Manchester City's CAS ruling highlights hollowness of FFP, UEFA should learn from NBA to level the playing field

UAE’s City Football Group-owned Manchester City were cleared of Financial Fair Play regulations on 13 July by the Court of Arbitration of Sports (CAS).

Srijandeep Das July 15, 2020 17:29:02 IST
Manchester City's CAS ruling highlights hollowness of FFP, UEFA should learn from NBA to level the playing field

Sometimes we need to squint to see the truth. Especially when fine lines can come no finer than the terms and conditions applied to the laws and bylaws of right and wrong in one of the most competitive industries in the world - the football industry.

UAE’s City Football Group-owned Manchester City were cleared of wrongdoing on 13 July by the Court of Arbitration of Sports (CAS). Their two-season Champions League ban has been lifted. But before we get lost in the befuddling details, let us talk about how the optics look like from the outside.

For the average football club who have to sell to buy, like Adebayo Akinfenwa’s Wycombe Wanderers, or the Premier League Champions, Liverpool; more accurately, for any club who isn’t bankrolled by oligarchs, this is an expunging of crime and not alleviation from it.

City know what they have done, and knew they could get away with it - by the sheer well of their resources. For those clubs, the ones left aggrieved by the ruling, this feels like a death gong for Financial Fair Play (FFP), a collective sigh of disbelief. For the ones they stand to benefit from this ruling, like Roman Abramovich’s Chelsea, it’s the spastic waving of the chequered flag signalling the start of a footballing equivalent of an arms race. The legal precedent used by City thus becomes a blueprint and an escape rope.

There’s a deeper sense of resentment now more than ever. This is at a time when non-existential gate receipts have crippled the transfer dealings of even the best (Jugen Klopp’s Liverpool reportedly could not complete a deal for star forward Timo Werner despite sustained interest), and leagues like the Bundesliga faced a 750 Million Euros loss, and once a permanent fixture in the Premier League, Wigan Athletic have declared bankruptcy.

Manchester Citys CAS ruling highlights hollowness of FFP UEFA should learn from NBA to level the playing field

CAS ruled that Manchseter City did not breach UEFA's FFP rules by disguising equity funding as sponsorship. AP

The above-mentioned clubs, the do-it-by-the-books institutions needed catharsis in time of corona. Instead, they got a shrug.

CAS declared that Manchester City did not disguise equity funding in the visage of sponsorship money. They, however, ruled that the club obstructed the timely process of an audit by UEFA, and have decreased their fine from an initial 30 million Euros to 10 million Euros.

The two-season Champions League ban UEFA ruling coupled with the 30 million fine came in February 2020. This was an investigation conducted in reply to reports from German publication Der Speigel in 2018 claiming that the Sheik Mansour-owned club exaggerated their sponsorship income between 2012 and 2016. The Manchester City e-mail leaks supplied as evidence by the German publication were damning. They suggested a flagrant, dubious waiving of the FFP rules and a future attempt to whitewash any evidence.

City football group pleaded that the means of procuring those e-mails were illegal, therefore, there can be no legal precedence on the veracity of those facts and appealed against the decision.

Yesterday’s statement from CAS read: “Following the hearing, the CAS Panel deliberated and concluded that the decision issued on 14 February 2020 by the Adjudicatory Chamber of the CFCB [UEFA Club Financial Control Body] should be set aside.”

“The CAS award emphasized that most of the alleged breaches reported by the Adjudicatory Chamber of the CFCB were either not established or time-barred.”

UEFA’s statement following the ruling helped us break that CAS statement down.

“UEFA notes that the CAS panel found that there was insufficient conclusive evidence to uphold all of the CFCBs conclusions in this specific case and that many of the alleged breaches were time-barred due to the 5 year time period foreseen in the UEFA regulations."

According to Article 37 of UEFA’s own procedural rules covering the CFCB, “Prosecution is barred after five years for all breaches of the UEFA Club Licensing and FFP Rules”. Which is to say, after 5 years from the start of any violation, the prosecution is barred from presenting a case against the accused.

The fact that this process took UEFA 8 years conveniently folds rather neatly into the timing of the ban and the CAS ruling. Thus making it a one-sided case where City were able to present their side of the paperwork with ample time to right any wrongs.

