Tuesday, 14 October 2014

Financial Fair Play

Financial Fair Play or FFP has been around for a while, although you may not think so, Originally this seemed to me to be a good idea with the basic principle behind it seeming to be to stop clubs spending themselves out of existence in an attempt to secure those all elusive trophies or trying to keep up with the Jones.  To many clubs were or are spending way beyond what they earn.  Not only do they need protecting from themselves, to many are in danger of financial collapse and also clubs spending in this manner is unfair on their competitors who may have a little more control over their spending.  Simply put clubs feel they can spend now, get the success and the income this success brings and then using this new wealth pay off the original debt, this could work, but is risky and obviously not fair on their competitors. 
I don't know what the rules are and I think you would need to be an accountant to start to understand some of the fine print, but basically, I believe that a club is not allowed to make a loss of more than thirty eight million over a couple of years, with lots of exceptions, including money spent on infrastructure and on youth development.  On the face of it a good idea, but is it working?  We have all had a laugh at Manchester City and their pathetic argument that they were in fact making money as they somehow paid themselves many millions to name there own stadium and therefore were making a profit, they were found out but then the sanctions were a fine, surely not a big problem for Manchester City and their owners.  They are also finding ways around the rules by using unofficial feeder clubs to get players on their behalf as we can see with the recent "loan" of Frank Lampard, legal yes, but only just and still unfair against smaller clubs in the league who haven't got cash to throw around.
FFP seems to have little respect in Spain with Barcelona and Real Madrid still throwing around huge amounts of cash at will, despite having massive debts and massive real terms annual losses, they seem to have little or no sanctions thrown at them and be allowed to continue to collect the worlds best, most expensive players.  I question the fairness when smaller less powerful clubs in Eastern Europe do have meaningful sanctions issued against them when the more powerful clubs of Western Europe can carry on as they please.
Recently Liverpool have come under the scrutiny of UEFA's accountants after reporting losses, over the limit for the last couple of years.  I would be surprised and disappointed if we fell outside the rules.  Our owners FSG stated, when they bought the club, that one of the reasons they chose to invest was FFP, to go against this and become one of the teams taking the risk would be very bad financial management, especially after the situation we found ourselves in a few years ago. On top of this it would be unfair, we have criticised other clubs and I don't want to be one of the teams seen to be buying success.  Yes we have spent a lot of money on players again this summer but it must be remembered that we sold as well bringing in huge amounts of money particularly from the sale of Suarez.
Despite been under investigation Liverpool remain confident that they have not broken any rules and I am happy with this, we have significantly increased the income of the club signing deals with partners all over the world and their has been significant invest in the infrastructure so we should be ok.
Clubs including Liverpool do need to think of new ways of working, within the framework of FFP, I think we could do worse than have a look at Chelsea. They appear to have set up a player trading arm of the club that is working almost outside of what Mourinho is trying to achieve with the first team.  They are buying up most of the continents young talent (young players are not considered in the FFP process) keeping them if any become good enough for the first team then all well and good If not they are sold on for a profit, income that is counted towards FFP a win win situation for Chelsea. FFP is a good idea, it needs UEFA to enforce it with all clubs even the powerful big names not just smaller clubs and it needs to be looked at again and loopholes to be closed or clubs will continue to a use the system. Finally the sanctions imposed against any offenders need to be relevant and enough of a threat to prevent further breaches, point deductions or disqualification from competitions rather than fining the richest clubs in the world


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