A new EU goal: Tackling football’s imbalances

Football is bigger than it has ever been, and as its business grows, it faces new regulatory challenges. The European Union has tried to stay out of football, but William Gaillard argues that it should do more to ensure that the game is played fairly

The numbers in modern football are boggling. This summer, Paris Saint-Germain (PSG) spent some €222 million to buy Brazil’s top player, Neymar, from Barcelona. An estimated global TV audience of 350 million in 200 countries tuned in to watch the Champions League final in June, when Real Madrid beat Juventus. Real’s star player, Cristiano Ronaldo, now has Facebook’s most popular personal account with 123 million followers, and the third most popular Instagram account with 116 million followers. All these figures testify to football’s mesmeric hold on our collective attention.

But as football has seen its power and influence grow to ever greater heights, there is a risk that the beautiful game is pulled too far in the direction of money and ratings.

Financial distortion

There are today just five national football leagues that really matter in Europe: La Liga in Spain, Serie A in Italy, the Bundesliga in Germany, Ligue 1 in France and the Premier League in England. And in these leagues, there are usually only five clubs that can reasonably compete seriously for the title. This does not reflect a competitive system.

Finance has a dramatic effect on the way clubs compete. This summer’s transfer market saw a sharp price inflation. As well as the record-breaking Neymar transfer, Barcelona spent €147 million on French striker Ousmane Dembélé from Borussia Dortmund, and Manchester United paid out €100 million to Everton for Romelu Lukaku. The total transfer figure from the top five European leagues was €4.45 billion for some 1,648 deals

The situation becomes particularly slanted when governments get involved, notably Qatar’s Oryx Qatar Sports Investments backing PSG, and the Abu Dhabi United Group owning Manchester City. Their investments have distorted the market in an unprecedented way: both clubs have each spent around €1.5 billion over the past ten years.

These investments come despite UEFA Financial Fair Play Regulations (FFP) that came into force three years ago to put a lid on the rapidly escalating spending. Clubs were asked to balance football-related expenditure – transfers and wages – with TV and ticket income, plus revenues raised by their commercial departments. But while Manchester City, Monaco, Inter Milan and Roma were punished for breaking the rules, none have been handed severe sanctions. The FFP has clearly not had a deterrence effect.


Where is the EU?

All this has happened without a squeak from the European Commission. The Commission is the EU’s competition regulator, with a power even greater than the equivalent agencies within the US Justice Department. It has humbled corporate giants, yet it has been mute over the question of regulating football across Europe.

Part of this is due to the political question about what sport represents. Sport is mentioned in the EU’s Lisbon Treaty as an EU competence, recognising its cultural importance. It is worth noting that while FIFA and the International Olympic Committee (IOC) both welcomed its inclusion in the Lisbon Treaty, they both seemed to assume it would exempt sport from regulation. In some ways, they were right. In practice, sport is just like any other economic activity. It should be treated as such by competition authorities, and the EU should help restore some competitive balance.

One area that is ripe for intervention is player salaries. Unlike other sports, like rugby, football does not have a salary cap. Some claim that it might not be legal to impose a cap, but there are many ways in which it could be rolled out, for example through a collective bargain negotiated through the players’ union, FIFPro.

There are still many unresolved issues surrounding the player transfer system. The overall transfer system is a sham: it allows the rich to trade players like casino chips. This ties in with questions about player agents, and the Commission has paid for no fewer than four studies on their role. We should take a leaf out of American sports, with their annual player draft, which is a much fairer way of spreading talent and competitive balance.

Scope for action

The EU has arguably done more for football than FIFA or UEFA. The 1995 Bosman ruling by the EU Court of Justice transformed football’s transfer rules, making it easier for players to move from club to club. The Bosman ruling also ended the quotas on foreign players in clubs, bringing in footballers from around the world.

Yet it was a famously non-soccer loving country, the United States, that swooped on top FIFA officials in 2015, including former president Sepp Blatter, after a string of corruption scandals. For all the EU’s reach it has none of the powers to tackle fraud, bribery and racketeering that the FBI has (or indeed, Switzerland, who launched a separate probe at the same time).

However, the EU can exert pressure by other means. Although FIFA and UEFA are lightly regulated, Swiss-based organisations, their activities in the European market are subject to EU regulatory rules. And it’s not just the Commission that has power. In September, a European Parliament inquiry into money laundering, tax avoidance and tax evasion accused FIFA and UEFA officials of being “enablers” of a system that permits players and agents to avoid paying tax. MEPs described Barcelona’s #WeAreAllLeoMessi social media campaign after star Lionel Messi’s conviction for tax fraud as “immoral”. The MEPs could prompt the Commission to extend the tax avoidance inquiries that have ensnared the likes of Amazon and McDonald’s to football players.


Openings for EU action

I believe the EU should start playing more of a role in football. One area of potential action is on social dialogue in sport. The Commission has sponsored this dialogue, but it disappeared without trace. It needs to be revived, and UEFA should join in, accepting it as a rule-making framework for labour relations.

The EU should also look more closely at the sale of broadcasting rights, which are currently sold only on a national basis. The Commission has so far held back from intervening in media rights for tournaments, even though their sale by sports organisations restricts competition. This is an area where the EU single market is not being implemented.

Action in areas like these can profoundly change the structure of football. While sporting associations always like to proclaim they are autonomous, all the scandals we have seen – from doping and cheating to outright corruption – show that there should be more monitoring and regulation.

Officials in Brussels and other EU capitals have so far been reluctant to upset football’s establishment. But football has shown that it is not capable nor willing of regulating itself: the EU needs to act.

Burson-Marsteller Senior Advisor William Gaillard spent 15 years with European football’s governing body UEFA, first as Director of Communication and Public Affairs. and later as a Senior Adviser to UEFA’s then-President, Michel Platini.

Leave a Reply