The Official Financial Fair Play (FFP) Thread

How a Premier League spending cap can stop the destructive race of the richest clubs

As the English top flight moves to vote on a rare measure to safeguard its future, Miguel Delaney explains why such a drastic change to the framework of the league is needed.

Ater a storm, an anchor has been sent down to bring some calm perhaps. A season that has seen the Premier League castigated for off-field controversy may yet conclude with one of their better boardroom decisions. On Monday afternoon, the 20 clubs voted to move the potential implementation of the ‘anchoring’ rule to the next stage. That would be where spending is linked to the broadcasting income of the club that receives the least. It ended up 16 against four, which in this case indicated the logic of the decision.

While the proposal will now go to the annual general meeting for the full vote and while the actual details are still to be confirmed, its principle should be praised at least.

It would be a rare move in modern football that doesn’t just see the wealthiest clubs accumulate more revenue to allow them to spend more, as has been the case for most of the last 40 years. It would instead actively mitigate against their ability to generate wealth. So, at a stroke, it is a more equitable rule.

That is long overdue. It would encourage sustainability and also act as a first move in suppressing the maddening wage race that has led to everything from cost-control punishments to ticket price rises. The hope is it would be the start of wider initiatives across European football. Executives, who are usually critical of almost anything the Premier League does, were already declaring it ‘intriguing’.

It probably shows the competition had reached a point of absurdity when debates about financial regulation dominated the entire season, but it is also why the clear logic of proper rules needs to be stressed. This directly affects the games you watch, and how well your team can do.

For all the debates about who can invest and business models, too, something that is often overlooked in football is that the sport’s actual ‘product’ isn’t about stars or super-squads but competitive games. That is what drives interest, because it creates drama, which creates a narrative.

That’s the other point always worth stressing in these debates. ‘Competitive balance’ doesn’t actually happen organically. It requires heavy regulation to prevent wealthier clubs from sailing away. That’s why the Football League introduced gate receipt sharing in the early 20th century, to mitigate against the power of the big-city clubs. That’s why American sport has been obsessed with draft systems. Football is ultimately dependent on co-operation so you can put on properly competitive games.

This is a very difficult balance to strike, though, which is precisely why these arguments have raged for so long.

It’s also why alliances on this didn’t necessarily go the way people expected. Although the most animated argument in the Premier League over the last year has been the perception that the old ‘big six’ want to keep the rest in their place, that isn’t how the voting has gone at all.

Instead, it was only the two Manchester clubs from that group that went against in this stage of the voting, with Aston Villa joining them. Chelsea abstained.

If Villa’s decision is a surprise, that of the Manchester clubs isn’t. They earn the most commercial revenue. It’s nevertheless interesting to ponder how City would have voted on this at different points in the last 16 years.

None of this is to say the rules are guaranteed to be perfect, or that there will not be unforeseen consequences.

How these regulations work will be dependent on the details that are eventually voted. It is expected they will include transfer fees, wages and agents fees, partly to both be in line with Uefa and also to stave off possible challenge by the Professional Footballers’ Association. The latter would have a legal case if it was only applied to salaries, even though escalating wages have been the great driver in where modern football has gone. Spending would also likely be anchored to TV income alone, since that is centralised and relatively steady. The ratio is similarly expected to be around 4.5 to 5 to 1, which would have meant the most anyone could have spent on their squad last season was just over £500m.

Through all of that, one of the arguments being put forward from the Manchester clubs is that it’s absurd that Kylian Mbappe is on the market, the Premier League could easily afford him, and yet none of their team are in for him.

That example, however, only serves to show the logic of the rules. Mbappe is only paid so much because a state-owned club can afford it, with that artificially inflating the entire transfer market. And yet his presence hasn’t actually served Ligue 1, since the French competition is going through a crisis in terms of attracting broadcasters. The reality of football history is that competitive games are more important. Fewer people actually want to watch stars if there is no jeopardy and they aren’t being pushed to sporting excellence. The Premier League itself has been a great example of this.

It didn’t have the global stars of La Liga or PSG for most of the last few decades but still outstripped all competitions in terms of broadcasting deals because it sold the idea of more competitive games and storylines. This is a long-term reality the Spanish league has actively been wrestling with. Through 2009 to 2018, La Liga had the two most glamorous squads that have probably ever been put together, but that was as a consequence of concentrating most wealth in the top two, so the rest of the league was hollowed out. They are now seeking to reset that. The Premier League, it should hope, may pre-empt a similar problem. It’s all the more necessary as concern grows about Manchester City’s dominance.

Another argument has been that this could affect the Premier League’s supremacy, but that is another absurdity. The competition already collectively pays £2bn more than any other league. Such immense superiority can bring strange decisions, as those involved become obsessed with sustaining that position and don’t want to do anything to affect it. Such conservatism, however, usually only makes decline more likely. If anything, that superiority means the Premier League has the breathing space to bring more logic to its rules, to move away from a destructive race.

