With the increasing amount of rich stake holders taking over footballs’ elite clubs there has been a huge increase in transfer fees paid out to land ‘hot property players.’ Roman Abramavich has spent a staggering two billion pounds since his arrival at Chelsea, with Man City owner Mansour bin Zayed Al Nahyan heading the same way since his arrival at the club just two years ago. Clearly this level of investment has transferred to success on the pitch; Chelsea FC has landed three Premiership Trophies and is now Champion of Europe; Man City won the League title in 2011/2012 for the first time since 1967 showing that cash investment does pay off and win trophies.
Player’s contracts at both clubs have followed in the same way with star players such as Man City’s Yaya Toure and Chelsea’s John Terry securing in excess of £200,000 per week on lucrative long term deals. However the business model of football clubs being sustained by sugar daddies is unsustainable and is a luxury afforded by the minority of clubs as can be seen by the increasing number of football club insolvencies in recent years, Portsmouth FC, Rangers FC and Cardiff City to name but a few. The impact of foreign and wealthy benefactors is creating a dangerous disparity between those elite clubs that can afford the best players, pushing the clubs with the tighter purse strings to the bottom of the league and the periphery of the game.
Such cash-strapped clubs have recently been seeking younger and cheaper players and are increasingly looking for value abroad. This has emphasied the importance of youth protection and training compensation to encourage clubs to grow their own players. To address this imbalance of power, The Premier League has devised “The Elite Player Performance Plan” (the ‘EPPP’) in order to assist the smaller football clubs with their youth players and development. The EPPP has been implemented to start in the 2012 / 2013 season and was accepted by fifty of the seventy two Football League Clubs and opposed by the other twenty two clubs.
The key principles of the EPPP are summarised below as published by The Premier League:
• Increase the number and quality of Home Grown Players gaining professional contracts in the clubs and playing first-team football at the highest level;
• Create more time for players to play and be coached;
• Improve coaching provision;
• Implement a system of effective measurement and quality assurance;
• Positively influence strategic investment into the Academy System, demonstrating value for money; and
• Seek to implement significant gains in every aspect of player development.
The EPPP aims to improve youth development by focusing on the following:
• Allowing clubs to have more coaching time with their young players;
• Helping clubs foster links with local schools in order to help young players get the best out of their football education as well as the academic side;
• Allowing clubs that have earned a top category grading to recruit young talent from further afield than is permitted under the current rules; and
• Working with the Football League to review the current system used for determining compensation.
The principal changes from the former academy system includes the abolition of the “90-minute” rule whereby academies were only allowed to sign players aged under 18 if they reside within 90 minutes travel of the training facility. This created a “catchment area” effectively limiting the pool of talent. The EPPP also creates a new four-tier academy system proposing four gradings of academies, with the highest rated academies being able to sign the best players and command the largest fees. Category 1 academies will have high contact time with young players, require a minimum of 18 full-time staff and an operational budget of two and a half million pounds. The academies will be reviewed every two years and re-categorised if necessary, to be determined by an independent audit.
The EPPP further introduces a fixed tariff for transfers of players under the age of eighteen, replacing the current system whereby compensation is determined by an independent tribunal for compensation. The proposed tariff for players aged between nine and eleven years old is fixed at £3,000 per year. Players aged between twelve and sixteen years old are fixed at £12,500 to £40,000 depending on the academy category. Such a scheme is clearly going to be controversial where many football clubs rely on income from cheaper foreign players whose value has increased. However, it is a solution that attempts to readdress the imbalance of power by creating an incentive for clubs to develop home grown players rather than rely on international talent. Further fixed fees are also payable on the player making first team appearances in any senior competition. For example if a player makes 10 senior appearances in the Premier League, then fixed fees of £150,000 are obtainable compared with £25,000 in the Championship, £10,000 in League One and £5,000 in League Two for the same number of appearances. Whether these measures will work are yet to be seen. The success of the EPPP will depend on whether the clubs with deep pockets play ball and focus on homegrown players or whether they continue to buy in talent from the wider international player market.
Other factors that create an imbalance of power for playing contracts on an international scale are the Premier League’s prohibition of third party interest in players. This concept whereby football agents and/or sports management companies and/or investors can own the economic rights of football players often occurs in Africa and South America. It can create a disadvantage for British Clubs that won’t have access to such international players that are available to the rest of Europe. UEFA are currently investigating introducing the same ban adopted by the Premier League. Whether this will impact on the game remains to be seen as whilst the Premier League fined West Ham a record five and a half million pounds for contract irregularities in relation to Carlos Tevez, essentially Tevez was not banned from the team.
UEFA have also acknowledged the need to create a level playing field by the proposed implementation of Financial Fair Play (‘FFP’) which is designed to limit football clubs’ spending on a “fair value” basis. This is assessed by calculating the club’s value and from that value deducing the limit of the club’s spending so that the club operates within its means. Effectively, FFP, if implemented correctly works to prevent such falls from grace as Glasgow Rangers that saw one of the most decorated clubs in Great Britain falling into administration and being placed in the Scottish Non League; one of the most compelling cases of irresponsible financial management.
Clubs that breach the FFP rules are liable for sanctions including fines and from 2014, exclusions from UEFA competitions such as the Champions League. However, such initiative, whilst welcomed by the cash-strapped clubs has been criticised for underestimating the sheer power of the cash-rich clubs to find ways around the rules. Indeed, some view that the less affluent clubs will suffer, many of whom are balance sheet insolvent. What constitutes “fair value” remains subjective and untested, leaving room for the elite clubs to manoeuvre the rules to fit within the parameters of their large budgets by securing lucrative sponsorship deals, increasing the value of the club. Paris Saint-Germain’s one hundred million Euros shirt sponsorship deal with the Qatar National Bank is just one example of how the elite clubs can both abuse and use the FFP to their advantage.
Other ways in which UEFA have tried to create fair play has been via a compensation scheme whereby domestic clubs are compensated for loss of players resulting from international duty. However, again it seems that this will benefit the top flight clubs which will have the funding to afford the best domestic players.
The next two years will be interesting in terms of domestic and international football to see whether FFP and the EPPP will have sufficient influence to readdress the imbalance of power. In a sport where cash is king and the richest team wins, it would be great for the game to be evened out. Success should not be driven by the level of spend as otherwise the competition will become predictable and formulaic. With the emergence of an exclusive super-league funded by the rich, it may be a case of too little too late. However, the repercussions resulting in an era where football clubs were living beyond their means is a certainty and we will no doubt see inevitable future casualties before there is a level playing field.