Football: The European Dilemma

After the closure of this summer’s transfer window, one has to wonder: what happened to Michel Platini’s plan regarding financial fair play? This summer’s transfer season has seen the likes of Paris Saint Germain, Napoli, Real Madrid, and Chelsea spend copious amounts of money. This has created some uncertainty over the promised financial restrictions. Indeed, the potential idea is a virtuous one, but this will have repercussions. Football is a very competitive sport, on and off the pitch. Managers will have to work twice as hard to keep their teams in form once the financial restrictions are applied.

Chelsea Manager Jose Morinho when asked about the regulations stated:

In the long run, Arsene Wenger who has long been criticised for his procurement of young stars had the right strategy; bringing in youngsters and integrating them into the club. If the financial restrictions are put in place, big spenders like Manchester City, Real Madrid or Bayern Munich will have to concentrate on restructuring their financial systems or face the consequences; which may lead to teams not being allowed to perform in European championships.

UEFA President Michel Platini. Photo taken during unofficial meeting of european ministers of sports in Kraków. Image credit: Piotr Drabik

From an analytical perspective, these restrictions could also have political repercussions. During the first three months of his presidency, Francois Hollande proposed a 75% tax rate on all revenues above 1 million Euros. Is Michel Platini’s financial fair play following President’s Hollande’s tax increase against the rich? Nevertheless, with the recession still hitting European countries alike, this is a favourable move from UEFA president Platini, who time and time again defends his position. In his address to the European Parliament he stated: “We are currently looking at the idea of limiting, to a certain degree, a club’s expenditure on staff- salary and transfer fees combined- to an as yet undecided percentage of its direct and indirect sporting revenues”

Some of the major football clubs in Europe are run like multinational corporations and their gross revenues sometimes surpass GDPs of small nations. As an example, Spanish Giants Real Madrid recorded an income of over 514 million Euros during the 2011/2012 fiscal year. Nevertheless, financial fair-play is indeed a bold move.  However, these financial restrictions on European football are by no means a solution they are only a step in the right direction.