The most long term solution will surely be, to try and close the gap between all leagues.
Keep it competitive, but the money floating around is ludicrous, especially given the state of our national team, and national youth setup!
I suspect we all agree, but it 'ain't happening, unfortunately. Right now the game is becoming increasingly uncompetitive with financial advantage ever more important.
The only real answer would be a series of radical measures, including salary caps, maximum wage bills, controls on the length of player contracts or, as a minimum, enforced performance conditions (step downs on relegation, for example), an end to the blatant abuse of the loan system by the big Clubs and so on. The problem though is that the weak and ineffective football authorities have lost control. The big Clubs have the game by the nuts.
Chelsea looking to pay Cavani £220k a week but it looks like PSG will hijack the deal and pay him £300k a week...the world gone mad
FFP is going to be very interesting. There has to be a very good chance that Chelsea and Manchester City will fail to meet the targets. We need to hope that the authorities then have the strength to enforce sanctions. If they do and, as result, those two Clubs are unable to compete in the Champions League, further undermining their finances, then they could be in real difficulty. Let's wait and see. I'm expecting UEFA to bottle it, but there might be some entertaining second round effects. In the Premier League the big, big winners from FFP are Manchester United and Arsenal. Might they take legal action if sanctions are not imposed on their competitors?!!
There has to be a very good chance that Chelsea and Manchester City will fail to meet the targets.
We can but hope - but as I mention on another thread Abramovich has converted a lot of the debt into equity already and Chelsea have been no slouch in arranging some curious sponsorship deals to beef up the income side of their balance sheet. Gazprom for example have appointed Chelsea as their global energy partner whatever that means and how they coped before without a global energy partner is a mystery to me. Last year Chelsea also tied up a deal with a Burmese whiskey producer and they've signed other deals with Audi and Samsung.
Interesting points, Mundell. What are enforced performance conditions and step downs on relegation?
Back to the problem Clubs have when being relegated from the Premier League, a real issue is that they've signed players on, say, four year deals at very high wage levels. If instead of receiving parachute payments so that, in effect, they have some time to adjust whilst those players, who have failed of course, continue to receive Premier League wages, those wages automatically fell to Championship levels then the parachute payments would not be necessary.
Of course, Clubs could write such conditions into player contracts without the need for a rule that required it, but if they were alone in doing so nobody would sign for them. The result is a kind of arms race. Scudamore's solution is parachute payments, but that's because he only cares about the Premier League and, presumably, his bonus. A better solution would be to deal directly with the real problem which is that player contracts are too long and not performance related.
I'm not holding my breath here though because the status quo suits the big Clubs and they are calling the shots.
Chelsea looking to pay Cavani £220k a week but it looks like PSG will hijack the deal and pay him £300k a week...the world gone mad
Palace buying a striker for £6M just 3 years after going buncrupt and paying their creditors 1p in the £1 (including th St Johns Ambulance....what's more the striker is from Peterbrough a small club just relegated from the Championship where said striker played half of one season.......world seriously mad!
The clubs who benefit most from parachute payments are the non-established Premiership clubs who have accepted they will probably get relegated, don’t spent big and produced relegation friendly contracts. I think it is pretty essential for an established club to have them as they will generally have a bunch of players who were not good enough to keep them up on better contracts than their skills warrant. Those who don’t fall into that category, usually join another club. But a player on a decent contract will probably want to stay if there are no better offers. This squad of over paid under achievers has to be funded.
The real issue is the differential between the leagues and greed and self interest will always prevent the sensible and right distributions from occurring. So basically we are stuck with it. The model for a club like ours is surely the yo-yo route with a view to eventually sticking and building in size.
I recognise, given the nature of our debt, the reasons why we haven't entered administration over the last few years but I can't help feeling that had we gone through that pain we'd have come out the other side smiling.
The 'slate' would have been clean and we would have then been an attractive proposition to investors - would have done naff all for the creditors of course, particularly the 'friendly' creditors.
The results from this season suggest that Parachute payments don't mean automatic promotion, as long established PL clubs find themselves stuck with players on expensive contracts, which the parachute payments help pay for.
Wolves went down, Blackburn nearly went down and Bolton missed out on promotion. In previous years, the likes of Blackpool and Burnley have failed to return to the PL. From memory, the only teams who bounced back immediately were Newcastle and West Ham.
I recognise, given the nature of our debt, the reasons why we haven't entered administration over the last few years but I can't help feeling that had we gone through that pain we'd have come out the other side smiling.
