European football is moving away from its ‘open’ system and will quickly become a ‘closed’ American style system and this is all down to Uefa’s financial fair play rules. This is the claim made by football economics guru Stefan Szymasnki writing in the Financial Times.
European football is moving away from its ‘open’ system and will quickly become a ‘closed’ American style system and this is all down to Uefa’s financial fair play rules. This is the claim made by football economics guru Stefan Szymasnki writing in the Financial Times.
Although I think that he has a point, he does overstate it somewhat. It’s difficult to see fans, or even the football authorities, accepting an end to promotion and relegation which provides considerable excitement. Even less acceptable would be a franchise system where clubs could be transferred from one city to another.
Where he is correct is in arguing that the Uefa rules will ossify European competition and limit the potential for the big clubs of today to be challenged. If anything this applies even more to the Premier League’s new rules which limit additional spending on the wage bill. However, the big six already spend over £100m while the rest spend at or below £52m which is where the limits cut in. As Szymanski points out, there are no plausible mechanisms for the smaller clubs to close this gap and compete.
Of course, there is an underlying problem. Across Europe, many clubs have fallen into cycles of extravagant spending, temporary success followed by financial disaster, retrenchment, frequent changes of ownership and the injection of new money.
Szymanski notes, ‘Uefa tells us that in 2011, 63 per cent of clubs in Europe’s top divisions were reporting an operating loss and 55 per cent reported a net loss overall; 38 per cent reported negative net equity, and 16 per cent of club accounts contained a qualification expressed by the auditors as to the financial viability of the company. This is despite the fact that club revenues have grown at an annual rate of 5.6 per cent in the past five years.’
Of course, the financial fair play rules may not be fully enforced. They are open to legal challenge and if too many big clubs are barred from the Champions League, it would quickly lose its appeal.