Article from Economia on FFP.
Financial Fair Play rules could have the
unintended consequences of “locking in” wealth disparity between football clubs across the leagues this season
A BDO study on football finances and the impact of Financial Fair Play (FFP) has shown that 94% of club finance bosses believe the wealth disparity between larger and smaller clubs is growing. It revealed 64% of English Premier League (EPL) clubs and 76% of Football League Championship clubs report a widening gap within their leagues.
Polarisation of the industry has to be taken as a serious issue when considering sustainability and the long term health of the game as a whole
Trevor Birch
The major sponsors are focussing their efforts on only a “handful of clubs”, as a result, Football League clubs, and even Premier League clubs outside the Champions League positions are finding it increasingly difficult to attract sponsorship deals.
Trevor Birch, BDO partner and former Everton chairman, said that the success of the EPL has tended to concentrate its wealth in the hands of the few, at “the expense of the many”.
He said, “Polarisation of the industry has to be taken as a serious issue when considering sustainability and the long term health of the game as a whole.”
FFP rules, which were introduced to promote financial stability after a number of clubs overstretched their finances, will take time to take effect and “may lock in the existing differential”, the report claims.
Although 90% of clubs have complied with the rules, 44% said they need to be refined or changed while 61% think they do not yet meet the objective of promoting sustainability. Despite the rules, 57% of respondents were still not expecting to make a profit in their next accounting period, indicating that loss making is still rife.
Almost a quarter of clubs believe their finances need attention or are a cause for grave concern, and 21% of EPL respondents think their club’s owners could be considering a full or partial exit in the next 12-18 months, compare to none in the same survey last year.
Birch said, “The top six or seven clubs in the EPL will be able to consolidate their superiority with bigger and better global commercial deals. The rest of the league then struggles to grow revenues outside the central media deal and faces a perennial relegation battle, with the consequent uncertainty that brings for long term planning. FFP is unlikely to change this scenario.
“In the FL, clubs have historically made large losses as they compete to gain promotion and the introduction of FFP should go some way to assisting clubs reduce these losses and promoting sustainability.
However, the recent increase in parachute payments to FLC clubs relegated from the EPL, which are not included in FFP calculations, may start to have a greater distorting effect on competition in the future and effectively create a two-tier league.”
In his recent interview with economia, former FA chairman David Bernstein said he worried FFP will only serve to maintain the status quo among the very elite of the European game.
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