The 'slate' would have been clean and we would have then been an attractive proposition to investors - would have done naff all for the creditors of course, particularly the 'friendly' creditors.
I recognise, given the nature of our debt, the reasons why we haven't entered administration over the last few years but I can't help feeling that had we gone through that pain we'd have come out the other side smiling.
The 'slate' would have been clean and we would have then been an attractive proposition to investors - would have done naff all for the creditors of course, particularly the 'friendly' creditors.
I'd rather know that we haven't took the easy crafty way out (southampton & palace) by going into administration to get success. Not the club i support.
Interesting points, Mundell. What are enforced performance conditions and step downs on relegation?
Back to the problem Clubs have when being relegated from the Premier League, a real issue is that they've signed players on, say, four year deals at very high wage levels. If instead of receiving parachute payments so that, in effect, they have some time to adjust whilst those players, who have failed of course, continue to receive Premier League wages, those wages automatically fell to Championship levels then the parachute payments would not be necessary.
Of course, Clubs could write such conditions into player contracts without the need for a rule that required it, but if they were alone in doing so nobody would sign for them. The result is a kind of arms race. Scudamore's solution is parachute payments, but that's because he only cares about the Premier League and, presumably, his bonus. A better solution would be to deal directly with the real problem which is that player contracts are too long and not performance related.
I'm not holding my breath here though because the status quo suits the big Clubs and they are calling the shots.
You clearly outline the iniquity of the present system, and offer a very sensible solution. Without wishing to play devil's advocate: would a salary cap contravene any EU regulations regarding clubs' freedom to trade?
Following VW's comments, I found this article interesting. It looks a very complicated issue and smaller clubs look like losing out. It'll take time to sort it all out but sadly, time isn't on our side
Without wishing to play devil's advocate: would a salary cap contravene any EU regulations regarding clubs' freedom to trade?
First you have to bear in mind that not all UEFA members (and of course their clubs) are also members of the EU, think of all the Norwegian, Swiss and Russian clubs for example that regularly make it into into CL and Europa Cup.
Secondly...salary caps have been used in rugby league for sometime, but that might be because no one has bothered to test whether they are legal under EU law.
Third...salary caps are by their nature inherently anticompetitive - especially given point one.
Four...UEFA will not have introduced FFP without first taking on board some detailed advice and ensuring that they are operating within EU law.
So we won't know until someone brings a case and eventually the issue will eventually end up with the ECJ making a definitive ruling and that could take some time. This is in motion already - the legal team behind the Bosman rulings are on the case. In their favour the freedom of movement and freedom of employment within the EU are fundamental rights and the EU are pretty hot on outlawing anything that distorts competition. However some collective bargaining agreements are legal, otherwise a trade union could not collectively bargain wages, working conditions etc for their members.
Following VW's comments, I found this article interesting. It looks a very complicated issue and smaller clubs look like losing out. It'll take time to sort it all out but sadly, time isn't on our side
That's a very informative article, stilladdicted. It raises the question: since FFP seems to be a fait accompli, has it received approval under EU law, or are we waiting for a test case to be brought before the Luxembourg court? While I understand the honourable objectives of FFP in "preserving the long-term stability of European football", I see what you mean about there being a possible side-effect of putting smaller clubs at a disadvantage. One other thing bugs me - and tell me if I'm being naïve here - couldn't parachute payments be seen as distorting competition under EU regulations?
Without wishing to play devil's advocate: would a salary cap contravene any EU regulations regarding clubs' freedom to trade?
First you have to bear in mind that not all UEFA members (and of course their clubs) are also members of the EU, think of all the Norwegian, Swiss and Russian clubs for example that regularly make it into into CL and Europa Cup.
Secondly...salary caps have been used in rugby league for sometime, but that might be because no one has bothered to test whether they are legal under EU law.
Third...salary caps are by their nature inherently anticompetitive - especially given point one.
Four...UEFA will not have introduced FFP without first taking on board some detailed advice and ensuring that they are operating within EU law.
So we won't know until someone brings a case and eventually the issue will eventually end up with the ECJ making a definitive ruling and that could take some time. This is in motion already - the legal team behind the Bosman rulings are on the case. In their favour the freedom of movement and freedom of employment within the EU are fundamental rights and the EU are pretty hot on outlawing anything that distorts competition. However some collective bargaining agreements are legal, otherwise a trade union could not collectively bargain wages, working conditions etc for their members.
