European Commission calls for reduction in football transfer fees

The measures agreed voluntarily by the Premier League last week will dramatically reduce transfer spending  by England’s top football clubs.  The last decade has seen some truly astronomical amounts of money going on transfers. I can only assume that the Premier League took pre-emptive action in the face of massive pressure, from both UEFA and the EU, to curb expenditure.

The European Commission has welcomed the reforms with Androulla Vassiliou, the European Commissioner responsible for sport, stating:

“The Premier League’s decision to introduce new financial regulations in order to improve the financial sustainability of its clubs is definitely a move in the right direction. It follows the same principle as UEFA’s Financial Fair Play initiative and will secure long-term viability that can only benefit the league, the clubs, the fans and the game,”

The new rules, agreed in principle by the 20 clubs in the Premier League, mean that from next season Premier League clubs will not be allowed to make a total loss of more than £105 million over the next three seasons. Teams that break the rules could face a deduction in points.

The decision by the Premier League clubs was announced on the same day as the European Commission published a study calling for changes to international rules on transfer fees.

Football, clubs spend around €3 billion a year on player transfers, but very little of this money trickles down to smaller clubs or the amateur game, according to a European Commission study published today. The number of transfers in European football more than tripled in the period 1995-2011, while the amounts spent by clubs on transfer fees increased seven-fold. But most of the big spending is concentrated on a small number of clubs which have the largest revenues or are backed by very wealthy investors. The situation is only increasing the imbalances that exist between the haves and have-nots, as less than 2% of transfer fees filter down to smaller clubs and amateur sport which are essential for developing new talent. The level of redistribution of money in the game, which should compensate for the costs of training and educating young players, is insufficient to allow smaller clubs to develop and to break the strangle-hold that the biggest clubs continue to have on the sport’s competitions.

Transfer rules are set by the sport governing bodies – for example, FIFA for football and FIBA for basketball. FIFA’s online Transfer Matching System (TMS), which is used by 4 600 clubs worldwide, has increased transparency in international transfer operations but more needs to be done at national level. The report finds that the current system continues to mostly benefit the wealthiest clubs, superstar players and their agents.

It recommends that FIFA and national football associations’ rules should ensure stronger controls over financial transactions and for the introduction of a ‘fair-play levy’ on transfer fees, beyond an amount to be agreed by the sport’s governing bodies and clubs, to encourage a better redistribution of funds from rich to less wealthy clubs.

The report also calls for full implementation of UEFA’s Financial Fair Play rule and stronger ‘solidarity mechanisms’ to enhance youth development and the protection of minors.

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