Financial Fair Play faces extermination after Striani launches legal challenge

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Financial Fair Play initially sounded like an intelligent concept. The idea, in short, was to stop overspending-by banning clubs from Europe if they did so. However, the nature of FFP meant that it would upset a big proportion of the footballing world. Belgian football agent Daniel Striani is just one of the many who are unhappy at Financial Fair Play. FFP will impact him directly; with the introduction of the ruling the frequency and value of agents’ fees will rapidly decrease.

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Will Striani be smiling at the end?

Striani and Dupont complain

Striani’s displeasure was first displayed worldwide after he made a formal complaint-to the European Commission-in early May. “Specifically, this complaint challenges the restrictions of competition caused by the ‘break-even rule’ (article 57 of the UEFA FFP regulation).” (Taken from the press release issued on May 6th)

Striani believes that there are separate consequences of FFP. These consequences, in his opinion, are “anti-competitive”. This is largely due to the fact that the rules will affect his own ability to earn agents’ fees. The rules will dramatically affect any agent’s ability to earn money from players signing new contracts, from players’ wages and from players’ transfer fees.

One consequence of FFP, and the main disadvantage, is that no clubs will be able to enter the top echelons of football. Clubs at the top of the Premier League, like Manchester United, will be unbreakable. No mid-table club will be able to invest large amounts of money and experience glory. No Chelsea or Manchester City type club would be seen again under FFP. Already rich, powerful teams will dominate for eternity…

Striani challenges UEFA by saying that FFP is breaking EU law. This is the argument which is likely to be the most convincing in a court. (It worked with the Bosman ruling). “The ‘break-even’ rule infringes other EU fundamental freedoms: free movement of capital (as far as club owners are concerned), free movement of workers (players) and free movement of services (players agents)”. Striani adds that by lowering players’ wages and transfer fees FFP will cause a “reduction of the number of transfers, of the transfer amounts and of the number of players under contracts per club” while having a “deflationary effect on the level of players’ salaries”. This will cause the game to become “anti-competitive”.

Finally, Striani argues that the rules will restrict investment in clubs, as clubs will have to regulate their finances more in an attempt to stop losses and avoid penalisation. Striani thinks that instead of FFP, richer clubs could share money with smaller clubs, reducing the demand for overspending.

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The European Commission

At the time of the formal complaint to the European Commission, UEFA responded by saying: “The rules encourage clubs to ‘live within their own means,’ which is a sound economic principle aiming to guarantee the long term sustainability and viability of European football.” “UEFA believes that Financial Fair Play is fully in line with EU law and is confident that the European Commission will reject this complaint.”

The European Commission usually takes within a year to reject a complaint or open formal proceedings. However, the resulting appeal, from Striani or UEFA depending on the initial victor, takes a lot longer. A rejection of Striani’s inital complain will probably be appealed by the Belgian to the General Court. This will mean a further 3-5 years for the case to be settled…

Striani launches legal challenge against UEFA

Now Striani has moved even further, by launching a second legal challenge against UEFA in the Court of First Instance in Brussels. The man leading his legal team is Jean-Louis Dupont; the man who helped win the Bosman ruling. Dupont is very confident, having previously stated that the ruling would not stand up to a legal challenge. UEFA and FIFA are scared of Dupont… “This latest legal process is supported by a growing body of economic and legal opinion which argues the UEFA rule is ineffective, illegal and disproportionate given alternative measures available,” read a statement released to American media giant CNN, by Striani’s publicist on Thursday.

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Dupont has UEFA quaking

Striani and his legal team have asked the Court of First Instance in Brussels to “judge on alleged infringements of both EU competition law and the right to free movement [of capital, services and workers.]” Striani suggests that overspending should be allowed; as long as there are certain conditions in place-such as a “luxury tax” on over spenders.

Will Financial Fair Play survive?

The European Commission process is ongoing, with a ruling expected in 2014. It is very likely for the case to eventually end up in the European Court of Justice, just like the Bosman ruling. Dupont is a very experienced and respected football lawyer. With Dupont on the legal team, it looks quite likely that Financial Fair Play will be torn up.

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It is likely that Platani’s plan will be abandoned

If so a “luxury tax” would probably be introduced, as Striani suggests. The “luxury tax” would be similar to the one in Major League Baseball. In MLB, teams have to spend tax on any money spent above a certain amount. Baseball uses the Collective Bargaining Agreement to set a threshold, which incorporates the players’ union and the owners of the teams. The teams must pay a fraction of the money spent above the threshold to the league. The system works quite well in America, with teams being discouraged to spend greatly above the tax point. Crucially for agents like Daniel Striani, a luxury tax system does not have to limit the amount spent on players’ wages. UEFA were planning to do a similar thing in 2009, but then FFP was introduced…

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Luxury tax would be similar to the one in MLB

The impact if Financial Fair Play is scrapped

If UEFA announce plans for FFP to be terminated, it will cause wide spread celebrations and anger.