Brazenly and boldly, City posted their own statement on social media wearing the figurative garb of a martyr with mud on his robes and a cross on his shoulder welcoming the “implications of today’s ruling as a validation of the Club’s position.” The regime is anything but saintly.

To quote Jonathan Liew of the Guardian: “Does a regime serially defying a United Nations arms embargo in Libya – according to the UN’s own reports – strike you as the sort that places a high premium on bureaucratic process? Does the family that bought itself the world’s largest super-yacht – a $600m behemoth two-thirds the size of the Titanic and reportedly equipped with its own missile defence system – strike you as the sort to take a swingeing punishment with humility and good grace?

“Now: does this strike you as a group of people that is going to be intimidated by the fine print of Article 56, section (a) of the 2018 edition of Uefa’s Club Licensing and Financial Fair Play Regulations?”

Ex-UEFA communication chief, William Gaillard, had this to say: “This ruling will degenerate the European club competition into a tournament between Saudi Arabia, Qatar and the United Arab Emirates – I don’t know if the Chinese want to join in. The 10 million Euros fine (for Manchester City) will be like giving a tip to a waiter in a cafe.

“I think there will be a lot of dismay on the part of the other clubs - it leaves them unprotected, including the English clubs.”

Gaillard, who was involved in the construction of Financial Fair Play rules, goes onto explain why this ruling is detrimental to club football: “When you have an owner who is in football to make a legitimate profit, to be faced with competitors with the deepest pockets in the world, is incredibly discouraging. If I were a legitimate investor, I would divest from football.

"...if FFP should be repealed then we should be focused on competitive balance just like the rules in the US with luxury tax (additional costs paid by American sports teams who spend over the agreed salary cap) or wealth tax or salary caps...we need to look at very drastic measures, otherwise the game will degenerate.”

Those who neigh that it is nigh impossible for parity to be achieved in football should look across the pond for inspiration. The NBA, while not as global as football, is without a doubt many years ahead of the curb in trying to level the playing in a competitive league. The two-round trade structure limits intake and the outgoings to maintain a markedly better ecosystem where players in terms of assets can have time to develop.

Furthermore, the draft lottery system ensures that the 14 teams who would not make the play-off spots are assigned an order for the first four picks of the first round on the basis of a lottery. The rest of the league’s picks are then decided by descending order of their positions, with worse teams picking earlier. What this does, is to give, a club like Southampton who are not able to secure a European league spot, a chance for securing a top, emerging talent. The draft lottery system and the draft combine nourishes teams who aren’t better off, and provides youngsters with a more idyllic environment to develop their skills and grow into a team that is not thronged by superstars.

To elaborate further: A skinny 21-year-old was 1st round, 3rd pick for the Chicago Bulls in 1984. The Chicago Bulls were ninth in the Eastern Conference. It wouldn’t be until 1988 that that now-muscular 25-year-old Michael Jordan would elevate the Bulls to a third spot and into the play-offs. This was after the Bulls finished 10th, seventh, eighth, eighth, in the league since Jordan’s recruitment. By the time Jordan retired with the Chicago side, the once spindly organisation was one of the best-run units in world sport, their number 23 a global icon, and his team a six-time NBA championship winner.

However, due to the sheer scale of European football, this remodelling project may take years to fully realise. Consider this: There are approximately a professional football players pool of more than 265 million, according to a 2018 FIFA survey. This is about 4% of the earth’s population who at any time be procured by a club.

There are 195 countries in the world. Which is to say, that on an average, each one of those countries could field an army of 1 million footballers at least, if a sporty, intergalactic alien race were to challenge earth to a kickabout, in the manner of the Michael Jordan featured animation movie, Space Jam. There are about 70,000+ professional basketball players in the world, in comparison. The standardisation of a trading system in a sport that used to a transfer/loan model, has to be a gigantic effort.

But it is not unrealistic. Almost as many countries that have football leagues, also have their national basketball leagues. Therefore, it’s a large-scale question of administration, policy development and a process of signing emerging under-18 as well as professional football players onto a global charter, which doubles up as a database of active footballers. Similar in some sense to SoundExchange.

