Are big clubs using MLS to get around FFP?

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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.

Keenos

 

 

The Arsenal and Me – Hascim’s Story

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I almost became a Chav. I actually thought that Zola was the best player ever to play the beautiful game. I knew about Chelsea players more than the likes of Wright, Lee Dixon, Kevin Campbell, Merson, Bould, Alan Smith, George Graham etc. for the sole reason I grew up surrounded by Chelsea fans and watched some of their matches and only the odd Arsenal game.

It was difficult to watch any Arsenal matches back then. We didn’t have that coverage to such matches easily. You know the technological problems of a 3rd world country like Kenya in the 90s and I was just 5 yrs old then! I had never heard of a mobile phone back then let alone the internet or cable television, imagine! Most of the information about the EPL came from reading the daily newspapers which will be a day or two late!

I only read about The Arsenal signing the likes of Bergkamp, AW, Petit etc. in the papers. I also read about the 1998 double in the papers though I had watched just two matches that campaign one against Southampton I remember! At least I was ten back then and running away from extra tuition and Madrassa classes to just go watch football would earn one a thorough beating.

Good thing though that was a world cup year and everyone watched the world cup. I came to know more about Bergkamp, Petit and Vieira from just watching the world cup matches. We later signed Henry and Davor Suker; Croatia and France top scorers in that tournament. Sadly, I didn’t get to watch them play for The Arsenal as I had now moved to the upper classes and needed to concentrate a lot more on my studies. Thanks goodness I only read about the 6-1 loss to Utd in the papers!

In Feb 2002, I joined a national school in Nairobi, the capital city of Kenya for my secondary school education. It was there that I met Ian Kipchirchir, a devoted Gooner and my transformation to a fully pledged Arsenal fan was complete. He sneaked a small portable radio to school and we would listen to the 5 o’clock BBC live commentary every Saturday and the midnight sports news in midweek just to know how The Arsenal had fared. It was risky as it would lead to 2 weeks suspension if we were caught but who cared!

I could now watch more games when I was on holiday or not in school. It was now easy to catch the matches at the local joint as many people now had cable television coverage. I became completely engrossed in football and The Arsenal. I didn’t want to miss a single match. I would stay late into the night or walk long distances just to find a place to watch The Arsenal play. What a team we had then.

The years 1996-2005 were great years. The squad was complete. It was composed of players with great technical ability and just sheer physical strength. It was a great blend of players who complemented one another very well. It didn’t matter whether we lost key players because they were adequately replaced. The desire and passion to win was just vivid and add to it the panache in the overall team play. Winning was the only thing.

The years that followed that very successful period were very difficult as the club underwent many changes. The summer of 2005 saw an overhaul of the squad. The old guard was replaced by unproven precocious players and saw the shift from big, tall players to small, technical players. This came just after the greatest achievement for the club and English football; going the whole season unbeaten and just before moving to the new stadium. I really thought we would dominate English football for years to come after such an achievement. I was wrong…

The approach the club took their after was not the best at least in my opinion. Trophies were replaced by the ‘top four trophy’, returning injured players became LANS which was the biggest flaw in AW’s management in that same period, average players became overpaid, signing quality players became a taboo, the young players would be killed if better and proven players were signed, the cups lost their importance, more players became susceptible to injuries and would be sidelined for longer periods leaving the squad even thinner, change of formation and we started selling our star players without adequate replacements or completely fail to replace them.

In a nutshell the winning mentality was gone. Excuses for poor performances became the order of the day. Most players were average and/or not suitable to play the Wengerball. Players started being played out of position. Same tactics were used regardless of opposition and most players were almost similar to one another with absolutely no squad depth. For eight consecutive seasons our capitulation was just as similar as the season past yet nothing was done about it. Mistakes were never learnt and have never been even this 2013/14 season.

We always dither in the transfer market. Indecision and penny-pinching takes the better of our manager in the transfer window and still refuses to address the glaring problems of the team. 9 seasons since we last won a trophy the squad still has one 2/3 players short more notably a super striker and a proper winger. OG is a good player but we will never win the league with him as our main striker even if he were to stay fit the whole season. By our own standards he is not the best out there. Can we do better? Absolutely…

This season we can win the league but let us not deceive ourselves that this already thin squad can sustain a title challenge. Let 2007/08 be a great lesson. We must sign another striker and he should be better than what we have. Hope we win something this season. The whole team and the fans deserve it.

