Soccer's New Reality Surpasses Games' Wildest, Most Excessive Dreams


#1

A brief explanation of how the world’s gone mad in unexpected places: In soccer, players are rarely traded. Instead, their rights are sold for sums of cash, whereupon the player negotiates terms with the new team. The entire soccer economy is underpinned by this system of exchanges. If you’re a small club with a good reputation for bringing up young talent, you can make a sustainable go of things, for instance.


This is a companion discussion topic for the original entry at https://waypoint.vice.com/en_us/article/a37my8/soccers-new-reality-surpasses-games-wildest-most-excessive-dreams

#2

So Football Manager is increasingly turning into Global Capitalism Simulator?


#3

As someone who isn’t well versed in soccer, I really can’t praise Williams’ post enough. I had totally missed a world-changing event in the sport and learning about this reality shift was so surprising, especially to see it broken down so effectively for someone like myself. Not only that, but the article goes onto contextualise it through the medium of Football Manager and goes into some interesting questions about the role of simulation in an increasingly unstable world.

I am effervescent about this article. This post might have made no sense! It really is exception, please do not sleep on it.


#4

It’s always been that. It’s Unhinged Late Stage Global Capitalism Simulator now :slight_smile:


#5

Somewhat ironically, American sports are rather socialist in comparison to what goes on in Europe. Salary caps, government-approved monopolies, etc.


#6

For another take on football manager that has some crossover appeal to people that have no interest in the sport or the game (IMO, though I am a bit of a football fan so YMMV), The Pro Vercelli Chronicles from way back in 2009 by Brian Phillips (formerly of Grantland) is worth checking out.

Please stay healthy, David. You know you’re Raistlin to us. There’s always the danger, but we can’t do this without you.

There’s also this charming coda to the story three years later for the real life team (which probably won’t mean a heck of a lot to you if you aren’t invested in the story from reading the original series of blog posts).


#7

So, FIFA regulates a transfer fee cap but have been lax in it’s enforcement? Or is the 100m€ transfer limit an unwritten rule(or some never treaded territory?)


#8

Nope, no cap. The 100MM ceiling Ian refers to is just that up till recently no one could imagine a transfer being more than 100MM.

There are some complex regulations (called Financial Fair Play) requiring that clubs spend roughly within their means, but there’s no cap, written or unwritten.


#9

Thanks for clearing that up. Seems a lot like Major League Baseball except with multiple teams and no traditional talent exchange.


#10

Financial Fair Play is an incredibly ineffective and slapdash attempt to control wild spending in world football. One that has only seen spending get more and more crazier since its introduction.
It is supposed to prevent clubs spending more than they bring in.

All clubs have had to do is come up with ways of not “officially” spending any money.

So, for the Neymar transfer, mentioned in the piece involved Paris St. Germain giving the player himself the money, which he then used to pay his own “buy out clause.” Therefore meaning that PSG never actually spent any money themselves on the player.

This clause was only added because it was considered too outlandish a fee to ever actually be offered. It was supposed to be a badge that said “No one can afford this player, so don’t ask.”

World football got really crazy with money in the last few years.


#11

I could be wrong but all I’ve read about it says that if PSG paid it from its own money, from its official assets, it’s still an expense that counts toward FFP. The original rumor that PSG has denied (I think) is that semi-guvernmental organizations from Qatar (basically the same people that finance PSG) paid the release clause themselves to Neymar, so for legal purposes it doesn’t count. If the first is true then they’ll have to square it somehow, if it’s the latter then they’ll have no trouble, although they also have to justify Mbappé’s transfer.


#12

Warning: I really nerd out about the law and finances of soccer so can’t help but jump into these convos.

I’m not sure if the rumor that the Qatari fund paid the buy-out fee was ever verified, but because of how FFP accounting works it actually wouldn’t matter. Because of the close ties between PSG and the Qatari fund, FFP treats the fund as a “related party” to PSG. If a related party pays for something it’s treated as if the club paid that money itself, so in this case any money the fund pays would be treated as if PSG itself paid it. Thus, it ends up on PSG’s books for FFP purposes just the same. This “related party” idea was included in anticipation of situations exactly like this. I don’t disagree that clubs are looking for ways to spend money without it showing up on their books, but I think FFP has anticipated more tricks than people think. For example, we’ve already seen PSG get in trouble before when they tried to inject cash from their owner by using a super inflated sponsorship agreement from one of the owner’s other companies.

It is true that buy-out clauses work so that it’s the player themselves paying the club to buy themselves out, but PSG (or the fund) paying Neymar who can then pay Barca still shows up on PSGs books regardless; the money left their pockets at some point, and that’s an expense that FFP tracks.

As for the idea FFP has been ineffective, I don’t think that’s entirely true. FFP wasn’t instituted to decrease spending but to decrease losses, you can only spend what you earn—with some acceptable wiggle room—and since its implementation we’ve seen club debts and losses shrink drastically. It’s true we’ve seen spending increase, but we’ve also seen income increase exponentially—just factoring in TV rights alone—so that clubs have more money to spend than ever even within the ‘spend only what you earn’ restraints of FFP.