SoundExchange is where every musician in the world who hope to climb the Billboard charts need to register, with the non-profit organisation, which keep track of all the streaming and sales numbers. A lot of number crunching and legal hours will be involved.

The NBA benefits from being the most attractive league in the world, giving it a monopoly of the world’s best in basketball. The best players from the EuroLeague (Nikola Jovic), Spain’s Liga ACB (Pau Gasol, Marc Gasol), etc. make NBA and the USA the Mecca of world basketball. The same can be said to a degree about the English Premier League.

The reason why NBA enjoys its position is that it decided to be a model for the rest of the other leagues in the world, through an unerring sense of course-correction under the stewardship of league commissioner and visionary, David Stern and now, Adam Silver. There’s no reason why the heads of the Premier League, Bundesliga, LaLiga can’t take the lead into creating a more fair ecosystem.

One of the foreseeable difficulties can be managing upper limits, i.e. finding a correct, common consensus on the proportion of draft picks, the rounds of draft picks, the salary cap, and luxury tax for each league, accounting for exchange rates of a particular currency, and the canvassing each transfer with the most amounts of fairness in mind in the due process. UEFA will find itself inserted more actively in the trade process, thereby giving the association more homogeneity and transparency between the dealings and contract negotiations, like the Collective Bargaining Agreement (CBA) dictates for the NBA.

The CBA is revised usually on a seven-year period to keep up to date with the financial realities of the times. The NBA has two kinds of salary caps: a soft cap and a hard cap. The Luxury tax, as mentioned earlier, is levied on teams that go beyond a fixed percentage of revenue they can spend on player wages (soft cap). More the error margin, the higher the tax rate. For example, if the salary cap is 100 million USD, and a team spends 139 million USD, the erring team will have to pay an extra 95 million USD in luxury tax - which is almost the salary cap itself.

Teams who go beyond 6 million USD above the cap level (known as Tax Apron) are prohibited from trading players and are forced to wait until free agency. If any team tries to step outside the rules, they would be hard-capped by the NBA for rest of the season, and be forced to assets and contract to maintain said hard cap.

This stinging tax system also safeguards teams from irresponsible ownerships from running into high debt repayments leveraged on the team’s holdings. For example. private equity investor, Tom Hicks, has a rather distasteful track record of running teams close to bankruptcy by his mode of personal profiteering: Rangers, Liverpool FC, Cruzeiro and Corinthians were some of his victims.

NBA-styled luxury tax and salary caps will play a big part in this movement, should it arrive (and it should), and would be tempered with existing FFP ‘earn-to-spend’ models. The current FFP model that hinges largely on money recouped from sponsorship, gate receipts, transfer funds, tv rights, merchandising, i.e. revenue generated is still skewed to benefit the more celebrated, and successful clubs, and not so much in favour of smaller ones.

While the intention to move towards a meritocratic system seems a necessary evolutionary step, with the plans of a Super League looming large, a kinder system that makes sure that no club is left behind is definitely a more humane approach to the problems.

Let me take the opportunity to quote American physician and author, Ira Byock:

“A student once asked anthropologist Margaret Mead, “What is the earliest sign of civilization?” The student expected her to say a clay pot, a grinding stone, or maybe a weapon.

“Margaret Mead thought for a moment, then she said, “A healed femur.”

“A femur is the longest bone in the body, linking hip to knee. In societies without the benefits of modern medicine, it takes about six weeks of rest for a fractured femur to heal. A healed femur shows that someone cared for the injured person, did their hunting and gathering, stayed with them, and offered physical protection and human companionship until the injury could mend.

“Mead explained that where the law of the jungle—the survival of the fittest—rules, no healed femurs are found. The first sign of civilization is compassion, seen in a healed femur.”

Smaller clubs need to heal. UEFA are faced with two options: Free itself from the yolk of unscrupulous power or usher the age of a European Super League that resigns sustainably-run, local clubs to the endangered species list.

Football reflects the world and like the Ouroboros, both are on a path of self-consumption. Yet unlike COVID-19, there is a cure to this sickness: UEFA can choose to swallow the bitter medicine and learn from their cross-Atlantic peers and vaccinate future generations of football institutions from moral and financial bankruptcy. It will not be easy, but it’ll be worth it.

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