Thursday, 27 June 2013

Bundesliga - The Financial Fair Play Preview

The Financial Fair Play idea suggested by UEFA in order to ensure proper spending habits and financial health among all its clubs has been a perennial newsmaker. This was created in response to clubs going under due to spending money they didn't have. Portsmouth and Leeds are two examples. Several others were unable to pay salaries. UEFA saw this as a problem to be arrested, and came up with this idea to improve the financial situation.

This is what Financial Fair Play, at its most basic, entails:

  • Clubs must spend within their means i.e. expenditure must not exceed club revenue.
  • There are varying ranges of punishments for clubs making losses, the most extreme of which is expulsion from UEFA competitions till said club is able to comply.
A compliant system is already in place in Germany. Thanks to the "fifty plus one" rule put in place in the 90s, no single individual or group of private investors can majority-own any club. No club that doesn't comply is even allowed to play. Many of them rely heavily on scouting and the academy. This has served clubs like Freiburg and Borussia Dortmund quite well recently.

The financial model of the Bundesliga and the "team" nature of the clubs was being fronted as The Perfect Solution, particularly in the English media last month. The tickets are cheap, the clubs aren't at the mercy of the banks and the fans are happy, what's not to like?

Football fans, however, also want their team to do consistently well on the pitch and for "success" to mean more than just a season or two of improvement. And this is what the financial haven of the Bundesliga has failed to deliver.

The numbers are staggering. The Bundesliga was formed in 1963. Bayern Munich's first title came in 1968-69, and they've swept 20 of the following 44 seasons. On three occasions, they managed to win a hat trick of titles. They did the domestic Double 8 times (no other German club has done it more than once), and they won the Treble last season in the most dominant fashion imaginable.

No team (except Bayern, obviously) has more Bundesliga titles than him. No wonder he looks so happy.

The mid to late 70's saw Borussia Monchengladbach and Hamburger SV enjoy some success, but since then it has largely been the Bayern show with the odd title or two slipping away. As European football's viewership and support for the top clubs rose globally, Bayern's profile and bank balance grew exponentially with fantastic commercial revenue. Once they pulled away as the financial power in the league, nobody else stood a chance of sustained success no matter how bad a season or two Bayern had.

Bayern didn't even qualify for the Champions League in 2006-07. They spent 93 million and won the domestic Double next season. They followed up a disappointing 2010-12 by spending 61 million and winning the Treble. The power of riches is sometimes grossly underestimated in the face of heart-warming underdog victories. Despite convincingly putting the Bavarian giants away two seasons in a row and beating Real Madrid with a team that cost less than Kaka, Borussia Dortmund could but look on helplessly as Bayern won back their place at the top, snared Gotze even before the European Cup Final, and are now almost certain to get Lewandowski.

"And they thought Borussia Dortmund finished us"

Werder Bremen narrowly escaped relegation last season. Stuttgart and Wolfsburg finished in the bottom half in two of the last three seasons. Borussia Dortmund, despite winning the title twice in a row, finished a full 25 points behind Bayern last season and have been losing the likes of Kagawa, Sahin, Gotze, and most certainly Lewandowski next summer if not this, to richer clubs. This is the fate of the four latest non-Bayern winners of the Bundesliga. The challengers don't last long, and the end isn't pretty.

Can't one consider this a preview to life under FFP?

Imagine this being implemented on a global scale. Money already talks. In the last 3 seasons, 10 of the 12 Champions League semifinalists were financial giants. The difference between this year's semifinal and the last was just one team. What if ambitious interlopers could no longer make their way into the European elite, like Chelsea or PSG have? Money will still talk, it always has. It's just that under FFP, as in Germany, the money (and hence long-term success) will always be with the same teams.

I'm not for irrresponsible spending or huge debts and losses, but FFP is biased in favour of clubs who already have the big revenues. Building a period of success on scouting and youth, by "doing it the right way", is the line being fronted by the proponents of FFP. Sadly, it is little more than lip-service. Such a route to success has always been tried in Germany, has worked in the short term, and has always ultimately crashed in front of the rich and powerful.