Aleksander Ceferin talks tough about Financial Fair Play, but is the reality different?
By the esk 26th August 2017
Aleksander Ceferin has been President of UEFA for nearly a year, having convincingly beaten the Dutch Michael van Praag by 44 votes to 13 to become UEFA’s 7th President in September 2016. A Slovenian lawyer, he worked his way up the football administration ladder from club level, to President of the Slovenian FA, to the top of UEFA and also a FIFA Vice President.
Given his humble roots in footballing terms at least, it might be expected that he would favour and recognise the footballing plight of the “have nots” versus the “haves”.
An indication that this might be the case was given in July of this year when he mooted the idea that salary caps at club level might have to be brought in.
“In future, we will have to take into serious consideration the possibility of limiting clubs’ budgets for players’ wages. The wealthiest clubs are only getting richer and the gap between them and the rest is getting bigger”
He continued “Those who have the most money are the strongest and have the best connections in the media. If we succeed it will be a historic change”
In practice though, it’s unlikely ever to happen. Why would the largest, most successful clubs give up their (in their opinion) hard earned advantage over less successful clubs?
The precedent of a hard wage cap exists of course in the NFL however, not only do successful clubs not behave like turkeys voting for Christmas, the UEFA regulations do not carry jurisdiction in domestic tournaments, and ultimately it is likely to be impossible to defend if challenged in the European Court of Justice.
Thus, it was interesting to read his comments made to journalists after the UEFA competition draws in Monaco this week. On the face of it, it sounds like he’s getting tough with potential breaches of FFP regulations, but is it just further grandstanding?
“I am very serious, you will see. We will try to help. We will try to advise them [on legal points related to FFP]. But if they don’t comply we will punish. And we will punish severely.”
“I am not talking about PSG. I am talking about every club in Europe. We are monitoring the situation; the transfer window is not closed yet. Trust me, we’re working on it,”
Even once the window closes, then nothing can be done to those clubs suspected of breaking FFP regulations. The reason being is that FFP is retrospective, it looks backwards over defined periods (3 years in the case of accumulated losses greater than €30m). In the case of clubs potentially breaching FFP through losses arising from transfer activities this summer, the earliest an investigation could start would be the summer of 2018 with any potential penalties only applying in 2018/19 at the earliest.
It’s questionable as to which of the largest clubs will have been considered to break the rules.
Take PSG for example – it seems apparent to all that the acquisition of Neymar’s registration for £200 million and an additional £30 million in wages per annum must create a breach of FFP. But closer examination suggests it might not.
In accounting terms, Neymar is costing PSG £70 million a year (amortisation plus wages). How do PSG recover their costs thus making them compliant?
It can be achieved in a number of ways. Firstly, there are player trading profits. There’s nothing to stop PSG offloading other players to create player trading profits and reduce their overall wage bill.
Secondly there’s increased commercial income from sponsorship. It has been suggested that the Qatar Tourist Authority pay a significant element of the £70 million annual cost, throughout his 5-year contract. Assuming they could demonstrate the cost representing fair value, then they are home and dry.
Thirdly there is no doubt that the increased profile that Neymar brings to PSG lifts the value of other commercial contracts associated with the club. As I’ve argued before, commercial contract values relate directly to the global presence of the club and Neymar can only add to that on PSG’s behalf.
Back to Ceferin “We have to follow the rules,” he added. “Otherwise, it’s better if we leave. Just close the door and go home if we don’t respect our own regulations. I said it yesterday. We can’t be a tiger without teeth.”
It’s OK to talk tough about those that breach the rules, but the first question is proving the breach. I’d argue that the very largest clubs in today’s rarefied climate will not break the rules thus the threat of punitive punishment is irrelevant.
I’d argue it is the rules that need strengthening, not the punishments to those that break rules that can relatively easily be overcome. Remember his comments earlier about the wealthiest being the strongest? The wealthiest clubs have the resources and commercial ties to overcome the regulations. It is this that needs addressing in my opinion.
In further comments, Ceferin talked about an issue which in domestic terms has certainly dogged the Premier League, as well as other European leagues and of course, European competitions. This is the issue of the bigger clubs financially continuing to grow at a faster rate than their smaller competitors, thus making the gap between them greater and greater each year.
By his own admission, he concedes he and UEFA can do nothing to bridge the gap, the best they can hope for is a slowing of the growth in the gap.
“I think everybody knows we have to do something, we have to react. Even the big [clubs] agree. We will not [eliminate] the gap. But let’s stop if from growing. Or, at least, stop it growing so quickly.”
I think this is a huge issue, and if not addressed domestically as well as across Europe it will further reduce competitiveness, thereby reducing the appeal of the various football competitions, reducing television audiences with ultimately the inevitable decline in broadcasting rights payments and sponsorship payments.
If the larger clubs continue to allow themselves to grow at a faster rate than their competitors, ultimately, they will be responsible for the bubble bursting. Football can only continue to attract massive revenues if it remains vibrant, interesting and unpredictable in its sporting outcome.
Perhaps UEFA are aware of this issue? Then if so why did the change in distribution of prize monies occur last year (prior to Ceferin’s appointment to be fair) ensuring that the most successful clubs on a historical basis receive a greater proportion of the variable income available to participants of the Champions League and Europa League?
In my opinion, perhaps we are reaching the days similar to the last days of Rome. We’re at a point where the game has never been richer (certainly in Europe, and particularly England). The game therefore should be in the finest state possible. However, the greed and desire of those wealthiest, strongest and most influential might be so great that they destroy the appetite for the game, thereby reducing future revenues and leading to the bubble bursting.
Those clubs at the top of the game must consider their responsibility to the game in general.
The administrators like Ceferin, have to match their tougher words with more active, more responsive control of the game – otherwise not only will Ceferin be going home early (see quote above) in football terms we all will be.