Financial Fair Play at the bottom of the club game

The introduction of Financial Fair Play (FFP) by UEFA has been widely criticised for the suggestion that UEFA’s aim of prohibiting clubs from running up large losses will prevent teams from outside existing elites from challenging the domination of those at the top of the game in each country. In many of Europe’s major leagues, such as England and Spain, a handful of clubs dominate and this is increasingly the case in smaller UEFA members, where the money from the Champions League proportionately has a far larger impact.

After Michele Platini took over as UEFA president in 2007, he introduced structural changes to the Champions League that made qualifying for the group stages slightly easier for clubs from countries outside the elite echelons of the game, such as Bulgaria, Cyprus, Denmark and Hungary. In these countries, where clubs only rarely progress to the group stages of the Champions League, the prize money from the Champions League not only has a greater impact but is likely, under FFP, to go unregulated with big spending owners still allowed to operate to an unsustainable ‘sugar daddy’ model.

Putting Champions League money into perspective

First, the disparate size of the impact of UEFA prize money from the Champions League needs to be put into perspective. When Chelsea won the Champions League in 2011/12, the English club received prize money from UEFA of €59.9m and another £54.4 million from satellite broadcaster Sky for finishing fourth in the English Premier League. Both sums contributed to Chelsea’s turnover that season of £255.7 million.

In 2009, Debrecen became only the second club from Hungary to qualify for the group stages of the Champions League. Debrecen lost all six group games against Fiorentina, Liverpool and Lyon but were still awarded €9 million in prize money from UEFA. A study by  journalist Mihály Muszbek entitled ‘Sportgazdasági nagyító’ showed that Debrecen’s turnover is just 975 million Hungarian Forints (approximately €3.4 million). The value of television rights is also far lower in countries outside the elite and clubs in the Hungarian Arany Ászok Liga are expected to receive around €500,000 each this season.

As Debrecen made their debut in the Champions League, APOEL were becoming only the second Cypriot side to qualify for the group stages of the competition. In 2008/09, Anorthosis Famagusta were the first and received €7.5 million in prize money from UEFA. In 2009/10, APOEL were awarded the same amount as Debrecen: €9 million. The scale of this reward from UEFA dwarfs revenue at Cypriot clubs, which a 2009 survey by the University of Nicosia showed ranges from €2.8 million down to €744,319. The total turnover at all 14 clubs in the Cypriot top division amounted to just €17.5 million. When APOEL reached the quarter finals of the Champions League in 2011/12, the club received prize money from UEFA of €18.1 million – more than the entire Cypriot league had turned over just a few years earlier.

This impact can be similarly disproportionate in countries where there is absolutely no expectation of clubs ever reaching the group stages. Simply by losing in the first round of the Champions League in 2012/13, clubs were awarded €340,000 by UEFA and by winning through the first qualifying round that figure rose to €480,000. Northern Irish champions Linfield achieved this feat by progressing only via a penalty shoot-out and departed the competition in the next round without scoring a single goal but with €480,000 from UEFA.

In 2012/13, F91 Dudelange became the first club from Luxembourg to win through two rounds of the Champions League. The reward from UEFA was €620,000 and also a place in the Europa League qualifiers. Dudelange’s turnover is around €1.2 million but most clubs in Luxembourg turn over far less. In the first round, F91 Dudelange beat San Marino’s champions Tre Penne, who were making their debut in the competition. Tre Penne lost 11-0 on aggregate but received €340,000 from UEFA. In San Marino, the average club turns over around €85,000. Not surprisingly given such a large influx of cash, Tre Penne again won the Sammarinese league in 2012/13 and qualified for this season’s Champions League and the opportunity to make even more money.

The Champions League – more and more of the same

With so much prize money now available at all levels of the Champions League from UEFA to clubs, the number of new teams entering Europe’s top competitions is dwindling as national winners use these rewards to defend existing hegemonies across Europe. According to a Champions League Diversity Index published by in 2012/13, 11 of the 76 clubs in the Champions League were making their first appearance in the competition since the major structural changes of 1993/94 that produced the competition we see today. In 2013/14, that number shrunk and just nine of 76 clubs in this season’s Champions League were making their debut in the competition.

In larger footballing economies, clubs with rich owners have been able to combat teams enriched with rapidly increasing Champions League rewards (and often disproportionately distributed monies from domestic TV rights) to break into this elite. So have clubs in smaller countries, such as F91 Dudelange, which was created in 1991 through the merger of three existing sides. With investment from owner Flavio Brecca, F91 Dudelange won 10 of the 13 league titles in Luxembourg up to 2012/13. This domination was only broken through significant financial investment by local businessman Gerard Lopez, who paid heavily to bring one of Luxembourg’s greatest footballers Jeff Strasser to Fola Esch as manager and spent heavily on players.

Long live the sugar daddy

Unlike the larger footballing economies in Europe, clubs in Luxembourg and these smaller countries will still be able to operate on the unsustainable ‘sugar daddy’ so widely criticised because FFP only applies to clubs with revenue of €5 million or more. Any clubs that can prove to UEFA that their income and expenses are below €5 million in the two years before qualification are potentially exempt from the break-even clause in FFP. UEFA’s response is that “In practice a club with total relevant expenses of less than €5 million a year is unlikely to have much of an influence on the sustainability of club football as a whole.”

So a club can triple their turnover in one year, but if all this money is booked as income in one financial year, then spent slowly on wages over subsequent years this can be used to create the type of hegemonic elites that are in evidence in so many larger European footballing economies and which are only capable of being broken by unsustainable ‘sugar daddy’ model that FFP is trying to eradicate at the higher level.

UEFA’s priorities however clearly lie with the footballing elite in Europe. The arbitrary creation of this €5 million exemption clause will surely only lead to the creation of a two-speed footballing economy in Europe with smaller clubs on a ‘gravy train’ funded by UEFA and national associations needing to obey their paymasters to keep this train rolling.