That said it is easy to brush aside the overseas fan base just because we’ve never stood on the terraces of the North Bank at Highbury nor been to the Grove but we share the same passion. We win we bask in the same glory; we lose we share the same pain and angst. I am Arsenal and always will be…

Hascim

If you would like to tell your Arsenal story, click here

Ticket Price Rises, Andre Villas Boas, Bayern Munich and Luis Suarez

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Ticket Price Rises

Arsenal announced before the weekend defeat against Manchester City that they were planning to rise tickets in line with the rate of inflation – a 3% rise. Now under normal circumstances, I would understand this. Costs go up every year, so all companies have to squeeze their prices up a little every year. Either that or find additional revenue elsewhere. And that is my problem, the new Premier League TV deal will increase clubs income by 71%. The new Champions League deal is expected to double a clubs income, and the new Puma kit deal is a 428% increase on the old Nike one.

By my rough maths, once these new deals kick in, Arsenal will be increasing their income by around £83 million (£25m extra in sponsorship, £25m extra in CL money, £35m extra in PL money). This will see our revenue increase to around £335m, or around a 38% increase.

So why, I ask, are prices going up with the justification that it is ‘inflation’ when our increased revenue from other area’s far outstrips the inflation increase? As I have explained before, the club could have decreased prices to just £21.25 and maintained the same revenue as now. Where is all this money going to end up? Will it go straight to the players pockets? Will the board give themselves pay rises and bonuses? Or will they start paying out a dividend.

All I know is that with this 3% increase, the club have taken us for mugs. Will I continue paying? Yes, because I am a mug.

Andre Villas Boas

Tottenham, the gift that just keeps on giving. Just over a week until Christmas and they have already handed out their presents. A 5-0 loss at home to Liverpool was followed up by the sacking of AVB. To think, he spent £100 million and managed to get Spurs fans to think that they were title contenders, before a ball was kicked. They have been in a negative spiral since they beat Arsenal in March.

No matter what you might currently think of Arsene Wenger, it must bring a smile of joy to you that he has seen off:

  1. Francis (1994–1997)
  2. Hughton (1997c)
  3. Gross (1997–1998)
  4. Pleat (1998c)
  5. Graham (1998–2001)
  6. Pleat (2001c)
  7. Hoddle (2001–2003)
  8. Pleat (2003–2004c)
  9. Santini (2004)
  10. Jol (2004–2007)
  11. Allen(2007c)
  12. Ramos (2007–08)
  13. Redknapp (2008–12)
  14. Villas-Boas (2012–13)

Bayern Munich

So after finishing 2nd, we knew we were in for a tough draw, and for the second season in a row, we have been drawn against Bayern Munich. For me, this draw brings happiness and sadness.

The happiness is we have proved they are beatable, having won 2-0 at their ground last year. For me, Munich hold no fear, as I am of the honest belief they have gone backwards this year. They spent over €60 million on just two players in the summer (Thiago & Mario Gotze), 2 players who they did not need due to the fact they had many other similar players already in their squad (Kroos, Ribery, Robben, Shaqiri, Muller). They also let go Luis Gustavo, who was a defensive rock for them last season, and Mario Gomez, their only proper striker.

Guardiola is trying to copy his Barcelona style of play, but there is a problem, he does not have Lionel Messi. They might be top of their league, unbeaten, having scored 42 goals in 16 games, but this is more of an indication to how poor and uncompetitive the Bundesliga is, than how good Bayern Munich are. It is certainly a league currently on a downward spiral, and you have to wonder whether Munich will struggle to get up for the game competitively after playing so many easy games in Germany.

If we take confidence from our win their last year, and put in a better performance at home, we could win the tie, comfortably.

Luis Suarez

17 goals in 11 league games this season. We offered £40,000,001 in the summer, we will have to offer a lot, lot more now. The controversy surrounding the deal is up for debate. In my opinion, we were under the opinion we could sign him for anything over £40,000,000, hence the bid of £1 extra. Why pay more when £1 was enough to trigger the deal. And offering £40,000,000 is certainly not a derisory offer like same pretend. You have to think, however, after having that offer knocked back, should we have pushed further. Told Liverpool to name their price? In hindsight, paying £60,000,000 for Luis Suarez in the summer would have been a good piece of business. But I can imagine the uproar had we signed him for that price, considering he was due to miss the first half dozen games.

What he has shown is the importance of having the something special upfront. The difference between Manchester City and Arsenal this season could be Sergio Aguero. The goal scorer who can turn a draw to a win on his own. We do not have that. Is there going to be someone available in January of sufficient quality? Who knows. But if Lewandowski or Suarez are available, we should be leading the race to sign them.

Keenos