Monday, September 3, 2012

Kick back

But don't relax, because Fair Play may mean mediocre for European football, says Rob Simmons of Lancaster University;
As the 2012/13 football season kicks off, many fans, journalists, and social commentators will be heard saying that: a) the gap in financial resources between large and small clubs is greater than ever, b) star players at big clubs such as Barcelona, Chelsea, Real Madrid, Manchester City and Manchester United earn exorbitant salaries, and c) the finances of several clubs are out of control, as clubs that are hungry for success generate large financial losses as their spending levels on transfer fees and player salaries are driven up.
Can't get away from those 1%ers!  What to do?  What to do?
This perceived lack of financial discipline has led to UEFA’s [Union of European Football Assns.] new Financial Fair Play initiative. As a condition of entry into UEFA's Champions League and Europa League tournaments, clubs that are eligible for these competitions have to demonstrate to UEFA that their finances are in good order. 
Which probably doesn't bode well for the quality of the teams' players;
  • The player labour market is broadly competitive, and players will migrate to where expected returns are highest .... Expected returns are partly monetary (high salaries and opportunities for endorsements) and partly non-monetary (the value of winning trophies – which in turn helps raise salaries and endorsement potential). 
  • Empirical research shows how high spending on players relative to rivals translates into higher team positions across several European leagues .... Restrictions on player budgets will translate into reduced potential to hire star players. This has two implications – it becomes harder for new teams to challenge established clubs in the Champions League. And empirical research from England shows that gate attendances and broadcast audiences are influenced by the total quality of two teams in a given league match as proxied by total wage bill .... Restrictions on player budgets could well imply reduced quality of league competition – and reduced values of broadcast rights sales.
  • UEFA needs successful and glamorous players and teams in order to promote its Champions League brand. The Champions League would be far less attractive to viewers, sponsors, and advertisers without Barcelona and Lionel Messi, or Real Madrid and Cristiano Ronaldo. But Barcelona runs large deficits, underwritten by club members and local government. While Real Madrid posted healthy profits in 2009/10 and 2010/11 (£38m and £40m respectively), Barcelona posted a €69m loss on its 2009/10 balance sheet. In the end, a threat by UEFA to exclude Barcelona from the Champions League cannot be credible. These clubs could join with others to threaten formation of a rival league similar in format to the Champions League. Broadcasters, sponsors and fans would surely prefer a competition with deficit-ridden Barcelona and Manchester City to a competition without these big-spending teams but with a group of financially disciplined yet mediocre second-string teams from around Europe. 
One gets what one pays for, even in Europe.

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