FFP represents a set of requirements laid down by UEFA which are a condition for participation in UEFA competitions, notably the Champions League, which represents 17% of total income for participating clubs (according to the 2011 UEFA Club Licensing Report.
The published regulations specify a number of objectives, which are worth repeating here:
a) to improve the economic and financial capability of the clubs, increasing their transparency and credibility;
b) to place the necessary importance on the protection of creditors by ensuring that clubs settle their liabilities with players, social/tax authorities and other clubs punctually;
c) to introduce more discipline and rationality in club football finances;
d) to encourage clubs to operate on the basis of their own revenues;
e) to encourage responsible spending for the long-term benefit of football;
f) to protect the long-term viability and sustainability of European club football.
Now, I’m not a lawyer, but it has always seemed logical to me that a legal evaluation of FFP would start by considering the stated objectives and arguing about whether the rules are likely to achieve these ends, and whether the objectives are so broad as to permit essentially arbitrary ends. However, off the cuff comments by Michel Platini and others have given the impression that the real aim of FFP is to keep “sugar daddies” out of game, which is neither a stated objective nor one that I think is justifiable as a regulatory objective. So one issue in FFP is what it is really for, and whether the objectives are valid ones.
Whatever the objectives, it seems clear that they represent a restraint of the market in which both the players and the clubs operate. That gives the rule an economic dimension; if FFP concerned a purely sporting rule then the European courts would not interfere, but as long as there is an economic dimension they claim jurisdiction.
I’ve argued in previous blogposts that FFP represents both an excessive restraint on clubs which is unlikely to limit insolvency and significantly enhance the profits of the clubs at the expense of the players without generating any benefits for consumers. Last week Jean-Louis Dupont, one of the lawyers who represented Bosman, lodged a formal complaint against FFP which took a very similar view to the ones I have expressed (although I had not discussed these issues with him, he had read my papers).
Since this is a legal issue and not a debate about economic theory, I have asked two distinguished sports lawyers to write a blog giving their perspective on the legal issues. Economic analysis will play an important role in the case, but the framework within which the economic arguments are played out are determined by the law.
The first blog post is by Professor Steve Ross from Penn State University. Steve and I have been co-authors for a number of years, but he has written very widely on sports and related issues. As an American he brings a powerful appreciation of the jurisdiction in which most sports law case have been litigated. However, he is also an expert on sports law around the world, having worked, for example, on cases in Europe and in Australia.
The second blog is by Professor Stephen Weatherill from Oxford University. He’s an expert on EU law in general, which includes a focus on the application of EU law to sports.