Deals not rules becomes football’s new game

Financial fair play and the rules-based order

Simon Chadwick

Government and governance, International relations | Asia, South Asia, The World

20 December 2018

Challenges to football’s financial regulations highlight the shifting sands of global power and increasing frustration at who gets to set the rules, Simon Chadwick writes.

There has been much kerfuffle of late following a new round of computer hacks that have led to a series of revelations being released under the moniker of ‘Football Leaks’.

As a result, we now know discussions really have taken place amongst Europe’s leading football clubs about the formation of a super league. We also now know that French international player N’Golo Kante refused to participate in a tax avoidance scheme.

However, it has been the English Premier League’s Manchester City and France’s Ligue 1 Paris Saint Germain (PSG) that have drawn the bulk of the European Investigative Collaborations’ reporting of the leaks.

Stories about the two clubs have focused on all manner of perceived misdemeanours, ranging from third-party player ownership and secret contracts to artificially inflated sponsorship values and private deals with sports governing bodies.

Predictably, these revelations have caused uproar across football, though the loudest noises have inevitably come from Europe. Unfair, immoral and illegal have been among the barbs launched at parties connected with the revelations.

Officials from Manchester City have remained largely silent about the hack, only speaking to question the leaks’ legality and to stress that they shouldn’t be taken out of context. Even so, critics have called for the Union of European Football Associations (UEFA) to ban the club from European competitions.

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The context within which the leaks need to be set is UEFA’s Financial Fair Play (FFP) regulations. Agreed in 2009 and introduced in 2011, FFP was intended to moderate the finances of European clubs, notably by requiring them not to spend more than they earn.

UEFA’s fear was that some clubs were buying their way to success by signing players for high transfer fees, then paying them large salaries. This was deemed to be eroding competitive balance in European tournaments, resulting in the monopolisation of trophy success by a small number of large clubs.

Ultimately, FFP was a negotiated rules-based settlement involving all European clubs and national associations, which stated that those in breach of the regulations could be disqualified from European competitions, have prize money withheld or be banned from signing players.

Significantly, both City and PSG are owned by state entities from the Gulf region. The English club was already under Abu Dhabi ownership when FFP regulations were first agreed although the French club’s Qatari owners only acquired PSG in 2011.

The nationality of these owners is not, however, incidental to their apparent flouting of UEFA’s FFP regulations. Rather, it is a metaphor for broader challenges now confronting Europe, many of them created by an eastward global pivot towards Asia.

The associated economic and political turmoil that has caused and been induced by this shift are challenging the rules-based international order. An outcome of the Second World War, this order is a set of economic and political rules formulated by liberal western nations and bound up in an international network of regulations and international organisations.

However, the growing strength of Asian nations over the last two decades, allied to economic and political weaknesses in Europe and North America, has begun to challenge the global rules-based order that had prevailed during the previous fifty years. Further, the issues raised by these changes have been exacerbated by some Asian countries’ often more authoritarian forms of government.

More on this: Balancing power: will Asia's rise bring peace or war?

As such, the likes of Qatar and Abu Dhabi have begun to ask questions about the rules they have been expected to follow. For instance: Are the rules legitimate? Are they equitable? Do they represent our interests? And how can they be challenged?

In these terms, whilst UEFA’s FFP regulations may seem necessary, appropriate, and proportionate as a means through which Europeans can solve problems created in and by the West, to Qataris and Abu Dhabians the logic is much less obvious.

Whilst FFP might seem legitimate to European football clubs with established, healthy income streams, challengers to the existing order are less favourably predisposed to the regulations.

One reason for this is that the rules effectively favour an order that has been largely determined by Europeans, another being that the likes of PSG and City otherwise struggle to achieve parity with the accumulated assets and wealth of clubs like Real Madrid and Manchester United.

In the offices of Oryx Qatar Sports Investments and the Abu Dhabi United Group for Development and Investment, the rules may, therefore, be seen as being rather less liberal than the Swiss offices of UEFA otherwise appear to represent them.

More on this: How can Qatar reconcile with its neighbours?

As such, although Europeans perceive FFP as an attempt to restore equity in football, amongst the Asian owners of European football clubs the opposite is probably true, thereby justifying their posing of challenges to it.

A consequence of an erosion in rules-based order has been the emergence of an alternative, deals-based order. This need not be inconsistent with the application of rules, though the zeitgeist seems to be that deals should transplant rules – much like Donald Trump’s presidency of the United States.

The new deals-based order is similar to UEFA’s application of its FFP regulations. Indeed, Football Leaks’ flow of hacked correspondences apparently shows how the now FIFA president Gianni Infantino cut private deals with City and PSG officials to enable their continued participation in European club competitions.

As an aside, albeit related and relevant, Infantino has further proven his willingness to sustain a deals-based order by privately discussing the formation of a new FIFA Club World Cup with Saudi Arabia.

In the days following Football Leaks’ revelations, one British newspaper commented that Qatar and Abu Dhabi seem to think they can do what they want, which in part is an inconvenient truth given the economic power both countries have rapidly accumulated. That said, both are rather bereft of political power, hence their kicking against FFP regulations.

However, the owners of Manchester City and Paris Saint Germain are not football’s equivalent of mischievous school children, trying to bend rules rather than break them. Instead, Qatar and Abu Dhabi symbolise a changing world in which the rules-based, enduringly Western, global order is fracturing.

This doesn’t mean that FFP will end, though it does suggest the rules may need to be re-written in a more multilateral way. Westerners had therefore better prepare for yet more kerfuffle ahead. 

 

This piece is published in partnership with the China Soccer Observatory at the University of Nottingham.

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