FFP isn’t perfect by any means, it has been anti-competitive overall, entrenching the established market dominants, but it has had some benefits, and soccer needs something in the spirit of FFP in place if it’s to survive in any enjoyable capacity.


#13

Agree with you in all your points but didn’t know FFP took into account “related parties”. That’s super interesting, than you. I imagine it only does so for formally linked organizations, right? That should be the case with PSG and its funds, so how are they supposed to comply with or circumvent the rule?

As I understand it PSG has the biggest sponsorship deals FFP will allow and a lot of valuable assets, but is also playing in a league with relatively low TV rights income and comes off of a gargantuan spending in players, right? Its estimated total income is still pretty far from ManU or Real, so from the outside it looks really hard to comply with the three year balance thing.


#14

The related party idea applies most cleanly to formally-linked organizations, for example, if one party owns more than 30% of another they are automatically related. It could apply in more situations than that, but there haven’t been any cases clearly defining when else it will apply. Here, it’s pretty clear these are related.

Your second question, how will they comply? It’ll be tough! Like you say Ligue 1 has relatively low TV income, so they’ll have to hustle strike all the other best sponsorship deals they can, and probably sell players to make up revenues.

But, they will also amortize the full fee over the length of the contract. That means they won’t record the full 200MM in the first year, but record 40MM for each of the five years of his contract. That’s still a ton of spend to account for each year, especially when counting for the other contracts they have amortized, but it helps a lot. Also, this is why they used a loan with an option to sign for the Mbappe deal. With the one year loan at the beginning, they won’t have to start paying the transfer fee until next year, one year after they start paying the Neymar fee. That gives them extra years (before Mbappe’s deal kicks in and after Neymar’s is paid) where those fees won’t overlap, giving them a little more wiggle room.

So yeah, there are some strategies for making this work, but it will be really hard. This is a crazy gamble that could sink PSG if it goes wrong and/or Qatar gets bored with them.


#15

I’m familiar with that scheme but I don’t understand how both spendings won’t overlap. Mbappé’s transfer, staggered/amortized or not, should show up in the books starting next year, and Neymar’s yearly payments will be there for 4 or 5, won’t they?

Whether this is the case or not I take it that instead of failing to comply (in a spectacular way) this year, they are betting they can pass those yearly balances as they come including those amortized payments. For 4 years at the very least? Yeah that’s kind of a difficult situation, unless they are counting on new income that I’m not aware of or UEFA’s leniency? Do they retain Neymar’s and Mbappé’s image rights? Because I don’t see the French TV rights growing that much, and CL revenue is far from a safe bet if you’re just a little bit unlucky. If they are frugal with future transfers they’ll risk European success even more, which surely must be vital for the project…

I agree that it seems really reckless, though that might just be the plan, right? They are not incompetent, that much we know.


#16

Sorry, I wasn’t clear, the deals will overlap for the most part, but not entirely. This year only Neymar’s will show up, Mbappe’s will start showing up next year. So that’s at least 1 season with just one of these mega contracts. Mbappe’s pre-contract is only for a 4 year deal, so both deals would end at the same time. But, if they extended one or the other then the payment each year would be less, easing it further. Not a solution, but every little bit will help.

Impossible to know if PSG will get their rights. Those are super valuable so most players will want to retain them as much as possible.

My bet is that they are going for broke, hoping to win the champions league (I don’t think they can with this squad) and that the added publicity of that combined with their ever-growing profile can continue to increase revenues enough to cover. It’s crazy, but like you said these people aren’t incompetent. This will be interesting to watch.


#17

Madrid always gets half of them, at least for the first contract with the player, no matter how big of a star he already is. I have no clue how.

Anyway, thank you, I was intrigued by PSG’s plan but now I’m eager to see how it pans out. Agree that they’re still half a step behind, but clearly there is talent enough to beat anyone.


#18

Thanks for the correction, I had this all wrong then.

Interesting to hear that FFP has been more effective than I thought, although I still wonder if it expands the chasm between the top mega clubs and those in lower divisions. Those without power to barter for TV rights or even receive any TV rights.


#19

I wouldn’t say you’re wrong per se. UEFA has done a terrible job of messaging the objectives and successes of FFP, and it take a bizzaro cross-section of a soccer fan/legal nerd to dig through the actual docs.

That said, I think you’re absolutely right that FFP, despite good intentions and leading to clubs losing less money, has only made soccer more stratified between haves/have nots. Soccer needs something like FFP, but the current system has real flaws.


#20

I wouldn’t trust football bureaucracy to do anything for the greater good without it being baffingly compromised or faulty.

As they have no oversight they can continue to operate as they like. I would suspect that the real experts they need to put these kinds of systems in place are not the ones getting jobs at either FIFa or UEFA.