Good points, BlackForest - you have answered my question put to stilladdicted, above. I note in particular what you say about there being a precedent in certain collective bargaining agreements, e.g. trade unions. Any thoughts about the anti-competitiveness (or otherwise) of parachute payments?
One needs to remember that established Premier League teams that get relegated need the parachute money to service the debts that have run up while trying to compete in the Premier League. Thus they need to get promoted before the parachute money runs out of they are in terrible trouble. Selling (or releasing) all the players won't make the club sustainable without these payments, so it becomes promotion or disaster (see Leeds, Charlton, Southampton, Wolves).
I have to say that, even though I'm very critical off the Administration route, we have to look at Palace and Southampton and wonder if we will ever be able to compete with them financially and they managed to get where they are by knocking all their debt and starting again.
It's isn't fair and it isn't right but if everyone else is doing it......
we did a form of self imposed administration, net result was debt restructured only to be paid back in the premiership so negligible. The ground would have been taken by the bank who had a charge on it, could have been nasty fight on that/but end result might have been lower debt on Valley?
Any thoughts about the anti-competitiveness (or otherwise) of parachute payments?
Anything that skews competition and a level playing field could be deemed to be anticompetitive but not necessarily illegal under EU law, there are some exceptions - eg where it benefits the end-user.
But, I'm not aware of any cases being brought to specifically test whether parachute payments comply with EU law or not - so we'll need a definitive ruling and that means someone needs to bring a test case.
UK law here is also governed by the Competition Act 1998 & the Enterprise Act 2002 which is compatible with EU law (arts 101 and 102 TFEU).
The problem with EU law is that it was designed to deal with cartels, price fixing and to prevent dumping etc and not with sport. However it must be applied to sport as with any industry that operates inside the EU. If pushed I'd say that parachute payments are legal on the basis that collectively the members of the football league have agreed to their use. But it's a hellishly difficult area to rule on with any degree of confidence.
The question is though whether the new system of enhanced parachute payments which increase the reward for getting relegated unfairly skew the playing field? That potentially when viewed alongside the strict FFP rules on budgets that will come into operation might be deemed uncompetitive and I have far more sympathy with that argument rather than the generic issue of whether they should be allowed or not.
Regarding salary caps...
I note in particular what you say about there being a precedent in certain collective bargaining agreements, e.g. trade unions.
However...there is no doctrine of precedent in EU law (which exists in UK law) so anyone bringing a case on the legality of salary caps and citing that particular ruling cannot rely on it to assume that salary caps will also pass EU law. However I'd expect that reasoning to be used.
I wonder whether one of the big big clubs that feel FFP will hinder their aspirations will decide to challenge the ruling in the courts on the basis of restraint of trade ?
One needs to remember that established Premier League teams that get relegated need the parachute money to service the debts that have run up while trying to compete in the Premier League. Thus they need to get promoted before the parachute money runs out of they are in terrible trouble. Selling (or releasing) all the players won't make the club sustainable without these payments, so it becomes promotion or disaster (see Leeds, Charlton, Southampton, Wolves).
I have to say that, even though I'm very critical off the Administration route, we have to look at Palace and Southampton and wonder if we will ever be able to compete with them financially and they managed to get where they are by knocking all their debt and starting again.
It's isn't fair and it isn't right but if everyone else is doing it......
About the parachute payments - haven't you hit upon an injustice of the system? You run up a huge debt, then get rewarded for doing so. Certainly doesn't happen in my own dealings with the bank.
I wonder whether one of the big big clubs that feel FFP will hinder their aspirations will decide to challenge the ruling in the courts on the basis of restraint of trade ?
As I say above - this is currently in action. An objection has been lodged with the EU Commission - google Striani if you want more details.
Comments
The only real answer would be a series of radical measures, including salary caps, maximum wage bills, controls on the length of player contracts or, as a minimum, enforced performance conditions (step downs on relegation, for example), an end to the blatant abuse of the loan system by the big Clubs and so on. The problem though is that the weak and ineffective football authorities have lost control. The big Clubs have the game by the nuts. FFP is going to be very interesting. There has to be a very good chance that Chelsea and Manchester City will fail to meet the targets. We need to hope that the authorities then have the strength to enforce sanctions. If they do and, as result, those two Clubs are unable to compete in the Champions League, further undermining their finances, then they could be in real difficulty. Let's wait and see. I'm expecting UEFA to bottle it, but there might be some entertaining second round effects. In the Premier League the big, big winners from FFP are Manchester United and Arsenal. Might they take legal action if sanctions are not imposed on their competitors?!!
