UEFA Financial Fair Play Scheme - The return of the brown envelope? ⋆ An Old International

UEFA Financial Fair Play Scheme – The return of the brown envelope?

With the UEFA Financial Fair Play Scheme due to be introduced soon, clubs across Europe are getting nervous with regards to their wage balances but taking this on the other hand as an incentive to broker deals to get the singatures of the alleged best players before those regulations come into force. Once the next season is under way, their books have to be balanced, i.e. spending only as much money as they make from all revenue sources. Initially, of course clubs are still allowed to run at a loss of maximum of €30m, with this sum being reduced each season until their books no longer show red figures but at least balanced books. The aim is clear and certainly worthwhile. But there are flaws in this regulation and it appears once more as though European bureaucrats are trying to impose themselves onto each of its member association.

The market creates the prices. If Chelsea think Torres is worth 50m GBP, fair enough. But how will they handle his wages, which are certainly as astronomical as the fee they have paid for him? This applies even more to Manchester City, whose owners can pay any wage they fancy and thus deform the wage structure of the Premier League.

This could lead eventually to tax evasion as the players are getting paid in brown envelopes or through other ways, such as ‘loans’, for which they pay less tax than they would on their salaries. Some players might have contracts with their clubs about their image rights, for which the tax rate again is lower than for salaries.

While the aim is to spread the wealth that is generated through the European competitions fairly among its member federations, it remains questionable if this really is going to be the case. Will UEFA really prevent a debt ladden Man United or Barca from playing in the Champions League without risking the clubs establishing a Superleague outside UEFA? Will the clubs accept this kind of intervention in their own business? Do Bayern München really have financial stability they always claim to have? AC Milan are practically owned by Silvio Berlusconi, does that mean, they won’t be allowed to participate in Europe? The same applies for clubs from Russia and other eastern European countries, where rich oil magnates dictate the fortunes of the clubs. What will be the effects on the TV packages? With lesser known clubs competing, will TV companies be willing to pay the same amount for what could be seen as mediocre football? Is this really a fair proposal in the first place? How will this affect clubs that have just started building a new ground and thus have huge amounts of debt for the foreseeable future? West Ham certainly will forever be grateful to the Premier League for allowing them to use the Olympic Stadium after the London Games next year. Provided they ever reach higher regions of the table, they have a new stadium, generate more income and could thus be in Europe sooner than they think. Certainly the in England highly regarded notion of Fair Play has not been treated well here.

The scheme has been promoted as being as revolutionary as the Bosman ruling of 1995 which allowed players to move freely within Europe once their contracts have run out and led to an explosion in wages and transfer fees. Then English Premier League has considered it as an attack by the French to break their dominance in Europe. But it might backfire on French clubs as well as not certainly are making a loss every season that is in excess of the limits set by the scheme. German commentators reckon with good chances of teams such as Hanover 96 or Mainz 05 to be allowed into Europe because their finances seem to be in order.

No one can tell how the scheme will work, if it works at all. too many questions and issues remain, to make it look like a sound proposition in the financial ruling of European Football. And as such it is doubtful Gabriel Hanot would agree.

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