Monthly Archives: July 2012

One Year To Go: Financial Fair Play

How Europe’s top clubs are dealing with Financial Fair Play

Country by country breakdown. Most data from the Swiss Ramble.


Arsenal: Of course, one of Europe’s most profitable clubs is safe.

Chelsea: Contrary to common belief, also safe. We Ain’t Got No History wrote “There’s no reason to think that the club won’t be able to break even, as far as FFP is concerned, in the 2011/12 season. Things are looking pretty bright, even if we break the bank in the summer.” This was before the club received three pieces of £30 m worth of good news: winning the Champions League, the new Premier League TV deal, and a suspicious deal with the world’ s most profitable company.

The Champions League win seems even more important now: in addition to the prize money, it means £20 million for making the CL next year, and an immeasurable amount of money in sponsorships and global appeal.

Liverpool: The Reds have wormed themselves into quite a hole as far as Financial Fair Play is concerned. Without the usual Champions League money, Liverpool are quite close to the cut-line, so they will not be able to spend heavily in transfer windows until they get the money from making the Champions League back. Unfortunately, because FFP comes into affect at the end of next season, they will punished if they spend big this season, whether or not they make the Champions League.

The punishment in this scenario would not be a ban from Europe, even with a big spending spree. The transfer fees are amortized over a period of five seasons, so only a fifth of the money spent would count against them for the purpose of the first Monitoring Period, which would mean a minor violation of FFP, and, in all likelihood, a minor punishment—- ironically enough, it may be a fine.

It might be best, therefore, to accept the punishment, ensure Champions League qualification this season, and avoid forever having to play catch-up when UEFA really gets serious about FFP.

Manchester City: It will be interesting to see how close City come to reaching the €45 million limit, but ultimately, it shouldn’t matter. In yet another clause of the Financial Fair Play rules, if a club’s finances are improving, and City’s, so bad to start with, certainly are, then the club will not get punished. So Manchester City will be fine for the first few years—but eventually they will have to break even. Will they continue to show this year’s prudence in the transfer market?

Currently, City are far behind England’s “Big Four” in terms of revenue, so they need to increase this to stay competitive. Or they could sue UEFA, with a very, very good chance of succeeding. They still have a decade to decide.

Manchester United: The Red Devils have huge financial problems, as they pay £50 million a year in interest on their debt. That doesn’t count toward Financial Fair Play, though, so Man U will be fine.

Tottenham Hotspur: Staying both profitable and competitive, the sale of Modric  and the genius of Levy will ensure their passing FFP for the considerable future.


Barcelona: Intriguingly, Barca might have a lot of difficulty meeting the rules. Nobody seems to suspect the Catalans of being FFP’s biggest casualty, and that was the only piece on the topic I could find. I suspect they are in the same boat as Manchester City, AC Milan, and Liverpool- they wouldn’t have made it last season, but still have the ability to avoid getting punished. But what about the future? While Real Madrid remain profitable, will Barca have the funds to compete? Is Real winning the war to become the one dominate team in world football? What if La Masia goes through a dry patch? The Spanish League decides to distibute TV money more evenly….

Malaga: With no TV money, and very richer owners, this team looked like they would be the case study as to how UEFA would deal with a team breaking the rules. Unfortunately, Malaga seems to be in a financial crisis, as the owners haven’t paid transfer fees or player wages in a while. Keep an eye on them this summer.

Real Madrid: The biggest club in the world, the biggest beneficiaries of Financial Fair Play. Even with their ridiculous spending, they have been making huge profits year after year, while others (Barcelona) will soon have to rein in their spending.

Valencia: At first glance it looks like Valencia will qualify easily, but without a wealthy benefactor, their target could be €5m, not €45m. Their profits in past season have come from selling players, so they will have to continue to do this. Keep in mind that UEFA could be harsher on Valencia than on “big clubs,” and continuing to get the money from qualifying to the CL is paramount for this team.


AC Milan:  AC Milan were in big trouble because of the low attendances in Italy, but the sales of Thiago Silva and Zlatan Ibrahimovic will help for the next eight years (five years for amortization, three years for Monitoring Periods). By that time, if, somehow, the FFP rules are still around, no team will be allowed to post a loss in any three-year period. AC Milan will need to make a huge youth investment (which doesn’t count toward FFP) now, so that, by the time 2019 rolls around, they will have a strong home-grown base of players from which to select, instead of being so reliant on Berluscini (who will probably not be around by then) and his transfer wheedling.

Inter Milan: Just like their cross-town rivals, this team is in a lot of trouble, both on and off the pitch and needs significant rebuilding. And just like the Rossoneri, the Nerazurri have a trump card which will give them time to make drastic changes, and still participate in the Champions League (if they make it.)
In Inter’s case, it is their age— wages on contracts signed before June 1st 2010 do not count toward FFP, and this allows Inter to write off no less than 66 million euros from their accounts.

Juventus: With ever-improving finances, a focus on youth development, and the poor financial condition of the Milan clubs, UEFA will surely look at Juvy very favorably. The Swiss Ramble’s projection of a €10 m loss in 2011-12 is good enough to pass the FFP test with ease. The other Italian teams should have no trouble passing.


Bayern Munich: The most well-run team in football, able to compete consistently by spending almost as much as they make. Have had a profit for 17 years in a row.

Borussia Dortmund: Survived a huge financial crisis, and, amazingly, started to win trophies. Like every German team, whether Leverkusen, Schalke, or Monchengladbach qualify, they will pass. If worst comes to worst, Dortmund can sell ne of their plethora of young stars.


PSG: Farther from breaking even and earlier in the process of building a dream team than Manchester City, PSG will not be able to use any of UEFA’s loopholes to get out of Financial Fair Play. They are so far in the red that a ban is a realistic, if not likely, possibility. Since the takeover, PSG lost more on transfers than any other team in the world, while the other Ligue 1 teams remained profitable. Will be UEFA’s first major decision relating to Financial Fair Play.

IN REVIEW (for first monitoring period only):




Manchester United


Real Madrid



Every Bundesliga club



Manchester City



AC Milan





Paris Saint-Germain will be the first team for which UEFA officials will sit down and seriously discuss a ban for breaking the Financial Fair Play rules. The benchmark case will tell us a lot about how harsh UEFA plans to be, and what type of punishment a first-time violator who is heavily in the red will face.

If Russian big-spenders Anzhi make the Champions League or Malaga’s rich owners re-emerge, those teams could face questions too. Every other team in Europe should feel good about passing UEFA’s first ever FFP tests.