Platini's 'fair play' rule key to sound club management

Manchester City is the epitome of a club that has been strengthened by an injection of foreign capital, in this case from the Middle East.

It wasn't so long ago that it was languishing below the top division.

In 2008, an investment group from the United Arab Emirates bought the club from Thailand's former president, Thaksin Shinawatra. Every summer since then, it has spent the equivalent of tens of billions of yen on transfer fees in the process of building up its roster of star players.

"City were prudent," says David Meek, a former reporter for a local evening newspaper. "They set their sights on key players belonging to the best teams in the division, and used exorbitant salaries as bait to poach them. Their strategy was to strengthen themselves by weakening their rivals."

As a result, the team rose to finish in third place last season. The traditional soccer approach of discovering and cultivating young players faded into irrelevance.

Manchester is also the home of Manchester United, the hugely successful club that has won 12 championships in the 19 seasons since the inception of the Premier League. Its lineup is also full of stars, such as Wayne Rooney. City's rapid rise has turned this season's championship into a two-horse race between these local rivals.

The skyrocketing prices of natural resources in recent years has led to a major influx of investment in the sport.

In 2003, London-based club Chelsea was bought by Roman Abramovich, a Russian businessman who made a fortune in the oil business. Its new financial clout allowed the club to spend millions of pounds on bolstering its playing staff and win the Premier League on two occasions.

Business magnates from the United States and elsewhere also followed suit and purchased English clubs.

"The European football industry is a free market," says Coventry University professor and soccer business expert Simon Chadwick. "When you consider that Jaguar has been bought by Indian interests and an English bank has been bought by a Spanish bank, it's just like the business world."

To keep up with the billionaires, other clubs have gone to drastic lengths to reinforce their squads. The financial strain is often too much.

There have been a number of cases in which formerly successful teams were demoted after bankruptcies due to mismanagement, takeovers and excessive debts. They include Leeds and Portsmouth of England, and Fiorentina and Parma of Italy.

"Clubs that don't address their deficits can't be left to their own devices," warns Michel Platini, president of the Union of European Football Associations (UEFA). "It's necessary to put an end to this in order to avert the demise of clubs in the future."

Platini, a former French international and star player, was appointed to his current role in 2007 after winning widespread support for his call for corrective action to counter the trend of major soccer nations and large wealthy clubs being the only ones to prosper.

He has also created more berths for clubs from lesser soccer-playing countries in the UEFA Champions League, a competition with massive prize money at stake, in an attempt to move away from the favoritism shown to teams from more powerful territories.

Platini's trump card for rehabilitating club management is a "financial fair play" system. It puts forward a set of rules to prevent money being poured into club coffers that exceeds their annual revenue.

The system prohibits club owners who invest their personal fortunes at leisure from shoring up financial shortfalls with temporarily injections of capital, and orders clubs to work within their yearly income.

If they violate these rules, they can be penalized with point reductions and bans from UEFA tournaments. The system will come into effect in the 2013-2014 season.

It already seems to be proving effective as a deterrent. In European soccer, player transfers between clubs are only permitted during two windows per year, in summer and winter. A club buying a player pays a transfer fee to the selling club. This winter, transfer fees in the Premier League amounted to 60 million pounds (7.69 billion yen, or $95 million) which represented a 70 percent decrease compared to the previous year's figure.

In Italy and Spain, the total outlay on players was less than half of what it was the year before.

Will club management become more sound when the system goes into full effect?

Chadwick is not optimistic. "There are always loopholes," he says.

One typical example is the 400-million-pound sponsorship deal signed between Manchester City and Etihad Airways. The company's close links to the investment group that owns the club led the UEFA's Club Financial Control Panel to consider whether the deal was "out of line."

However, in contrast with an injection of capital, sponsorship deals can be recorded as earnings, which makes it difficult to label them as an infraction.

"If the system is strictly applied, football's entertainment value will be diminished," warns Chadwick. "Who would want to watch the Champions League without popular clubs like Barcelona? Besides, it's no surprise that clubs are looking to the economic power of the Middle East and Asia."

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Signs of an end to excess

Emirates, a Dubai-based airline with annual revenue equivalent to 1.2 trillion yen, occupies a position as one of only six official commercial partners of the International Federation of Association Football (FIFA).

"In striving to become the number one company, it was necessary to link up with football, which is the number one sport in the world," says Emirates Senior Vice President Boutros Boutros of the reason for his company's investment in soccer.

Emirates spends $100 million (8.09 billion yen) on sponsorship annually, a tenfold increase over the last 10 years. Soccer comprises 70 percent of that figure. The company's name is emblazoned on the uniforms of major clubs such as AC Milan and Arsenal.

However, despite the sums that Emirates has invested to date, Boutros hints at a change in direction. "The price has risen too much, so we're at a point where we need to review our strategy." He is contemplating a time when a more effective advertising tool than soccer is found.

Sponsorship deals with major clubs run for five to six years.

"For example, an attractive promotional campaign using YouTube and Facebook can reach 200 million people for an outlay of $1 million. Technology is evolving at an amazing pace, so if the price of sponsorship keeps increasing, we may have to consider a different medium."

Boutros says his company has already begun talks with an Internet company.