder investment, which they attempted to prohibit but also make a core pillar of what was wrong in football. Aside from the philosophical point of legitimately asking “why” a shareholder investing in his or her business is such a crime there is a very concrete question of how they intended to square this with the wider societal understanding of the question. The economic model we operate to depends centrally on shareholder investment in ensuring the wheels of business turn- be it share issues or the stock market at a macro level to business owners putting private money into companies to help them in times of difficulty to help them through at a more micro level. Money is invested into companies by shareholders & investors every minute of every day and fulfils one of the core facets of the economic strategy we exist in. Understandably the law then enshrines peoples right to do this. Trying to make this behaviour deviant and criminogenic by UEFA to me seemed an enormous strategic mistake.

Aside from the legal difficulties it has (and will continue to) encounter when going against one of the guiding principles of our society- there is also an ethical point here. Manchester City’s shareholders have not just put enormous money into their football club, but indirectly then into the football community itself. They have also made substantial investments into the city of Manchester in terms of houses and infrastructure to help local people. It would appear very odd that this behaviour is the behaviour that is targeted, yet football clubs who’s owners saddle the club with debt, take money out of the club (and football), run up enormous debts and then effectively withdraw are largely given a free pass by regulators. While there is a human element to these problems with individual people making bad decisions, in essence it’s a deep structural flaw in the rules that place UEFA in an awful bind whereby they are seemingly prosecuting the wrong people.

The inevitable question that flows from this is one of significance. While there is sympathy to be had with the viewpoint that there will not be an immediate and substantial change- I do think think the medium term significance of this decision should not be underplayed, and it represents the most important decision since Bosman. It is important to note, it took some time-years in fact for the full implications of what Bosman meant for football to begin to understand the ramifications of the decision. You rarely get a golden bullet moment when changes occur, there is always a gradualism. It’s also worth noting the changes that followed bosman (notably the huge weakening of leagues in Scandanavia/Holland) was not the intention of Bosman, but rather an unintended consequence. What he set out to do, and what resulted from it remain wholly different things. The same is true of most cases, and in this case it is fully understandable that Manchester City may not want to wholly bring down FFP, but where legalism becomes involved you do start to venture into the terrain of unintended consequences.

UEFA appear to be trying to put a brave face through this. I have seen little from them by way of statement at all, never mind an understanding of why it got this so wrong. In truth I’ve seen little to suggest they even understand what the legislation is not only ethically unjustifiable but legally unworkable. Given the amount of emotional investment they had placed in this, and their fortunate position of being able to operate in something of an enriched financial bubble due to footballs enduring popularity you do sense that road of reflection that needs to be walked could well be a long one. In situations like this, for organisations ike UEFA they tend to find it very hard to listen to people giving them honest and sincere advice, and will undoubtedly try to craft a narrative of misplaced victimhood to avoid having to face some damming questions that are stacking up.

Any attempt to slightly alter FFP will be doomed to further failure and embarrassment for UEFA. As indicated above, they are structurally at odds with the core legal principles of European countries. Likewise attempts to become more stringent will only bring more problems. If you are doing something inherently flawed, a voluntaristic response of just doing it more, for longer, with more purpose just leads you further down the road in the wrong direction. If they wish to save FFP (which in truth is a whole new debate) in the medium term there needs to be a fundamental change of direction taken.

For a starting point, aspects of FFP need to be completely removed. On top of a move away from penalising shareholder investment (ideally welcoming it) should be cancelling any notion of a “market test” rules that seem to unevenly govern clubs commercial performance. Given their overall level of performance in football, there is precious little to suggest that a body that exists to govern football is in any way qualified to dictate what a market value of what a club is, especially placing itself as a God like authority over the market itself. If the market is willing to pay for a sponsorship of a specific value, that is about as good as you are going to get in terms of measuring where the market is at. There is a supreme arrogance in UEFA that they believe they know better than a companies board or shareholder(s) the value of a specific sponsorship to their business. Again any such behaviour will simply not stand up in any impartial legal court. If those two areas are removed from FFP there is the possibility that some variant on it may be able to move forward.

There will be a myriad of ideas as to what needs to be governed moving forward, though I feel keeping things as simple and workable as possible. Focus on wage spend as a club and have a maximum upper level. Pitch it around the mean level for the highest paid league, perhaps with an initial 10% increase. It would allow clubs a maximum of £180m they can spend which you give them a year to acclimate to. Likewise, punishing debt (particularly debt owed to those outside of business shareholders) would be another prudent measures and help ensure clubs remain sustainable and produce a more competitive and therein desirable product.

For Everton, who have an owner who has shown not only a willingness to invest in the football club but also the city of Liverpool itself and positively contribute to the wellbeing of it’s denizens, a removal of the rules prohibiting and restricting such behaviours would be welcomed. Again though, it is not a magic bullet solution, and the club would need to ensure it spent what money it had available sensibly. For football more broadly though, we can only hope that that Manchester City’s inevitable victory in the impartial legal courts have begun a process whereby football can put behind it what has been a rather sorry experiment in how not to govern it’s game.

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