Chelsea, Liverpool Skeptical of UEFA’s Financial Fair Play Enforcement

Chelsea and Liverpool club executives voiced concerns about UEFA’s ability to enforce Financial Fair Play (FFP) regulations moving forward. Club spending for high profile players has ramped up during this year’s transfer window, and the dollar amounts are skyrocketing.

The European club football governing body’s FFP regulations have been the hot topic of discussion over the last couple years, and have recently resurfaced with the Malaga ban in December 2012, and the subsequent appeal denial in June 2013. The FFP regulations were essentially put in place in an attempt to restrict frivolous spending from European clubs, and to prevent their collective debt from spiraling out of control, reaching almost $11 billion in the 2010 financial year, according to an ESPN article. The FFP requirements stipulate that any club may not report more than €5 million in losses in a 3 season period, if the owners do not reach into their pockets to cover the difference (€45 million is max debt if owners inject equity into the club).

Liverpool Managing Director, Ian Ayre. Photo courtesy of cnn.com

Liverpool Managing Director, Ian Ayre. Photo courtesy of cnn.com

An article from Bloomberg  on Monday revealed a telephone interview with Liverpool Managing Director Ian Ayre, that clearly depicted not all of Europe’s clubs are feeling sure that UEFA will be able to implement broad scale enforcement of the FFP regulations:

We have to see the application by UEFA, we have to wait and see how fair they really play it. I have to say my level of confidence in it isn’t very high.

Liverpool is owned by Fenway Sports Group, the same investor group that owns the Boston Redsox, as the name would suggest. The group does well for themselves, but financially they cannot compete with the Russian and Middle Eastern oil billionaire owners that have entered the scene the last decade or so. Though Ayre is skeptical of the feasibility and implementation of the UEFA FFP regulations, their success is critical to his clubs success, because Liverpool can not afford the expensive tactics of the likes of Chelsea, Manchester City, or Paris Saint-Germain. Ayre himself said,

We can never compete with just writing huge checks for players here, there and everywhere. With the amount of time, money and effort that’s been put into this initiative, I think it would be an absolute tragedy if they don’t apply the rules strongly and firmly.

Even the approach of the end of the first monitoring period (2013/14 season) did not seem to deter the big spenders during this year’s player transfer window. Newly promoted French Ligue 1 side AS Monaco alone spent approximately €130 million on 3 players: A combined €70 for Moutinho and Rodriguez from FC Porto and another staggering €60 for Falcao from Atletico Madrid. PSG spent a reported €64 million for striker Edinson Cavani and Manchester City shelled out an easy £28 million for Stevan Jovetic, according to Bloomberg.

There were certain clubs that were specifically called out by UEFA as “targeted” teams that would be watched even more closely due to historical spending habits, Chelsea being one of them. Russian oil billionaire owner, Roman Abramovich arrived at the storied London side in 2003 and has since invested approximately £1 billion into the club, which has seen the team win 3 Premier League Title and its first ever European Cup in 2012. Chelsea CEO, Ron Gourlay seemed to be less concerned that UEFA would enforce the FFP rules, but more that they be enforced fairly across the board. Gourlay was quoted in the Bloomberg article saying,

It’s UEFA’S competition so we want to make sure that we comply. All we’ve asked for is that UEFA police and manage the process with a clear, even playing field.

The Chelsea CEO made it clear that he was concerned about clubs enhancing their balance sheets with “arms length” deals in order to bolster its financial positioning. In other words, there is a concern that some clubs will be able to tie themselves to substantial money of parent organizations that will convolute the real financial situation of some teams that, without that additional backing, would be subject to UEFA FFP punishment due to overspending. However, UEFA maintained that its Club Financial Control Body will evaluate any and all deals against a “fair value” benchmark, and only that value will be used during the FFP assessments.

There certainly is a lot of talk and anticipation surrounding FFP and the implications they may have on clubs across Europe. All too often, governing organizations make decisions in the name of a new set of standards that, in retrospect, could be argued were made just to appease the doubters and to live up to expectations. All football fans should hope that this won’t be the case with UEFA FFP, and that any decisions levied against any club are dutifully researched and are warranted. At the same time, they should also hope that if the situation merits it, UEFA will stick to their word and enforce the rules that they implement.

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