Malaga’s Appeal Loss is a UEFA Financial Fair Play Win

Recently, Business of Soccer reported (original article) on Malaga CF’s successful removal of a year from their original two year ban from UEFA club competition handed down on December 21st.

On Wedneday, June 11th the Court of Arbitration of Sport (CAS) released their decision regarding Malaga’s appeal of UEFA’s second one-year ban from UEFA competition.  They ruled that the ban would be upheld and as well as the €300,000 fine which means that Malaga will no longer participate in the 2013/14 Europa League competition and will be replaced by the next qualifying team in La Liga based on 2012/13 standings.

There is a sense of persecution coming from Malaga in the wake of this decision with club president Vicente Casado claiming that they feel “driven out of the competition.”  Casado spoke further on the subject with local radio and believes that UEFA “wanted a scapegoat, a sacrificial lamb, and they found it” adding further that “it seems this decision is not based in law but is political.”

Whether the decision to uphold the ban from UEFA competition on Malaga CF by the CAS is political or legal, the fact remains that UEFA, Financial Fair Play (FFP) and the UEFA Club Financial Control Body (CFCB) does have their first major scalp with the Andalusian club.  Of the six clubs sanctioned in December by the CFCB, Malaga was the only club to receive a ban from competition that was not subject to meeting a deadline of payment.  Each of the other five clubs received similar bans from participation but partnered with the stipulation “unless it is able to prove that, by 31 March 2013, it has paid the overdue amounts previously established by the CFCB investigatory chamber.”  Although Malaga did have a similar stipulation to its ban in the CFCB statement, it only applied to one of the two years of the ban.  The other clubs received just one year sanctions.

Source:ThikThak.com

Source:ThikThak.com

Two assumptions have been put forward that attempt to make this decision appear unjust.  The first is found in a statement from Spanish Under-21 and Malaga midfielder Isco, who claims that there are other teams with “alot more (financial) irregularities and debt.”  The second assumption is that their successful receipt of a UEFA License through The Spanish Soccer Federation, indicative of FFP compliance, shows that they should have their ban removed and be allowed to participate in the Europa League competition.

The flaw in the first argument is that while there may be other financial “irregularities” (whatever that technically means) and debt within other clubs, the ban didn’t have anything to do with the “break-even” aspect of FFP.  The ban was regarding overdue payments on said debt which also includes a decent amount of tax debt to Spanish authorities.  Structural and long term debt are unavoidable in organizations the size and breadth of European professional football clubs.  The emphasis is that these debts are handled in a timely manner which points to keeping within timelines of payments.  Malaga, as well as the other clubs sanctioned were found to have not been compliant with timely payments

The second flaw is the insinuation that being currently awarded a UEFA license, again indicative of current FFP compliance, somehow eliminates that fact that they previously were not.  They may very well be up to date with their payments to other clubs and have either payed off or set up a payment plan with Spanish tax authorities for whatever amount was owed, which is certainly good, but it does not take away from the fact that previously they were not in good standing at a time when they were required to be.  All the license proved was that Malaga had met deadline set by the CFCB on overturning one year of the two year ban.  The other year was apparently non-negotiable.

The second year is obviously the contentious aspect of the original decision.  The argument from Malaga that there is no precedent for their punishment maintains quetionable ground considering that they are among the first group of clubs to really be sanctioned from competition through FFP and the CFCB which was appointed just this past summer of 2012.  That being said there is the argument that precedent exists in the fact that they were the only club to have been given a second year ban that could not be conditionally removed.

The CAS, in their media release, made no explanation of the grounds on which the ban and fine were upheld except that the information would be communicated at an unspecified later date.  The argument and reaction put forward by Malaga is mainly based on principle rather than financial necessity of participating in the Europa League,  The Champions League’s younger and not nearly as popular brother.  Total winnings from this competition’s champion in the 2012/13 season, according to goal.com was €9.9 million compared to the Champions League winners’ €37.4 million.  This fits with Malaga’s official club stance that “this decision is a real blow to the Club, but our overall project doesn’t depend on the Europa League.”

The outrage based on principle lends a little bit of credence to the possibility that this is an attempt by UEFA to come down hard early and make an influential example of a club that certainly has high profile.  The fact remains though, that the sanctions can be applied according to FFP and the club itself was in violation due to the delinquency in payments.  Whether club finances were in order and the data was out of date is irrelevant in light of the revelation that tax debt still existed.   An explanation on the degree of sanctioning could be found in the amount of unpaid money but that  is not disclosed so that remains merely conjecture.  In the end, Malaga becomes the first major FFP target and there is little doubt that once the break-even regulations com into effect this upcoming season, clubs should expect to come under equally harsh punishment should a violation occur.

Reporting on the business side of the world's game.