Originally posted on YOUAREMYARSENAL.
It may seem odd to report on Financial Fair Play on an Arsenal blog without a focus or direct link to the club. But news this past weekend caused me and others to take notice and well, on first blush it presents the possibility of a worrying trend to circumvent FFP.
Reports have come out this past weekend saying that Bayern Munich are looking to support an MLS side at some time in the near future. This follows the news that Manchester City have formed New York City Football Club, who will enter the MLS in 2015.
A lot of people, especially in the states, will be delighted with these two potential link ups, as it supposedly highlights the growing popularity of the MLS and the possibility that more link up’s with some of Europe’s elite clubs will occur. These link-ups will see the European sides hopefully help the MLS sides financially, assist in improving the coaching and development of youth players, and lead to potential loan deals of youngsters from Europe to America. All of this having the knock on effect of increasing the level of quality on show. Perhaps most importantly, it will also see an increase of European sides playing in America against their ‘partner club.’
Whilst on paper, this looks all well and good – Manchester City for example have invested $100m into the league to ‘buy’ into their MLS franchise – I see it as a worrying danger to the future of European football, as clubs can potentially use the MLS clubs to circumnavigate the Financial Fair Play rules.
They way I see it working is as follows: Manchester City (for example) want to buy a player, lets call him Lionel Messi. Now Manchester City’s owners have the money to buy Messi, however, a £100 million transfer fee will put them in breach of UEFA’s regulation’s. So rather than buy him themselves, they buy him through their MLS franchise, who then immediately loan him to the European side for the length of his contract.
Manchester City then get a player of real quality, but at no cost, allowing them to balance the books when it comes to FFP.
I’ve provided an extreme example. Yes, MLS has stringent player contract and payment models but you get the point. A player of quality could be had and loaned to the bigger club without it violating any rules. Conversely, in England were the size of squads are being restricted, the MLS seems a great place for a club with unlimited fund to buy loads of talented young players and offload them without the club taking any hit.
The broader problem is that this has potential to expand to leagues outside the MLS, it can happen with any league throughout the world, outside of Europe. Whether it is a link up with an American side, an Asian side, an Australian side or a South American side. They would all act as the middle man, absorbing the cost of the transfer into their accounts – which is then written off by their owners – and allowing the European side to stay with UEFA FFP rules.
It’s not all too dissimilar to what already happens throughout the business world. For example, Starbucks use second tier companies based in tax havens to ‘buy beans’ to ensure their UK business does not make a profit, therefore avoiding UK Corporation tax. This method could work in a very similar method, with football clubs using sides outside of Europe to write off expensive transfer’s.
The MLS has very strict financial rules with regards to wages, however, these will also be circumnavigated as the European club will take the wage. I am also sure the MLS will turn a blind eye to being accomplices to this loophole if it ensures the League see’s a bit of the oil money currently in Europe. $100 million a franchise buys a lot of friends.
How these link up’s between European and MLS sides actually works will still be a case of ‘wait and see’ but the speculation of the scenario above, that European clubs will use them as an FFP avoidance scheme has real potential and should be a worrying sign. But we know it won’t – so long as everyone gets their palm greased.
This article was originally written and published by Keenos for our American friends YOUAREMYARSENAL.