This decision represents precisely that. It's why it's being described as "future-proofing". It won’t be perfect, and everyone is awaiting the details, but it is the right step.
 
Looks like City are throwing mountains of cash at this to try to undermine the 115 charges, delay the outcome of that case & hamper the PL's prep for that case by trying to occupy their legal resources with this legal action.

Very classy & not one bit surprising.


Man City launch unprecedented legal action against Premier League

Claim has plunged top flight into civil war and hearing on Monday could change competition for ever – and help champions to see off 115 charges

Manchester City have launched an unprecedented legal action against the Premier League in a move that has sparked civil war in English football’s top flight.

The dispute, which has become a battle between the most powerful clubs in the country, will be settled after a two-week private arbitration hearing starting on Monday.

The outcome could dramatically alter the landscape of the professional game and have a significant impact on a separate hearing set for November into City’s 115 alleged breaches of the Premier League’s regulations and financial rules. That hearing, expected to last six weeks, could lead to massive fines for the club owners and possibly even relegation for Pep Guardiola’s all-conquering side.

At next week’s hearing, which has provoked bitter divisions between clubs, City will attempt to end the league’s Associated Party Transaction (APT) rules, which they claim are unlawful, and seek damages from the Premier League.

Introduced in December 2021 in the wake of the Saudi-led takeover of Newcastle United, the rules are designed to maintain the competitiveness of the Premier League by preventing clubs from inflating commercial deals with companies linked to their owners. The rules dictate that such transactions have to be independently assessed to be of “fair market value” (FMV).

But within an 165-page legal document City argue that they are the victims of “discrimination”, describing rules they say have been approved by their rivals to stifle their success on the pitch as a “tyranny of the majority”.

If City are successful in their claim — and some rival clubs fear they will be — it could enable the richest clubs to value their sponsorship deals without independent assessment for the league, vastly boosting the amount of money they can raise and therefore giving them far greater sums to spend on players.

The league’s other 19 clubs have been invited to participate in the legal action and The Times understands between ten and 12 have stepped forward, providing either witness statements or a letter detailing evidence in support of the Premier League’s defence against the claim. Those who have provided witness statements may be called by the tribunal to give evidence at the hearing.

As well as the impact it could have on the Premier League as a competition, clubs fear City’s claim could also be key to the outcome of the hearing into their 115 alleged breaches between 2009 and 2023, with sponsorship deals funded by companies linked to Abu Dhabi central to the accusations against them.

It has been alleged that City concealed payments made by their owner Sheikh Mansour through third parties and disguised them as sponsorship revenue, which in itself was inflated. Even before the more recent moves by the Premier League to tighten regulation around APTs, there was a requirement under the league’s rules that related party transactions must be of fair market value. If such rules are now deemed unlawful, it could significantly strengthen City’s defence at the hearing later this year. City have denied any wrongdoing relating to the 115 charges.

In February it was reported that the Premier League had warned its clubs of the threat of possible legal action by a club against its APT rules.

Now, The Times can confirm, City carried out that threat, filing their claim on February 16, with the Premier League informing its member clubs in March that a date of June 10 had been set for the hearing.

City are suing the Premier League for damages, while arguing that the league’s democratic system of requiring at least 14 clubs, or two-thirds of those who vote, to implement rule changes gives the majority unacceptable levels of control. They accuse rival clubs of “discrimination against Gulf ownership”, citing the comments of one particular senior club executive.
 
City argue that sponsors linked to club owners — City’s are in Abu Dhabi — should be allowed to determine how much they want to pay, regardless of independent valuation. Four of City’s top ten sponsors have ties to the United Arab Emirates, including stadium and shirt sponsor Etihad Airways.

Newcastle, which is majority-owned by Saudi Arabia’s Public Investment Fund, have a shirt sponsorship deal with Sela, a Saudi sports rights company. Chelsea have a shirt deal with Infinite Athlete, a leisure company which counts the joint-Chelsea owners Todd Boehly and Behdad Eghbali among its investors.

While The Times knows of at least one club that has submitted a witness statement in support of City for next week’s arbitration hearing, sources believe more than half have sided with the Premier League. The Premier League invited clubs to submit their statements in a letter from their general counsel, Kevin Plumb, on March 1.

Despite just winning a record fourth successive Premier League title, City claim rules introduced two and a half years ago are restrictive and anti-competitive.

Their rivals believe what City are doing will actually destroy the competitiveness of the world’s most popular league, allowing clubs with super-rich owners to spend unlimited amounts of money on their playing squads and infrastructure and nullify Financial Fair Play rules.

Millions are being spent on legal fees to fight this case. One senior club source says the Premier League’s legal bill has more than quadrupled in the past year, from about £5million to north of £20million. They also point to the fact that since February the Premier League’s own legal department has been forced to shift its focus to this claim when it is also trying to prepare for the hearing into City’s 115 charges. “This is clearly a tactic,” the source said.

City have certainly spared no expense in their potentially groundbreaking legal fight. They have appointed three KCs, with Lord Pannick supported by Paul Harris and Rob Williams. A fourth senior barrister who specialises in competition and regulatory law, David Gregory, is also on City’s team.

