With many clubs throughout the world being stuck in mediocrity while a handful of teams spend big money, it could be time for FIFA to follow the models of some American leaguesValencia is a club with a rich history that has been threatened by recent financial downturns and shows why FIFA’s Financial Fair Play is crucial. A quick glance at the team’s recent transfers exemplifies a team that is struggling to keep its talented youth and sign significant players.
The recent transfer of Gareth Bale for close to 100 million euros places the spotlight on the gulf between teams like Real Madrid and Valencia. Not long ago Valencia was a top-flight club, winning La Liga in 2003 and 2004, along with a UEFA Cup in 2004. But, similar to many teams across Europe, Valencia is now trapped in mediocrity.
The pure extent of the problem has troubled FIFA, which reacted by passing the Financial Fair Play rules. The goals of the Financial Fair Play rules as outlined by FIFA are:
-to introduce more discipline and rationality in club football finances
-to decrease pressure on salaries and transfer fees and limit inflationary effect
-to encourage clubs to compete with(in) their revenues
-to encourage long-term investments in the youth sector and infrastructure
-to protect the long-term viability of European club football
-to ensure clubs settle their liabilities on a timely basis
The unfortunate reality of club soccer is that it is moving towards one super intercontinental league composed of the 15 teams that are financially viable, such as Barcelona and Real Madrid. But where does that leave teams like Valencia?
Over the past five years Valencia has sold its top players to avoid “going-under”, which include the likes of David Silva, Juan Mata, David Villa, and Roberto Soldado. All their transfer fees combined gave Valencia 124 million euros. Despite the organizations best efforts the team has been in a position where the top player must leave in order for the other players to receive pay, that is a situation that no club at any level could compete with.
In an interview in March with MirrorFootball, FIFA president Sepp Blatter emphasized the long-term viability of investors. “In ‘fair-play,’ there is the word ‘play,’ and you shouldn’t play with finances. Those who do are gamblers,” he said. Recently many teams have gone on huge buying sprees to only turn around the next season and sell. “As long as you’ve got serious investors who wish to put money into football, I applaud… What upsets me, what I find scandalous is when clubs accept fools. We’ve seen that in England with Portsmouth, we’ve also seen that in Switzerland.”
“In financial matters, it’s about the bottom line, profit and loss, for the whole world,” he told the newspaper.
The last phrase has been the toughest for FIFA and Blatter to achieve. Most of the large clubs in England, Spain, and France will rarely go under. But smaller teams are facing extreme finical difficulties, one of the challenges being many of the teams throughout Spain and Italy do not even own their stadiums. While Blatter and the rest of FIFA have struggled to find economic stability throughout all the leagues and levels, maybe an eye should be cast on the NFL, the leader in sports revenue for the past decade.
Perhaps FIFA should look to MLS and the NFL as two leagues that promote sustainable franchises, while not promoting complete equality. The recent NFL restructured agreement forces teams to spend a percentage of the salary cap/income, while allowing wealthier teams to max out their cap. The NFL and MLS franchises also share a decent amount of their revenues within the league. Either way the solution is not simple, yet the problem is as pressing as it has ever been.
With the recent economic straits of large clubs, such as Valencia, Malaga and QPR, a hard cap similar to the NFL would not be a bad decision by FIFA. The NFL’s new collective bargaining agreement mandates a team must use 85 percent of the cap, forcing teams to use money on the teams, and not the pockets of the owners or board. While forcing teams to pay a certain percentage of the cap may sound counter intuitive, the consistent number gives clubs more stability and consistency when planning their finical futures. This strategy would be less harsh than FIFA’s current guidelines that state, if a team cannot break even at the end of the year, they are barred from next year’s European competitions. But, if the cap was based on stadium size, average league revenue and was accompanied by a greater T.V. revenue sharing, many teams could be successful.
While the giant clubs such as Bayern and Real Madrid are surely to protest, a standard hard cap based off the varying leagues and number of Champion League spots each league is given could provide finical stability for smaller clubs looking to move into the top flights. While Valencia will still struggle, the future clubs will not and should not.