Expecting To Spend In Europe

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By J Hutcherson - WASHINGTON, DC (May 15, 2012) US Soccer Players -- As if we needed another indication for how clubs are really responding to the specter of Financial Fair Play, Manchester City has already shown its hand. Media reports are quoting their manager as saying what we've come to expect. Defending the title will cost, and it's time once again to spend on players.

In particular, Roberto Mancini told BBC Sport: “Barcelona and Real Madrid every year buy two or three players and spend a lot of money. I think for Manchester City it will be the same."

Fair enough, but we already know what Barca - Real level spending means in practical terms. Lots of debt, certainly more than the Financial Fair Play rules will allow. This leaves any team following their example in the same basic situation. Changes will have to be made or they won't be playing in European competitions. Since the whole point of spending at this level is to win the Champions League, that's a significant disincentive. So why, with Financial Fair Play already in effect and counting down to full implementation, are clubs still acting as if debt beyond the limits of UEFA's financial regulations is ok?

How UEFA defines acceptable losses simply doesn't work at the current level. By the 2015-16 season, clubs are welcome to lose €30 million euros, with that number eventually falling to only €8.8 million euros three years later. To get to that 2018 figure, the value of transfers has to adjust accordingly. The clubs trading at the top end of the market are the usual suspects, the giants of Europe that spend their summers setting new record transfers while shuffling the majority of the money between themselves.

It's an old point, but if you look at the top five transfers by fee, it was Real Madrid and Barcelona spending and Manchester United, Juventus, Inter Milan, Milan, and Barcelona (the Luis Figo transfer) getting paid. Expand that to the top ten, and you can add Chelsea, Lazio, Juventus, and Inter Milan to the spending clubs and Liverpool, Parma, and Lazio to the ones getting significant checks. The average fee for those ten transfers? €63.63 million euros.

Something has to change, and it's the machinations of the transfer market itself that stick out. Again, it's another old point but the basic concept of the transfer system is what I'll politely refer to as suspect. Selling player contracts directly makes little sense in the current economic environment in Europe. Yet a revolutionary revamping of the transfer system remains unlikely. There's too much at stake, not the least of which is what it would do to the basic value of clubs.

On their own, clubs have worth but that worth is bolstered by what the playing squad could bring on the transfer market. As much as the elite clubs spend, in real terms they're attempting to add value across the board. Players that can be transferred, trophies that can be won, and a brand that becomes better. That doesn't mean tweaks to the system are out of the question.

Without exception, those massive transfer fees are paid by the biggest clubs in Spain, Italy, and England. Those are the same leagues with the most to lose due to a draconian interpretation of UEFA's new financial policies. At the same time, they're also the clubs in the strongest position to oppose Financial Fair Play. They didn't, with the elite clubs lining up alongside the rest of the European Club Lobby to welcome the changes.

Manchester City expects to have to spend in the words of their manager "a lot of money."  He's right, that's what it takes to win at Champions League level.  The major clubs failing to do so this season changes nothing.  If anything, it adds to the pressure to make sure your incoming transfers are the kinds of players that make a difference.  At this level and among these clubs, we know what that costs.  More to the point, we know that clubs already shouldering substantial debt as Financial Fair Play defines it are more than willing to continue to spend. 

That's where we find ourselves as the clock continues to count down to the European version of soccer austerity. The clubs are publicly with UEFA in making a meaningful attempt to control financial losses, but at the same time the market leaders continue to incur losses that will never be ok under UEFA's rules. Something has to give, but for now exactly what that is remains an open question. The expectation is that the rules already in place are the answer, but that doesn't mesh with what we're seeing from the market.

Comments, questions, solutions to problems that have yet to present themselves.  Please, tell me all about it.

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