We can but hope - but as I mention on another thread Abramovich has converted a lot of the debt into equity already and Chelsea have been no slouch in arranging some curious sponsorship deals to beef up the income side of their balance sheet. Gazprom for example have appointed Chelsea as their global energy partner whatever that means and how they coped before without a global energy partner is a mystery to me. Last year Chelsea also tied up a deal with a Burmese whiskey producer and they've signed other deals with Audi and Samsung.
Of course, Clubs could write such conditions into player contracts without the need for a rule that required it, but if they were alone in doing so nobody would sign for them. The result is a kind of arms race. Scudamore's solution is parachute payments, but that's because he only cares about the Premier League and, presumably, his bonus. A better solution would be to deal directly with the real problem which is that player contracts are too long and not performance related.
I'm not holding my breath here though because the status quo suits the big Clubs and they are calling the shots.
The real issue is the differential between the leagues and greed and self interest will always prevent the sensible and right distributions from occurring. So basically we are stuck with it. The model for a club like ours is surely the yo-yo route with a view to eventually sticking and building in size.
The 'slate' would have been clean and we would have then been an attractive proposition to investors - would have done naff all for the creditors of course, particularly the 'friendly' creditors.
Wolves went down, Blackburn nearly went down and Bolton missed out on promotion.
In previous years, the likes of Blackpool and Burnley have failed to return to the PL. From memory, the only teams who bounced back immediately were Newcastle and West Ham.
Hold tight everyone.
http://www.mancityfans.net/mcfnet/viewtopic.php?f=119&t=45473#p517750
First you have to bear in mind that not all UEFA members (and of course their clubs) are also members of the EU, think of all the Norwegian, Swiss and Russian clubs for example that regularly make it into into CL and Europa Cup.
Secondly...salary caps have been used in rugby league for sometime, but that might be because no one has bothered to test whether they are legal under EU law.
Third...salary caps are by their nature inherently anticompetitive - especially given point one.
Four...UEFA will not have introduced FFP without first taking on board some detailed advice and ensuring that they are operating within EU law.
So we won't know until someone brings a case and eventually the issue will eventually end up with the ECJ making a definitive ruling and that could take some time. This is in motion already - the legal team behind the Bosman rulings are on the case. In their favour the freedom of movement and freedom of employment within the EU are fundamental rights and the EU are pretty hot on outlawing anything that distorts competition. However some collective bargaining agreements are legal, otherwise a trade union could not collectively bargain wages, working conditions etc for their members.
http://forum.charltonlife.com/discussion/55841/parachute-payments-solidarity-payments-and-the-football-league#latest
I have to say that, even though I'm very critical off the Administration route, we have to look at Palace and Southampton and wonder if we will ever be able to compete with them financially and they managed to get where they are by knocking all their debt and starting again.
It's isn't fair and it isn't right but if everyone else is doing it......
What other benefits are there?
Anything that skews competition and a level playing field could be deemed to be anticompetitive but not necessarily illegal under EU law, there are some exceptions - eg where it benefits the end-user.
But, I'm not aware of any cases being brought to specifically test whether parachute payments comply with EU law or not - so we'll need a definitive ruling and that means someone needs to bring a test case.
UK law here is also governed by the Competition Act 1998 & the Enterprise Act 2002 which is compatible with EU law (arts 101 and 102 TFEU).
The problem with EU law is that it was designed to deal with cartels, price fixing and to prevent dumping etc and not with sport. However it must be applied to sport as with any industry that operates inside the EU. If pushed I'd say that parachute payments are legal on the basis that collectively the members of the football league have agreed to their use. But it's a hellishly difficult area to rule on with any degree of confidence.
The question is though whether the new system of enhanced parachute payments which increase the reward for getting relegated unfairly skew the playing field? That potentially when viewed alongside the strict FFP rules on budgets that will come into operation might be deemed uncompetitive and I have far more sympathy with that argument rather than the generic issue of whether they should be allowed or not.
Regarding salary caps...
I note in particular what you say about there being a precedent in certain collective bargaining agreements, e.g. trade unions.
However...there is no doctrine of precedent in EU law (which exists in UK law) so anyone bringing a case on the legality of salary caps and citing that particular ruling cannot rely on it to assume that salary caps will also pass EU law. However I'd expect that reasoning to be used.