In their claim City are seeking “damages for the losses which it has incurred as a result of the unlawfulness of the FMV [fair market value] rules”, in particular for costs resulting from delays, sums they claim were not paid under agreed deals and additional costs, including the club’s inability to generate revenue from delayed or cancelled projects. This, clubs believe, could potentially amount to tens of millions.

ndeed, City’s claim says the club are seeking a split trial, with the first part focused on the APT rules followed by a second to then determine damages.

In his letter to clubs on March 1, Plumb detailed the nature of City’s legal challenge under Section X of the Premier League rules.

Plumb explained how the Premier League had to secure an order that enabled it to disclose the details of the arbitration to its member clubs and confirm that it was indeed City who had filed a claim. “The purpose of this letter is to provide those further details, within the bounds of the confidentiality of the proceedings, and to confirm the process by which any club may participate in the arbitration,” Plumb states.

He explained to clubs the detail of City’s claim that the rules are contrary to the Competition Act 1998.

Plumb then said the Premier League’s independent legal counsel believes the rules are compatible with English law and that they will fight the legal action.

On February 26 a directions hearing in the arbitration took place, with the tribunal appointed to hear the case giving the Premier League permission to provide a redacted copy of City’s statement of claim to other clubs, because they may be affected by the outcome of the challenge.

The tribunal set a date for the final hearing to take place from June 10 to June 21, with all witness statements due to be submitted by March 28 in line with the deadline for the Premier League’s statement of defence.

Clubs were given the option of either intervening formally in the proceedings, upon receiving permission from the tribunal, or submitting factual evidence on relevant matters.

Within the City claim is a challenge to the voting system upon which the Premier League’s decision-making process has long been built, which requires two-thirds of clubs to support a rule change. They say this allows a majority of clubs to exert a “tyranny” that damages the minority.

City also claim the fair market value rules are intended to be discriminatory towards clubs with ties to the Gulf region.

The claim says the rules were imposed at the instigation of certain rival clubs reacting to the Saudi takeover of Newcastle, with the aim to “safeguard their own commercial advantages”. They say rivals were seeking to limit deals from companies in the Gulf region, citing a quote from a senior executive from another club.

They claim the rules were “deliberately intended to stifle commercial freedoms of particular clubs in particular circumstances, and thus to restrict economic competition”.

City also complain that, when it comes to negotiating any form of sponsorship agreement, clubs in the north are at a disadvantage to those in London, saying they can charge higher ticket prices. However, rival clubs estimate that, based on median ticket prices at the Etihad Stadium and the seven Premier League clubs in London, City are ranked third.

City blame the Premier League for not regulating spending when clubs such as Manchester United were more dominant, arguing they have been prevented from monetising their brand in the way United did. City also say the rules penalise clubs who have “lower-profile sporting histories”.

In their claim, City also dismiss concerns that an inflated sponsorship deal with a company linked to the club’s ownership could be vulnerable to a change of ownership.

“There is no rational or logical connection between a club’s financial non-sustainability and its receipt of revenues from entities linked to ownerships,” City’s claim states. They say companies would honour sponsorships even if the club was sold to new owners.

As one Premier League source observed, this overlooks the fact it is common for sponsorship contracts to have clauses that mean the terms change under new ownership.

City argue that the Premier League have failed to provide evidence that sponsorship deals with related parties give clubs an unfair advantage or distort the league’s competitive balance.

They also say that the Premier League, as an organisation, is a direct competitor for sponsorship and therefore claim they have a conflict of interest.

Further to that, City question the independence of Nielsen Sports, the data analytics company used to determine the fair market value of sponsorship deals, because it has been retained by the Premier League for more than two years.

City complain that FMV rules discriminate against clubs who form part of a multi-club ownership group, and only apply to commercial deals and not shareholder loans.

Ultimately, City stand accused of breaking financial rules to spend close to £2billion building a team that now dominates the Premier League and in the 2022-23 season won a European and domestic Treble.

In their claim, City argue that the current rules will limit their ability to buy the best players and force them to charge fans more for tickets. They say they may also have to cut spending on youth development, women’s football, and community programmes.

Premier League clubs have a scheduled meeting in Harrogate on Thursday.

Manchester City did not respond when contacted for comment. The Premier League has declined to comment.
 
I still love the fact that City's " offical Asia betting partner" was found to be a shell with 3 employees, their CEO LinkedIn profile picture was from Getty under "Asian business woman" and parent company was back in the middle East.

Took a reporter from the Huddersfield Gazette a couple of days to find that out to satisfy his own curiosity.

Miguel and the boys too afraid they'd lose their access presumably
 
All hail the All Mighty EPL :rolleyes:
Eye-watering amounts of money paid out to giant corporations and it's destroyed football in these islands outwith the EPL, hoovering up finances from everywhere. Instead of a pyramid football finance in and around the EPL is more like a giant thumb-tack. It's a matter of time before it consumes itself.
 
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