Sporting Rules/Regulations Part 4

A response to the question that critically considers the self-regulatory sporting rules and the impact of the same on the UK Domestic Laws, The ECJ jurisprudence and the inpact of the EC White Paper on Sport: written by Football Agents and Sports Lawyers:

2. Administration /Further implications of FFPR

The concerted campaign mounted by UEFA to ensure that all of its member clubs have their respective financial houses in order confirms permanent UEFA regulation and supervision of what was once a great free enterprise bastion.27 Prior to the introduction of the FFPR the European football / economic landscape was as much defined by its paradoxes as it was shaped by a single consistent philosophy. Winning trophies was the single ambition of almost every club at the expense of balancing the books where debt financed tomorrow's ambitions was the standard operating procedure.28

With high profile club administration and club finances being questionable, the declaration made in early 2012 by UEFA's head, Michel Platini has been borne out by the subsequent summer 2012 transfer window activity. Platini asserted that, "We will never go back,"29 to the former days where UEFA adopted a relaxed approach to questions of member club financial solvency. The 2012 summer transfer activity

confirmed decreased expenditure3° with more clubs looking to loan in players. In the previous days it was unsustainable economics that was the norm and not the exception in elite UEFA club environments,31 in reality it was 'jam today and bread tomorrow.'

In many respects, the greatest paradox associated with the FFPR is that it took a global financial crisis to give the Association a grim and foreboding economic reality. Numerous commentators in the early 21St century regarded the restrained approaches adopted by national tax collectors towards debtor clubs as an attitude consistent with the hallowed status of football in European society.32

For clubs who do not meet the 'break even' rule by the commencement of the 2013 is liable to UEFA sanctions that include suspension of club membership.33 It is tentatively concluded that UEFA will seek to enforce its entire FFPR programme. There are two fundamental reasons that support this assertion. The first is inherent UEFA credibility; if one is the biggest sport organisations, continued public credibility will demand enforcement in the name of fairness. The second reason is more subtle, one rooted in human nature as much as it is influenced by the commentaries cited in this section. UEFA must know that some clubs will fail in their compliance efforts; a number of these clubs may disappear from the elite UEFA landscape but new icons will emerge.

The FFPR are biting, for the first time under Abramovich's reign, Chelsea FC have made their first reported profit34 and for the cynics regarding enforcement, the Scottish icon of Glasgow Rangers were allowed to fold and drop out of the SPL.

But the FFPR faces significant criticism35 as the FFPR may be construed as anti­competitive restricting finance and preserving the monopoly and stranglehold by the 'big clubs' on all competitions. For instance, since the advent of the Premiership, if it was not for the financial backers behind Chelsea and Manchester City, there would have only been 3 clubs to have won the premiership.36 These Financial backers have increased competition the likes of which we may never see again under FFPR. Money in the game has intensified competition and wealth has filtered down to other clubs.37 Whilst the FFPR do not prevent wealthy benefactors funding youth or stadium development, such capital injection cannot be used to fund relevant expenses like players' salaries and player acquisition. The 'break even' rule will inhibit long-term competition as the better players can only be afforded by the wealthiest clubs discouraging new benefactors to the game such as Roman Abromovich. Whilst UEFA insist that competition is still possible as clubs can invest in bigger stadia and youth development, the issue is that youth development leads to uncertain returns and new larger stadiums without a successful team to ensure attendances are sufficient to fill it is irrational.38

The FFPR may also be subject to a legal challenge as the Regulations were formed only with consultation with a minority of PL clubs and other national leagues in what Hornsby39 describes as "magic circle" clubs. Without structured dialogue and targeted harmonization with all relevant stakeholders before implementation as expounded by the White Paper,4° it could be argued that the FFPR is discriminatory, resulting in a distinct lack of transparency and openness that could be subject to a legal challenge by clubs (signatories or not) and even players whose salaries may be affected by the Regulations.41

Whilst there may have been financial mis-management or abuse by club owners/directors, this has primarily occurred during the "credit crunch" and it may be argued that many clubs may have survived had this not occurred. The self-regulatory rules could be construed as ill-thought out, a "knee-jerk" reaction to a global downturn. Dramatic company failures have not been reserved to the football industry; commercial enterprises that were once considered 'too big to fail' have required support by the tax payer.42 But the problem is even on a much worrying scale where whole nations such as Greece are bankrupt. Bankrupt nations will fail the FFPR on 'break even" or the ruling Government fail the Directors Test! (see below).

The sceptics will argue that UEFA have missed the opportunity to address the modern game's fundamental financial issues by failing to undertake a balanced and structured consultation with all stakeholders of the game only listening to the 'magic circle' clubs to which the FFPR favour and perhaps fear as they could form a breakaway league beyond their jurisdiction if they are not appeased.43 That FFPR is a clear illustration of what the White Paper seeks to discourage; limited dialogue and opaque self-interested Regulation that harms competition.

27 Lago, U et al 'The Financial Crisis in European Football: An Introduction' (2006) 7 Journal of Sports Economics February 3-12, 5.

28 Findlay, R 'Regulating club financial expenditure to avoid debt' (2010) 8 (2) WSLR 3, 5.

29 UEFA "Here to Stay Club Licensing" [online] <www.uefa.com>accessed 24 September 2012, 1

Ibid,

31 As inspired by reading Billins, A and Hornsby, R 'Should the football creditors preference be ruled offside; or should there be an exception for sport?' (2004) 11(2) SLAP; the 'special status' ascribed by some commentators is also addressed in Keen A, MP "Report: 'English Football and its Governance" (2009) 7 (7) WSLR 6, published in the wake of the Luton Town administration noted below.

32 Watkins, T 'Football insolvency and the 'football creditors' rule' (2010) 8(10) WSLR 14, 16.

33 Hornsby, R "UEFA FFPR Regulations: the grounds for legal challenge" (2011) 9(3) WSLR 3.

34 http://www.bbc.co.uk/news/20270934

35Hornsby "UEFA FFPR Regulations: the grounds for legal challenge" (2011)9(3) WSLR3

36 Manchester United, Blackburn Rovers and Arsenal

37 For instance £50m transfer Fernando Torres from Liverpool to Chelsea, resulting in a £35m transfer from Newcastle to Liverpool for Andy Carol. See Also Horsnby ibid re Newcastle FC example of wealth injection.

38

Burnett & Ors "UFFA's Financial Fair Play Regulations: analysis" (2010)8(12)WSLR14

39 Hornsby "UEFA FFPR Regulations: the grounds for legal challenge" (2011)9(3) WSLR3 4° See Section 5 in particular and see later in this paper.

 40 See Section 5 in particular and see later in this paper.

41 See Hornsby ibid:

42 E.g. 41% of Lloyds Banking Group propped up by the British Tax Payer http://en.wikipedia.org/wiki/Lloyds_Banking_Group

43 Thorp & Leadcramer "Self-regulation of sport: arguments for and against  (2010) 8 (8) WSLR 7.

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An original essay written by Football Agents and Sports Lawyers