Financial Fair Play and the English Pyramid

An actual slide from the 2009 UEFA FFPR proposal powerpoint. Maybe.

You may have heard about the Financial Fair Play Regulations (FFPR). In the works since 2009, the rules are the sword which UEFA’s Michel Platini hopes will slay the dragon of financial excess in the European soccer economy. The legislation requires clubs to be financially break even or profitable without the help of cozy financing schemes (*ahem* ̶R̶o̶m̶a̶n̶  Sheik Mansour) while also maintaining or improving debt levels. The carrots offered to compliant clubs are reduced costs and financial stability, inducements which fall somewhere between an actual carrot and a package of underwear for Christmas. The stick that will compel clubs to fall in line is UEFA’s ability to deny entry to the Super Cup, the Europa League, and the Champions League. The glory and prizes are enough to give credence to Platini’s message: if you want to play at the highest level you will follow the rules.

Some doubt it, some are in denial, and some are depending on it, but FFPR is coming. What may surprise you is exactly where it is coming to and what will happen.

Carlos, Kia, and Third-Party Ownership

It has been a cold winter for Carlos Tevez. The fiery Manchester City striker has dug himself into a situation that has hurt his career, reputation, and bank account.  The trouble began last with rumors of disagreements between Tevez and manager Roberto Mancini, things were left on a low simmer and promptly boiled over during City’s Champions League match with Bayern Munich where the striker refused to enter the game as a substitute. Tevez’s refusal arguably cost the club advancement to the knockout stages of the competition with a furious Mancini publicly lambasting and dropping him from the first team. Relations between player and club predictably plummeted to a new low with Tevez leaving the club to winter in Argentina. City subsequently docked him wages and actively sought to sell him to other clubs in response.

The Tevez situation has been cast as a personal spat by much of the soccer world; it is a regrettable product of the Argentinian’s temper, the Italian’s pride, and the modern reality of the game, but ‘Così è la vita!’ with eyes directed at the heavens. But some suspect that there is more to the situation than a simple clash of personalities. Many believe it is Kia Joorabchian, Tevez’s agent, who is encouraging the Argentinian to agitate for a big money transfer. Why? Because it is Joorabchian who has the most to benefit from Carlos Tevez on the move.

Premier League January Spending 2011-12

Pencils down, hand in your papers, the transfer window is now shut. How do this season’s transfers (2011-12) compare with previous years?

Let’s look at Gross Spending, Gross Revenues, and Net Spending for the Premier League from 1992-Present.*

Gross buying activity was down considerably to

Systemic Risk in the Soccer Economy

“Systemic risk” is a concept which has come to the forefront in the past couple of years as people have searched for the cause of the financial crisis. Post-mortems have focused on the unbelievable level of risk taken on by institutions and the speed with which it was transmitted to others when conditions started to sour. Contrary to theory diversification, rather than mitigating risk, actually contributed to the contagion and amplified the damage. The broader consequences of the crisis have been far too familiar for the past three years and they could have been prevented if regulators were vigilant for the right signs. A similar level of regulatory passiveness currently exists in the soccer economy and it is encouraging the rise of financial risks that pose a serious threat to clubs and their supporters.

What is systemic risk?

Systemic risk refers to the