Premier League

European Commission calls for reduction in football transfer fees

Labour Party

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.

Cheaper to Watch Football, but What About Cricket?

Labour Party

The European Court of Justice (ECJ) recently made a ruling on broadcasting rights for sporting events that could have serious effects on minority sports across Europe, including cricket. 

At the moment broadcasting rights for sport in Europe are sold on a ‘territorial’ (country by country) basis.  They are also sold on an ‘exclusive’ basis, which means that only one broadcaster in each country is allowed to broadcast the event.  Understandably the rights are sold at different prices in each territory since, for instance, Greek broadcasters are unlikely to pay as much for English football as British ones.  The system works using ‘decoder cards’ which, once a subscription is paid to your territories service provider, allows you to access their channels through a satellite dish.

What has happened in this instance is that a British publican has used a Greek ‘decoder card’ to access Premier League games for far less than they would have to pay for subscription to a British provider.  The Premier League has brought a case against them as they believe that this infringes their right to sell their product on a country by country basis.  The ECJ has ruled that this ‘territorial exclusivity’ goes against the principles of the European Single Market and that decoder cards can be legally traded across member state boundaries.  So the victory goes to the pub owner.

Now you are unlikely to hear me standing up for the rights of the megalithic Premier League or BSkyB, they are big enough and tough enough to do that for themselves.  I’m also uncomfortable with the notion of such a big organisation with limitless resources suing an independent pub owner.  Having said that, this ruling, in my opinion, does no one any good at all. 

It would mean less money for all sports who sell their broadcasting rights. If there are no ‘exclusive’ rights, then broadcasters would pay far less money.  It would mean a significant loss of cultural diversity, if there are no ‘territorial’ restrictions then you could have a ‘one-size fits all’ European system. Big sports could still sell on a big ‘European’ system (football is popular everywhere). But smaller sports such as ski-jumping, cricket, curling, or cycling, would not be able to make enough money from selling to the whole of Europe.  Smaller broadcasters would not be able to afford the cost of ‘European’ rights. They would not be able to compete, which would mean a monopolistic advantage for the biggest broadcasters in Europe.

So we could see cricket losing a lot its money, similarly handball in France and the Scandinavian countries.  This would be bad for sport and bad cultural diversity.