Manchester City are to be found guilty under financial fair play rules this week and face either a heavy fine or a transfer embargo. Much depends on how sponsorship of the club by Etihad is treated and whether it is regarded as a related party transaction.
Manchester City are to be found guilty under financial fair play rules this week and face either a heavy fine or a transfer embargo. Much depends on how sponsorship of the club by Etihad is treated and whether it is regarded as a related party transaction.
I have spent some time recently talking to sports lawyers and reading their papers on financial fair play and this has confirmed my view that the rules are open to legal challenge which is a course City may wish to take if any sanction is too severe. It would also be possible for a player to bring an action as their wages and transfers are affected. This is, of course, what happened with the Bosman judgment that fundamentally transformed the transfer system.
FFP rules are concerned with the long-term financial stability of club football, but it is doubtfuil whether this can be considered a legitimate objectve under EU law, not because it has no value, but because it does not justify restrictions on competition. It is not enought to show that European football is suffering from financial difficulties and the fair play rules are designed to solve this problem.
It has to be shown that there is no alternative, less restrictive means of achieving this objective such as a ‘luxury tax’ on top clubs. This would, of course, ne deeply unpopular with such clubs who have seen the FFP rules as a means of pulling the ladder up behind them and preventing the emergence of new challengers on the Manchester City model.
Finnacila fair play may also violate the free movement of workers within the EU which was the basis of the Bosman judgment. Henning Vopel of the Hamburg World Economy Institute concludes that a break even rule for football is in breach of four articles of the treaties of the European Union, as well as articles 15 and 16 of the Charter of Fundamental Rights.
Article 101 is probabloy the most important provision. It prohibits agreements that restrict or seek to restrict competition and the FFP rules do that by collusive action that erects barriers to entry. There may be other ways of achieving the objective of restraining spending, but they will take time to devise.