Here’s a thought for these turbulent financial times in Europe: Could UEFA’s Financial Fair Play regulations (FFP) survive a collapse of the Euro?
These are the rules through which the governing body’s boss Michel Platini hopes to save European football from itself by, to oversimplify outrageously, obliging clubs to operate on a break-even basis.
They are being alluded to more and more frequently in the mainstream media simply because they will soon be upon us.
Indeed, the first reporting period relevant to FFP is the one ending in 2012; that is to say, the one many clubs are in now.
If there are any dyed-in-the-wool fans who have not yet squinted their way through UEFA’s FFP document, you can find it here.
Be warned – it runs to 74 articles, 11 (or, I should say, XI) annexes and 85 pages.
I have done so, and I have to say that I think UEFA would really struggle to implement them if the Euro disappeared at some point in a puff of white smoke.
Apart from anything else, the Euro is FFP’s currency of reference.
Clubs – such as ooh Manchester United, Chelsea, Manchester City (whose owner Sheikh Mansour Bin Zayed Al Nahyan is pictured above) – whose financial statements are denominated in a different currency will have to convert their break-even result [the difference between relevant income and relevant expenses] into Euros “at the average exchange rate of the reporting period, as published by the European Central Bank”.
So, if the Euro goes bye-bye, presumably all mentions of the defunct currency would have to be removed from the articles and replaced by something else.
But what?
The Deutschmark?
That might be the logical choice, but how would that sit with Monsieur Platini?
The US Dollar? That would kind of compound the embarrassment for Europe.
Ah, the Swiss Franc? Well, that is where UEFA is based.
Yes, OK, however bad things have got, that nightmare scenario remains a little far-fetched.
But what about the consequences if, as now deemed not remotely far-fetched, the eurozone shrank to a hard-core of Germany and a few other countries?
Well, FFP would not have to change its reference currency, but I think its impact could well be considerably diluted.
Take the case of Greece, the country generally assumed the most likely to leave the eurozone.
Well, if the New Drachma hit the streets, you could anticipate a) that it would be introduced at a level calculated to kick-start the Greek economy and b) almost irrespective of that initial exchange-rate, for a time at least, it would drop like a stone.
That would mean, in turn, that far fewer Greek clubs than at present would probably hit the €5 million (£4.3 million/$6.7 million) income/expenditure threshold at which FFP becomes applicable.
Furthermore, the allowable deficit of €45 million (£39 million/$60 million) that UEFA has enshrined for the 2013-14 and 2014-15 periods added together (provided it is covered by contributions from “equity participants and/or related parties”) might seem a king’s ransom in New Drachmas and hence undermine UEFA’s attempts to instil improved financial discipline.
Now think about the implications if Italy and Spain, host nations of some of the biggest clubs in Europe, went the same way as Greece.
You’d imagine UEFA would be well advised, in such circumstances, to delay implementation altogether until Europe’s troubled finances had settled down.
While the imposition of similarly strict financial regulations in French football has worked pretty well (although one wonders if it is responsible in part for French clubs’ failure to punch their weight in Europe) I think the inclusion in FFP of clubs from outside the eurozone would have risked sparking tensions even in the most benign background financial circumstances.
This is simply because financial operators in non-eurozone clubs will have an extra element of uncertainty – the exchange rate – to factor into their FFP-related projections.
For most clubs, most of the time, this would probably make little difference, especially as we are talking about the average exchange rate over a particular period.
But for those with results projected to come in close to FFP’s designated limits – who knows? – an unexpected convulsion in the currency markets might make a crucial difference.
On a lighter note, could I also recommend that UEFA, even at this late stage, consider rewording the heading of Article 61 (in English anyway)?
To me at least – and I doubt I am alone – the phrase “notion of acceptable deviation” conjures up images of a nature that rather detracts from the document’s seriousness of purpose.
David Owen worked for 20 years for the Financial Times in the United States, Canada, France and the UK. He ended his FT career as sports editor after the 2006 World Cup and is now freelancing, including covering the 2008 Beijing Olympics and 2010 World Cup. Owen’s Twitter feed can be accessed here.