The EFL are a financial mess, they should look to Spain for inspiration


La Liga’s stricter Financial Fair Play rules have been in place since 2013Jan S0LO (under Creative Commons Attribution license) / Wikimedia Commons

Last Monday (18/4), Derby County was relegated to the third tier of English football for the first time since 1986. Derby finds itself in this predicament thanks to years of trying to cheat the system with financial mismanagement in the hands of ex-owner Mel Morris. Everybody knows it. Everyone also knows that in a few years there will be another club like Derby County, and a few years later another.

Spending in the English Football League (EFL), particularly the Championship, is overall recklessly unsustainable and only getting worse. Clubs are risking everything for the windfall moment of reaching the Premier League and, when only three of 24 teams make it to the top flight each season, there are inevitable losers.

Derby are the latest in a line of teams that includes Sheffield Wednesday and Wigan to face financial ruin. Overspending and losses becoming commonplace in the EFL, the Premier League and the French Ligue 1 are beginning to be dominated by state-backed, high-spending clubs, and teams from the Italian divisions are steadily folding over the last few years. last 20 to 30 years. , many football leagues should seek an example of sustainable operation. They should look to Spain.

“[Spain’s] the rules also prevent very wealthy owners from pumping money into clubs out of their own pockets, preventing state-backed clubs like Man City or PSG from dominating.”

La Liga’s Financial Fair Play rules, which cover Spain’s top two divisions, are much stricter and more effective than those ‘imposed’ by UEFA and many domestic leagues. A quick summary: In Spain, the league sets each team a different team cost limit, limiting the money spent on both transfers and staff salaries, including non-playing staff. This is set before the summer transfer window to avoid any unsustainable or anti-competitive spending before it can even take place, unlike the rest of Europe. This limit is calculated taking into account a range of factors, from potential club revenue to past profits and losses, overheads, income, investments and savings. The league employs a number of accountants to draft these, and when a club signs a player and attempts to register him with the league’s ‘La Liga Manager’ software, the signing must first be deemed economically viable by the league before it can be registered. .

Barcelona’s debacle in its inability to register players last year was a good example of the league putting those rules into practice, mandating responsible spending. Additionally, the rules also prevent very wealthy owners from pumping money into clubs from their own pockets, preventing state-backed clubs like Man City or PSG from dominating. In addition, it avoids any risk of clubs closing if the owners suddenly decide to sell. It is a fundamentally sustainable model.

These rules were put in place in 2013 after a pattern that could easily emerge in the English league. In the five years before the rule change, more than 20 teams had struggled financially and the very structure of the Spanish football pyramid was in jeopardy. Players went on strike and some of Spain’s biggest clubs, Real Betis, Valencia CF, Deportivo de La Coruña and Racing Santander, to name a few, were in serious danger of disappearing. But the new rules were quickly put into effect and Spanish football is much, much healthier today.

“In other countries, financial doping is widespread and unsustainable. UEFA FFP rules fall woefully short of requirements”

Since 2013, no club has ceased to exist, no player has gone on strike and there have been no Spanish Derby counties. Certainly, some clubs have encountered financial difficulties. Malaga are a notable example, but their former owner was largely to blame after racking up a lot of debt before 2013. Yet they remain in Spain’s second tier, vying to return to the top. Obviously, this level of financial instability is on a much lesser scale than in other European leagues.

Moreover, these rules have improved the quality of Spanish football and made the league a more attractive investment opportunity. There is obviously irony in calling Spanish football competitive when Barcelona and Real Madrid have won in 60 of the league’s 90 years of existence, but there is real truth in that statement. The rules have only been in place for nine years, so smaller teams have had little opportunity to put in place business models capable of dethroning the big oldies in Spanish football, but there has been change nonetheless.

Granted, Spanish football isn’t perfect, but many of its flaws aren’t a consequence of its improved FFP. Even still, the league’s rules have come under criticism, especially last summer when Barcelona were unable to register several players and Lionel Messi eventually left for PSG. Yet these criticisms were misdirected. Spain’s FFP rules actually saved Barcelona from suffering even bigger losses and far bigger problems down the line. It was Barcelona’s insane wages and transfer fee and lack of foresight that saw Messi leave, not La Liga.

You might want to blame the European Super League stunt last April, when Atlético Madrid, Barcelona and Real Madrid were given the option to pump unlimited money into their squads, on spending restrictions. But don’t. Instead, blame the arrogant, out-of-touch club leaders who were seduced by bankers selling them a dream. The Spanish FFP is acting to block exactly what is happening, creating a level playing field and supporting the football ecosystem that these clubs have tried to master.

Other leagues must adopt measures similar to Spain in order to curb the growing exodus of historic clubs from the upper divisions to the lower levels of the pyramid. In Italy, it is certain that after most seasons, one or two teams will cease to exist or be relegated to the third division Serie C because of money problems. In other countries, financial doping is widespread and unsustainable. The UEFA FFP rules fall woefully short of the requirements. When you punish a club for breaking spending rules with a fine, the fine is just a tax on overspending and an insufficient deterrent for deep-pocketed clubs like Man City and PSG.

What then of Derby, the latest victim of financial difficulties in England? Derby are simply victims of the culture to which they contribute. In the absence of rule changes in the EFL, or at least stricter implementation of existing rules, more and more clubs will suffer losses trying to reach the Premier League, and others will face financial ruin. The league is sometimes described as the most unpredictable league in the world. Perhaps its members should still shock us and follow in La Liga’s footsteps.

Edward K. Thompson