FFP Rules: More likely to inhibit rather than promote competition

[Joker]

There was this quote from Wenger on the other thread about how the FFP will supposedly make things more interesting:

"When you look at the history of England, there are Nottingham Forest, Aston Villa and Derby County who have all won championships.

"If that is possible again it will be even more interesting."

However, the FFP rules will probably ossify the football hierarchy, as Stefan Szymanski, a well known sports economist has said:

http://www.playthegame.org/fileadmin..._Szymanski.pdf

Significant risk that the dominance of the strong clubs will be enhanced, while the financial instability of lower divisions is not addressed

He also makes a good point questioning the criticism of the so called "fat cats" and "oil sheikhs" that some people love to revel in. Wenger is being disingenuous by claiming the FFP will enhance competition, when it seems to be more likely that it will simply strangle competition. You won't get the likes of Villa, Forest and County being competitive again because the only way they can is through investment from an owner, i.e. non football income. However, the new rules makes it much more difficult for owners to takeover clubs and finance losses through this "non football income" because of the demand to live within your own revenues, and the result will invariably be that the top clubs can cement their position at the top, while those not within the elite will find it very hard to achieve anything beyond mid-table mediocrity or avoiding relegation.

So perhaps we shouldn't see the FFP as a panacea. Although on the other hand, it does help us because it makes it unlikely that clubs like Villa, Everton, etc can ever begin challenging for a champions league spot, therefore reducing competition. However, let's be honest that our demand for a strong enforcement of FFP is due to selfish reasons, rather than a concern for the welfare of football as a whole.

[Coney]

However, the new rules makes it much more difficult for owners to takeover clubs and finance losses through this "non football income" because of the demand to live within your own revenues, and the result will invariably be that the top clubs can cement their position at the top, while those not within the elite will find it very hard to achieve anything beyond mid-table mediocrity or avoiding relegation.

Hang on - that is how it used to be, in the main. Clubs got revenue according to their support base along with a small amount from tv. There was a bit of advertising round the grounds with advert panels but that was about it. If your club could attract local support, you could afford to spend more on players.

It has mostly been the case before that clubs with a larger fan capture - usually in big towns - have been the winners of the title. However, a good manager can usually still punch above weight, hence the reference to Derby and Forrest, both of which succeeded due to one of the best ever managers - Brian Clough (who, of course, never managed England due to the snobs and control freaks in the FA, otherwise England might have won more trophies. No change there then.)

At least with FFP - if (IF!!!) the thing is correctly enforced, there will be more teams with a chance of getting somewhere. When you have the situation that Chavs and Citeh can just buy what they want and everyone fights over the scraps, it is more destructive. Manu have done better but that is on a negative budget that will explode in time if they don't get it under better control.

[Joker]

But the correct enforcement of the FFP will in the long term probably protect established clubs from competition, rather than open the league up. A better way to promote competition would be to put limits on advertising/sponsorship revenue, and undertake a more explicit redistribution of income from rich to less rich clubs. This regulation has strong unintended consequences that may achieve the opposite of competition. If we want football to be like it used to be, then simply stopping the "fat cats" is not enough, it will require the decommercialisation of football, which exploded after the creation of the Premier League. People like Wenger and Gazidis will not be prepared to accept that, because we (and others like Utd, Liverpool, Tottenham) have benefited from that immensely at the expense of smaller clubs. Notice how Wenger never points out the root cause of the problems in football, which is the "big bang" liberalisation that took place in the early 90s.

And this is not just my opinion, other academic papers have said similar things about FFP:

http://www.hwwi.org/fileadmin/hwwi/P...Fs/1210201.pdf

Regarding long-term effects, a tighter regulation might turn out to be dynamically inefficient as it unintentionally protects well-established clubs from being challenged by non-established clubs. Therefore, Financial Fair Play could ultimately and counter-intuitively confirm an unbalanced competition rather than making it more even. As has been shown, a redistribution of income is additionally needed to restore competitive balance. Furthermore, a more market-based instrument would be less costly than just imposing a ban of equity participants in football. Alternatively, explicitly including income from non-football operations into a redistribution mechanism could lower the incentives for patrons and private investors to become involved in football clubs.
All in all it is highly doubtful whether such a far reaching and costly form of market intervention like Financial Fair Play is actually justified in economic terms. But only time will show how football will respond to Financial Fair Play and how “fair” it really is.

[Kano]

Notice how Wenger never points out the root cause of the problems in football, which is the "big bang" liberalisation that took place in the early 90s.

wasn't a problem when we were winning trophies from what i recall.

this is no right or wrong answer anymore. the wheels have long been set in motion decades ago, so there will be winners and losers. as long as we remain in the former category then thats all that matters.

[Joker]

wasn't a problem when we were winning trophies from what i recall.

this is no right or wrong answer anymore. the wheels have long been set in motion decades ago, so there will be winners and losers. as long as we remain in the former category then thats all that matters.

That's true tbh, I just wish there was a bit more honesty from people like Gazidis, who make these quasi-"moral" arguments about the benefits of prudence, "living within your means", FFP etc, when at the end of the day we're pushing for it because we stand to gain from it.

[Kano]

it's all part of the PR from a CEO. standard procedure.