The news this week that UEFA are investigating the finances of fewer than 20 clubs in accordance with their Financial Fair Play (FFP) regulations isn’t surprising. Nor is it particularly a shock that the two biggest names on this list are Manchester City and Paris St-Germain.
The FFP rules were brought in to force clubs to live within their means and to discourage clubs from spending well beyond what they can afford in pursuit of success. It also means that, in theory at least, rich benefactors who take over a club cannot pour money ceaselessly into the club and run it at a huge loss, in an attempt to win trophies.
That should set alarm bells ringing if you are a Manchester City or Paris St. Germain fan.
From 2011 to 2013, City have made losses of £149m. The average wage of a player in their squad is over £100,000 per week and they have one of the largest squads in the Premier League. In 2012/13 City’s annual turnover was €316m, of that €46.2m came from matchday revenue, €103.1m from TV revenue and most surprisingly €166.9m from commercial revenue.
It is this final figure which is a bone of contention for many. A huge amount of that money comes from City’s $642.2m 10-year deal with Etihad as the club sponsor. This was almost a third more than the previous biggest sponsorship deal, Manchester United’s 13-year deal for $486m with Nike.
In annual terms, this means that the previous biggest deal saw Manchester United earn $37.38m a season from their Nike contract. City’s deal with Etihad saw them earn $64.22m a season. Almost $27m more per season.
The problem with this is what have City achieved in order to attract such an investment? They have won the Premier League in 2012 and the FA Cup, but they have performed poorly in Europe and are yet to reach the quarter final stages of the Champions League.
If clubs who have regularly performed well in the Champions League and domestically, such as Bayern Munich, Barcelona, Real Madrid, Manchester United and Chelsea cannot attract anywhere near this level of investment, how can Manchester City?
Is it the economic climate? Certainly at the highest level, football is attracting even greater investment, so their is likely to be an increase in commercial revenue. So it is fair to assume that as City gain an increasing presence in Europe, so their commercial arm will see greater turnover.
However, the main sticking point it this: UEFA imposed strict clauses in their FFP terms which stated that clubs are not allowed to artificially inflate their worth by arranging commercial deals with companies that they already have existing links with.
Unfortunately for City, Etihad, the $642.2m sponsors of the club, are a company owned by the Abu Dhabi government and have long been associated with Sheikh Mansour, a member of the Abu Dhabi royal family who just happens to be the owner of Manchester City.
The key issue is not so much that Etihad sponsored City, but that they paid a fair market price for doing so and that the figure wasn’t artificially inflated to help City’s financial position look markedly better. On that score, and given the evidence we’ve already mentioned pertaining to other top clubs in Europe, that does seem to be a legitimate concern.
The fact of the matter is, City’s success in recent times in no way explains why the club have managed to attract an investment which is almost a third better than even the very best European clubs, regular winners of the Champions League, can attract in the same market.
In effect, this would be like the top clubs in the Premier League earning deals of between £75m and £100m from sponsorship and then for mid-table club to announce they’ve agreed a sponsorship deal worth £200m – with a company that has close ties to the club’s owner who is bankrolling their success.
Most of the focus on the Financial Fair Play rules have been centred on whether top clubs will be able to adhere to them, yet in actual fact, for the good of football in Europe, this is a much bigger test of UEFA’s ability to govern the game at this level effectively.
The governing body has generally adopted a conciliatory tone when dealing with clubs with these issues, seeking to help clubs meet the levels that they have set. However, with their timescale now running down and two big name clubs potentially falling foul of the rules, will UEFA show their teeth and impose punishments that do have ramifications, or will they adopt an appeasement policy and tap the wrists of the rich elite by fining them a token amount?
There are clear issues with each decision. If UEFA do take a harsher view and impose transfer sanctions on clubs like City and PSG, or even ban them from European Competition, then you can bet that the highly powered legal teams of both clubs will seek to turn over the decision in a lengthy and potentially costly (and damaging) legal battle.
On the other hand, if UEFA do not adopt a severe enough policy, then it makes a mockery of the financial fair play system and could lead to other clubs banding together to insist that tougher sanctions are imposed. Already, there has been talk of clubs like Arsenal, Liverpool and Chelsea lobbying UEFA to impose stricter sanctions if City are guilty of breaching the rules yet do not receive a stringent enough punishment.
This is why UEFA have to get this decision right. If they find Manchester City and/or Paris St-Germain guilty of breaking the terms of the financial fair play system, then the punishment has to appease the clubs who have abided by it, yet it must also be lenient enough not to incur the wrath of two of the wealthiest clubs in Europe.
The problem for UEFA is that those two scenarios, share no common ground.
This is why I feel both clubs will likely be exonerated; this outcome avoids UEFA having to make a decision. Yet if they take this line, then I believe that it will make a mockery of the financial fair play rules, much to the detriment of the game across Europe, particularly at a domestic level.
This decision could well be the historic moment whether we see UEFA chief Michel Platini as the future president of FIFA and the saviour of football, or as the man who effectively sounded the death knell on competitive domestic football, by allowing the super-rich to effectively run the game as they see fit.
UEFA don’t face an easy choice, but in my view, there is a right course of action to take and that is to punish the clubs who have bent the rules to suit their means.
The question is, do UEFA have the bottle to fight that battle? Based on previous decisions from the European Football governing body, I am extremely doubtful they do.