Malaga from Spain; Hadjuk Split and Osijek from Croatia; Rapid Bucharest and Dinamo Bucharest from Romania; and Partizan Belgrade from Serbia have all been banned from Europe this season due to unpaid wages, being in debt to other sides and being in debt to the tax authorities. Malaga were fined £255,000 and were banned for two seasons from continental football as a result. Their appeal to the Court of Arbitration for Sport was rejected. Malaga’s general manager Vicente Casado claimed that the club “don’t understand” the Court of Arbitration for Sport’s decision to upheld the ban. “Our immediate reaction is of indignation and a real sense of injustice. We’ve been fighting our corner with the team and the whole city behind us and we failed” he said; just after the announcement was made. “We literally feel driven out of the competition. The club has been working tirelessly for a year in order to comply with Financial Fair Play regulations, which was proven by the granting of the UEFA Licence.”stated an unhappy Casado. “We haven’t had the full explanation as yet but we don’t understand the basic reasoning behind the decision.” Teams who have suffered due to FFP will be very happy if the ruling is cancelled.

However, some teams have based their entire strategies on FFP. Arsenal and Newcastle United are two great examples of this. Both sides have tried to make profits each season, often selling more than they buy. Newcastle have tried to decrease their previously high wages. A tight wage budget is in place on Tyneside for manager Alan Pardew. If FFP was to be cancelled, Arsenal and Newcastle would have wasted at least 3 seasons. There would certainly be protests from clubs and supporters around Europe. Surely, if the luxury tax fails or is poorly introduced, smaller teams will struggle to win anything. Swansea, a poorer and weaker team in the Premier League managed to win the Carling Cup through clever buys. Swansea may never be seen again if UEFA fail. Smaller and poorer teams hopes’ ride on Michel Platini…

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If UEFA fail expect no Swansea-style shocks

Without FFP, an alternative has to happen. A luxury tax is probably the best option. The luxury tax, while penalising clubs for overspending, would need to be really high. Still there would probably be an owner, such as Dmitry Rybolovlev at Monaco, who is willing to pay ridiculous taxes to see his team succeed. The tax needs to increase more rapidly the further a team goes above the tax point. If a team is late in paying their taxes they should be banned from Europe. UEFA needs to show the severity of late fees or tax avoidance.

A big issue with the luxury tax system is choosing and running the body which regulates the cut-off point. In baseball different groups of people meet up and decide the threshold. A Collective Bargaining Agreement would be very hard to implement in Europe due to the vast amount of teams, compared to the MLB’s 30. Even if the CBA could be instigated, the rich teams could bully the poorer teams into agreeing a higher threshold. Being even more cynical, bigger teams could bribe smaller teams into bartering for a higher threshold. Football is growing more and more corrupt, with bribery being a major issue. Getting everyone to agree would take far too long, so some teams would always be left unhappy if the vote went against them. Would teams, such as Steaua Bucharest, be banned from voting? Bucherest are owned by Romanian politician George Becali, who is currently serving a 3 year jail sentence for abuse of power. He has also publically displayed homophobic, racist and sexist attitudes.

Interestingly, some fans of rich Paris Saint-Germain are changing to Paris FC. Paris were originally founded in 1969 and merged with Saint-Germain in 1970. They then split in 1972 after Paris city council asked for the Saint-Germain name to be removed, offering a fee of 800,00 francs. FC refused and the club was then forced to split. Now, Paris FC are attracting the money-hating fans from Le PSG. This is all despite FC’s third tier status and the bitter hatred between the two clubs since the controversial split.

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A football forum banner made by a Paris FC fan

“I sometimes say to footballers’ agents, ‘The difference between you and me is that, if tomorrow there was no more money in football, I’d still be here, but not you.'” Arsène Wenger is an example of a man who has become disgruntled with the increasing amounts of money. This is a reason for Arsenal’s fall from success. Wenger does not like spending obscene amounts of money.

If fans do not like the increasing amounts of money involved in modern day football, they should show their anger. Change will not happen if people do not ask for it. The American essayist, lecturer and poet Ralph Waldo Emerson said: “Every revolution was first a thought in one man’s mind”. It just takes one person, who is not happy with the large amounts of money involved, to protest-for change to happen…

Whether FFP survives this strong challenge or not, the fact remains that football is becoming more and more money orientated. Nicklas Bendtner provides us with an example: “I deserve my £50k a week wage… I’ve had to give up skiing for football!”. Fans are now seen as consumers, not as supporters. UEFA needing to install financial regulations shows that money is now the driving element in football.

While it is inevitable that football is powered by money (it always has been) the money involved is increasing. Despite what ‘experts’ say, football isn’t a business, if it was clubs would make massive profits-most make losses. In reality, most football clubs are toys, ways for the rich to show off. With football being the most popular sport in the world, it is certain that ridiculous amount of money will become increasingly involved. What is essential is that smaller, poorer teams-the ones who lack a rich oligarch-are protected.

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PSG president Nasser Al-Khelaïfi will be able to splash more cash without FFP

This link contains the full press release from May 6th: http://www.soccernomics-agency.com/?p=454 Thank you Stefan Szymanski.

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