Thursday 6 December 2018 10:40 pm

Did Football Leaks kill financial fair play? Where breakaway threats and claims of systematic cheating have left Uefa’s rules

Credibility has always been hard to come by for Uefa’s financial fair play rules, but a series of recent claims involving some of the sport’s richest and most powerful clubs has made the European governing body’s attempts at regulation look weak at best and, at worst, doomed.

Central to the current crisis surrounding FFP is the question of whether some clubs – in particular Manchester City and Paris Saint-Germain, champions and current leaders of the English and French leagues – have systematically broken the rules to boost their spending power, yet avoided detection and punishment by Uefa.

Reports in German publication Der Spiegel based on documents from whistleblowing website Football Leaks last month accused City of hiding direct investment from their Abu Dhabi owners by inflating the value of sponsorship deals and routing money through third parties. Similar allegations have been aimed at PSG, who are owned by Qatar.

Both clubs have been placed under renewed investigation by Uefa. City have refused to comment on the claims other than to say they are an “organised and clear” attempt to damage their reputation. PSG, who own the world’s two most expensive players in Neymar and Kylian Mbappe, are challenging the decision to reopen the case against them.

While Uefa has been willing to ban smaller clubs, such as Besiktas, from the Champions League and Europa League it is yet to use its ultimate punishment on the biggest teams. When City and PSG were found to be in breach in 2014, the two super-rich teams received mostly financial sanctions.

Among the cache of emails allegedly obtained by Football Leaks is an internal City message that says the club’s hierarchy would sooner hire “the 50 best lawyers in the world to sue [Uefa] for 10 years” and bring down FFP altogether than accept punishment they felt to be unduly severe.

Perhaps the most revealing correspondence suggested that City’s agreed settlement with Uefa had been the result not of an independent process but a behind-closed-doors deal struck between the club’s chief executive Ferran Soriano and then-Uefa general secretary Gianni Infantino – now in charge of world governing body Fifa.

The claims have left Uefa looking clueless, toothless and craven, their rules a sham. If powerful clubs can flout the rules and bully Uefa into soft-touch treatment, supporters might ask, then what is the point of any team playing by the book. So has Football Leaks killed FFP?

Laudable aims

Support for the rules, which broadly require clubs to break even, is based on their laudable twin aims: to prevent clubs from going out of business, and to maintain a level of competitive balance necessary to keep the Champions League interesting.

Regulation in some form is “a necessity”, according to leading agent Jon Smith, who adds FFP “was put in place for all the right reasons”. “If you let it be determined purely by market forces,” says sports lawyer Satish Khandke, “then some participants will fall by the wayside.”

“There is a common misunderstanding about FFP, that it is an instrument of control,” says football finance expert Professor Simon Chadwick,. “However, it never was and never will be; instead, it is a mechanism designed to moderate club finances.”

A major problem, however, is that FFP has favoured the established elite and, by using revenue as the key measurement, made it more difficult for new teams to rise up by spending heavily – even if, in the cases of City and PSG, their owners can ensure they remain debt-free.

“It therefore has distorted the market and arguably made football less exciting,” says sports lawyer Simon Leaf.

Subjective and arguable

Enforcing the rules is also a headache for Uefa, with clubs looking to exploit every loophole and both the severity of punishments and essential legality of FFP open to legal challenge.

Whether clubs have inflated the value of sponsorship contracts with associated entities, for instance, is a partially subjective and arguable matter. Some teams’ expenditure on youth projects – another grey area – has also come under close scrutiny from Uefa’s auditors, according to one industry source.

AC Milan, the most high-profile club to face a ban from Uefa competitions, succeeded in overturning it in July by appealing to the Court of Arbitration for Sport. Lawyers for the seven-time European champions argued that the suspension was excessive given that other clubs – City, PSG – had escaped bans.

No club has yet challenged the legality of FFP, which was drawn up in conjunction with the European Club Association, a lobbying body for more than 200 leading teams, although – as the email leaks purport to illustrate – it remains an option should Uefa antagonise one of its super-rich participants too much.

Legally ambiguous

Legally, FFP is ambiguous. It restricts the free market, making it a breach of competition law – unless it satisfies two tests: a justifiable objective, and proportionality. Khandke, of Charles Russell Speechlys’ integrity services unit, says Uefa is on “fairly safe” ground with the first test, but that the second is questionable.

Uefa has taken steps to strengthen its position – drafting the rules with a nod to the laws and forging close links with the EU Commission – but Leaf, a managing associate at Mishcon de Reya, believes it is “surely only a matter of time before aggrieved clubs with deep pockets challenge any punishments they consider onerous and contrary to law”.

“Should one or more clubs decide to challenge it in whatever form,” says Chadwick, Professor of Sports Enterprise at Salford University, “it is not inconceivable that it could easily begin to fracture.”

Breakaway threats

The other ace up the sleeves of the biggest clubs is the threat of abandoning Uefa and setting up their own breakaway competition – a European Super League, detailed talks about which were also revealed in the Football Leaks documents.

It is no coincidence that Uefa agreed to give more places and a greater share of money to the most powerful teams for the next cycle of European competitions while its most powerful constituents pondered a breakaway. It is these dynamics which also shape FFP.

“Albeit that it’s the governing body, Uefa isn’t necessarily carrying the biggest stick,” says Khandke.

Uefa's tough talk

Uefa has pledged to get tough on City and PSG if they are found to have cheated FFP. President Aleksander Ceferin said this week there was a “concrete case” against the former and an outcome was due “very soon”. Whether it dares to back up that talk remains to be seen.

Ceferin’s words may be aimed to please smaller national associations as he canvasses for a second term, while also setting out Uefa’s negotiating position, says Chadwick.

“There’s a battle for power, position and money going on in European football, and this is a Uefa gambit in seeking to ensure it retains it pre-eminent position in the sport,” he adds.

Khandke believes FFP is facing its biggest test in its eventful nine-year history. “It’s a tightrope for Uefa to walk,” he says. “They’ve got to be seen at least to be doing something to maintain the competitive balance, but if they do too much they’re in danger of the competition being devalued by those clubs no longer participating.”

A continued compromise

Unless forced to by legal challenge, abandoning FFP altogether appears Uefa’s least likely option. It has always been a compromise approach based on consensus and retains broad support from a majority of clubs – if it didn’t, it would dissolve overnight.

The rules may have to evolve, however. Smith, chairman and founder of The Fans Agency, believes revenue is the wrong yardstick and another metric is needed. “It’s got to speak for all the clubs,” he says.

Hard caps, like those used in American sports, are also a long shot. Says Khandke: “The more likely scenario is they’ll stay soft – sustainability rather than overtly trying to rebalance the playing field. They would get a breakaway scenario rearing its ugly head again.”

Debate over the future of FFP, says Chadwick, echoes another tortuous set of negotiations: “It is rather like Britain’s Brexit deal: it pursues the middle way; it is a compromise; but in trying to satisfy everyone it ends up satisfying no one. Similarly, in some ways there is no better deal.

“The governing body walks a fine line between meeting the needs of smaller, less powerful associations and those now pressing for money whilst threatening breakaway. It requires hugely astute political leadership at the top of Uefa.”