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Saturday, July 30, 2011

Football, Money & Financial Fairplay : A Match in the Making..

Money, money, money must be funny in a rich man's world. Money, money, money must be sunny in a rich man's world. And these certainly have become the words of the present footballing scenario. Be it the Russian tycoon or the Qatari Sheik or the American businessman , the game is no longer safe in terms of a financial meltdown. The question is can money buy you a trophy? Certainly not. But money can certainly take you sliding down from where a team can only remain in memories.

The most recent team to be bought by a foreign investor who pumps in huge money is not Manchester City but  Malaga. An unknowingly quiet team bought by a Qatari, Sheikh Abdullah, has suddenly stepped up to sign big names like Ruud Van Nistleroy, Toulalan, Mathijsen, promising big wages and projecting an ambitious project. But unlike Sheikh Mansour at Manchester City, Sheik Abdullah has been careful and smart in the spending of his money. However at Manchester City Sheik Mansour has brought about a revolution,a philospohy which certainly involves buying the biggest of stars to build a team, to guide a project which if doesn't turn successful will push the club into grave misery. Is this buying a club and splashing money on new players and their wages so very dangerous? Certainly it is, if the going gets wrong.

The biggest example of the financial mess is none other than the "biggest" league, the English Premier League. The sunnier side of that apparently hopeless picture is that the English top flight made much more money from television and other commercial income than its rivals, €122m on average; the next wealthiest was the German Bundesliga, whose clubs made an average €79m. Yet despite that commercial advantage, the English clubs were hugely more reliant on borrowed money from banks and club owners than the 714 other clubs combined. English clubs contain on their balance sheets an estimated 56% of Europe-wide commercial debt which is a very worrying sign.According to a report across Europe in 2007-08, overall income rose 11%, but "the huge increase" in wages exceeded it, at 18%. In a bumper time for football, 47% of clubs across Europe lost money, with 22% reporting "significant losses" equivalent to more than a fifth of their income. A huge chunk of the money football clubs make is spent on ever-inflating players' wages which is totally absurd.

Now here comes to picture the 'UEFA Financial Fair Play'. Though I was personally against the concept which amounted to violation of personal spending, the meltdown at Portsmouth, which followed the standard Premier League practice of borrowing from an owner and banks to pay high wages for otherwise unaffordable players, seriously shook the credibility of the English league's model bringing out the harsh reality after some of thier beautiful years in the premier league, made me feel that the rule is for the good of the game. There might be pros and cons associated with it. However the overall good this program will bring forth will benefit the club, players and it's fans.

A look at the Financial Fair play suggests that clubs will be required to break even from 2012-13 , spend no more than the money they make, and not borrow, or have a rich owner putting money in, to scoop up losses and overspending. In the words of Uefa's general secretary, Gianni Infantino "The problem is that all clubs try to compete, a few of the biggest can afford it, but the vast majority cannot. They bid for players they cannot afford, then borrow or receive money from owners, but this is not sustainable because only a few can win." The argument that being financially supported by a single owner is not sustainable because it inflates players' wages generally, then if the backer runs out of money, the club is plunged instantly into crisis is a point which definitely is worth pondering and evaluating. The key thing is sustainability and the The idea of preventing what the likes of Dave Whelan [at Wigan], Jack Walker [Blackburn], Steve Gibson [Middlesbrough], Roman Abramovich [Chelsea] and Sheikh Mansour [Manchester City] have done to take their clubs on is not something UEFA will be looking forward to.

Overall, though, the English Premier League is a great deal quieter about this than it would probably have been two or three years ago, when, with revenues booming, the risks of clubs relying on borrowing or owners had not been messily exposed by Portsmouth and West Ham. UEFA has moved impressively, from initial statements of concern by Platini, who talked of clubs borrowing to buy success as "financial doping" to a workable, practical proposal aimed at helping Europe's clubs live within their prodigious means. By opposing that, and arguing that clubs should still be allowed to be bought and pumped up by owners, the Premier League is swimming against a tide of logic.

Allegations that the Financial fair play is to stifle the likes of Manchester City and Chelsea are totally unwarranted. The mess at Portsmouth and West Ham are enough evidence that going round the globe to bridge the gap between the top teams will eventually pull you down. Manchester City's £400million, 10-year sponsorship arrangement with Etihad Airways including stadium naming is to be investigated to see if financial fair play rules have been contravened which will certainly seem dictatorial but over a period of time it will be considered a wise move. However It might be said that if clubs have to live within their income, the rich clubs will surely dominate, but that is a separate argument, for  - how to make the sport more competitive again. At present, the rich clubs dominate anyway; the top four clubs in each league make on average four times the money of every other club in their league. Attempting to bridge that gap the English way, by relying on a "benefactor" to put money in, now requires just two words to point out its flaws: Fratton Park.

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