FFP Doesn't Work

In the space of five minutes, I read two football articles at completely opposite ends of the scale.  The first is the utterly astonishing news that, for some reason, Monkey Boy is switching to Real Madrid for a transfer record busting £105 million.

http://www.mirror.co.uk/sport/football/transfer-news/tottenham-transfers-gareth-bale-agreement-2115446

Aside from the fact that it's a joke that he's worth more than Ronaldo and yet isn't actually as good, it means we're now on the North side of a NINE FIGURE transfer fee.  How can RM actually afford this?  And how is Bale going to cope with the weight of this ridiculous transfer fee and the resultant expectation of the fans and management on his shoulders?

On the opposite side of the footballing coin, a story relating to a team that play in sky blue and are referred to as City by their fans.  Obviously I'm referring to Coventry, whose administration issues are still rolling on and, following their 10 point penalty last season, can look forward to a minimum of 15 points being deducted this season.  They dropped two places last year because of this, so this season they're going to really struggle with relegation.

http://www.bbc.co.uk/sport/0/football/23548760

Of course, the point deduction will likely result in their relegation, which will reduce their income and leave them even deeper in the financial mire.  And, if Paul Dickov hadn't scored that goal back in 1999, there's a chance we could've been in the same boat - bear in mind Coventry were a top flight regular for many years.

But my big beef with all of this is that FFP, the regulation that is supposed to prevent mismanagement of clubs and stop them going into administration, is clearly not working and that RM's bid for a single player is just making a complete mockery of it.  The £105m that Spurs will collect on Bale would likely be enough to rescue Coventry City from the jaws of financial meltdown and help them to consolidate and possibly even strengthen, which would help them bring in more revenue.

So the FA will sanction the sale of one player for the GDP of a small country, but will continually slap a club whose finances are dwindling thanks to issues they don't have much control over.  How is FFP actually helping?

Leo,

Real can afford it because they are a financial monster. They are the biggest club in the world, they have the backing of their government (they sold their training stadium for £200m a few years ago), they sell the most amount of football shirts more than any else in the world. Real can afford any player the like. Imagine the revenue Real must generate, it's probably only a mouse click away but I'm pretty sure Real will not be going against FFP, if it's all about balancing the books, Real are  a club who can do that.

I think RM turnover about 400M. Their net spend this summer is only £7M. If they sell Ronaldo back to Utd, it will have been a cheap summer for them!

Christ, only seven mill?  Blimey, we've got a long way to go to hit that!

Its PSG and Monaco that i am more interested in, their income is nowhere near the amount that they have been chucking about on players surely Monsieur Platini?

Monaco are not in Europe this season so it does not affect them as much but psg that will be interesting. I see wenger was having a pop at real Madrid also.

Wenger just repeated what I said.  He's a bloody plagiarist!

How do Madrid afford it? One option would be to spread the payments over several years. Apparently that's what they've offered here with an initial payment of 20mill and the rest in installments. It's how many deals are done these days in football. I also the heard that perhaps Levy isn't keen and wants it up front. Though I guess he could still borrow against the agreement. Could make things interesting though.

I don't think there is an issue whether you pay up front or in installments. The expense still hits the books at the full whack and the amortisation is on the full amount rather than the staged payments.

For instance, our spend of £90M summer will be amortised over the length of the contracts, say 4 years and that works out as an expense of £22.5M per season which is less than the increase in tv contract this year (£30M).

RM are turning over 500M a year so they can afford what would be about £25M a season in staged payments and amortisation expense.

Okay, granted, Real Madrid can afford to splurge so much cash.  But that wasn't really my point.  I was saying that RM's potential purchase of Bale makes a mockery of FFP.

The whole idea of FFP was supposed to level the playing field so that a club with a rich owner couldn't propel a team into the upper echelons of football.  It was suggested that this model was fair and equitable, but all that Madrid have proved here is that it fully supports the teams that have money over the ones that don't and shows the vast gulf between them.  My inclusion of Coventry City was to point out this gulf - their latest smackdown for going into administration was a helpful coincidence to highlight the point that FFP doesn't help anyone but the wealthy clubs.  But then we already knew that.

I guess my point is, what is the actual point of FFP?

We all know the point of FFP - so no one can challenge the big clubs. Ever.

But, can you really take away from Real Madrid what they have worked hard to achieve? 

I may be wrong, but Real Madrid are the club they are today because they've won 9 European trophies, and God knows how many La Liga's. So, why should they not be allowed to spend £80m plus on a player? Out of any other clubs, surely they have earnt the right? I may be way off though. Just playing Devils advocate I guess. 

Thoughts?

On one hand, they may have 'earnt' the right but on the other, did they get that chance because of some skullduggery along the way?

There are dark chapters in many clubs' histories, given time people forget these. Maybe in 20 years time people will call City 5 times Champion league winners and we'll be 3rd in the list of premier league titles rather than the club that got given a fortune.

Jordan, I can see what you're doing, but the reality of the situation is that UEFA hands out massive lumps of cash to teams that play in the CL, meaning the rich only get richer and the poor end up getting turfed out of their grounds and have to beg for a ground share or fold.

Of course, it helps that Madrid make more than three times more out of their bespoke TV deal than United get out of the one we get in the PL.  Or at least, that was true until this season's TV windfall.

Wouldn't it be good if the other teams in Spain said screw this football deal? Share the money equally or we won't let your cameras in.

RM and Barca could agree their own deals for their home matches and all the other clubs could sort their collective deal out. And they could send their youth teams to play away at RM and Barca. Let's see how long the tv companies would accept that arrangement before seeing sense.

Actually, that would be pretty funny.  Although I suspect RM wouldn't mind knowing they'd win every home game at a canter, keeping their legions of armchair fans happy.  Much the same as happens with most teams at the swamp.

Sorry, but FFP is all fucked up. A simple smoke-screen devised by the footballing equivalent of The Illuminati or The New World Order.
 
https://www.youtube.com/watch?v=l04UKiK3VCs

https://www.youtube.com/watch?v=YDe22UD2ge0

Just read Nafeez Ahmed's book - The Crisis of Civilization....very very interesting read.

Fair enough Dawg. That's why I married an accountant - so I can remain blissfully ignorant of the financial detail.