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European football is not an industry like any other: despite recurring deficits and colossal debts, few of the companies in the sector that eventually file for bankruptcy. There are quite a few emblematic examples of bankruptcies like those of Glasgow Rangers or Parma FC, but it happens more often “do-gooders” to bail out: by-offs of loans, by private or public bailouts. Private bailouts are often the work of “sugar daddies” these benevolent patrons who inject tens of millions of euros in unsecured clubs to regain their implementation (the example of Robert Louis Dreyfus Waldemar Kita, Roman Abramovich, Hafiz Mammadov, QSI, …). This singularity of the professional football sector is identified by the Economist Sports Wladimir Andreff as the existence of a “soft budget constraint” ( Soft Budget Constraint [1,999,004]).
The Financial Fair Play: noble purpose and perverse
The authority sector (UEFA) Can only rely on the miraculous emergence of resources, each year, come the deficits? Michel Platini, the president, does not think so. He therefore promoted the Financial Fair Play (FPF), a binding mechanism football clubs do not spend more money than they earn. The aim was to end the debt that threatens the entire industry. This noble design faces a perverse effect. As explained by the economist Frederic Palomino in a position paper the EDHEC Economics Research center (forthcoming) “The FPF allows … mature clubs to capture a income share of top industry that this part would be in the absence of FPS … This additional revenue share is not obtained at the end of a competition on the merits. “ In of other words, the disadvantage FPS emerging clubs to clubs already installed. Frédéric Palomino explains:.. “ The FPF prevents new investors to set up this virtuous circle between investment, sports results and income of this, the FPF leads to consider two categories of clubs Firstly, clubs mature, which already had a first-rate players stock at the time of entry into force of FPS, and other part of clubs ‘youth’, which did not have such a stock. “
iniquitous at the continental scale, beneficial nationally
The FPF was established at a time when the Qatari decided to launch an ambitious investment program in Paris: the project was to bring the Paris Saint Germain in the circle of clubs capable of winning the Champions League. As expected, PSG was sanctioned in May 2014 (UEFA refused to consider the € 200 million paid to the club by the Qatar Tourism Authority as “ relevant income “). In France, it was particularly moved by what treatment disfavor reserved for the capital club, “Why Paris could she not émarger, such as London, Madrid, Munich or Barcelona, among the cities flagship of global football, while investors -a priori lucides- freely make the choice? Rightly, the deal seems unfair at European level. At national level, however, the consequences of FPF may appear more salutary: the economy of the hexagonal football could be less unbalanced, due to a lesser hegemony PSG …
UEFA blows hot and cold
Before the relevance of remarks on the effects of unfair FPF UEFA decided, Monday, June 29, 2015, to ease the device “making the criteria more flexible assessments to encourage investment” . But cold shower for Paris Saint Germain, he was not, at this time, no way to challenge the sanctions which the club was subject (management of payroll and restricted envelope of € 60 million on the transfer market ) … UEFA in small secretive, differed its announcement on the review of the Parisian club finances: gold -that the landmark information of the early July- accounts PSG would already returned to the balance or a season rather than commitments! This justifies in the eyes of the European body, lifting sanctions . The Paris SG fans can resume dreaming …
PSG one day in a closed European league?
What can we learn from this post in two UEFA? Obviously, the organization headed by Michel Platini wanted to say that the FPF is not dead and the sanitation target of European club finances remains a priority. But the device, because it penalizes clubs can enjoy an outdoor windfall therefore “ any benefit ” to European football, could not remain in the state. By lifting sanctions against PSG, a form of equity (between mature and emerging clubs clubs in Europe) has been restored. A hexagonal scale, however, the gap may widen between the club from the capital and other French clubs. PSG will, of course, increasingly favoring continental tournaments (at the expense of national competitions?). Will it be to take the plunge and join the other European heavyweights in a closed league (or a Premier League extended)? That is indeed the question that will itch the largest in Europe in the coming years.
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