Chelsea found a little loophole in UEFA’s FFP regulations which allowed them a little wiggle room, but it looks as though that’s to be closed very quickly.
UEFA’s confirmation that they are to close the loophole over contract lengths which clubs – and one in particular in this last six months or so – have been exploiting to stockpile players while flying under the radar of current Financial Fair Play regulations, seems to have caught a lot of people off guard.
It’s not surprising to find that Todd Boehly of all people was the most ruthless in exploiting it. The ‘blue sky thinking’ promised when his consortium took over the club at the end of May has already stretched in radical directions.
To be absolutely clear, there is no ‘blame’ to apportion to Chelsea. In the last seven months, Mykhaylo Mudryk has signed an eight-and-a-half-year contract with Chelsea, while Benoit Badiashile and David Datro Fofana both signed for six-and-a-half years, Noni Madueke for seven and a half, Wesley Fofana for seven, Marc Cucurella for six and Raheem Sterling for five.
This is all fine within UEFA rules (indeed, this is effectively accepted in the fact that they’ve already confirmed that they won’t be retroactively applying the upcoming changes), but it does have one not-insignificant side-effect that is very beneficial to a club that wishes to spend a lot of money in the transfer market.
Signing players on these very lengthy contracts enables Chelsea to spread the cost of a player’s transfer fee over the length of their contracts when submitting their annual accounts, and these are the figures that feed into FFP calculations. Spreading the payment over longer frees up more money that can be spent on new players without breaking those rules, and that is the loophole that UEFA is set to close, with UEFA putting a five-year limit on player contracts.
Although apparently prompted by the transfer activity of this one particular club, and coming on top of a two-transfer window ban awarded against them in February 2019, this is no ‘vendetta’ against Chelsea on the part of UEFA. Firstly, the 2019 ban came about from FIFA rather than them. Indeed, FIFA regulations already state that contracts should be a maximum of five years unless a country’s law says they can be longer. And secondly, there are good and solid concerns that these long-term contracts aren’t necessarily such a good thing for anybody involved.
It is certainly questionable whether it is good for a young player to sign a contract of that length with one club as it hands so much control to that club. The historical trajectory has been for power to be taken away from clubs and given to players. Until 1963, English football had a ‘retain and transfer’ system, whereby a club could continue to demand a transfer fee for a player at the end of their contract, retaining their registration and preventing them from playing for someone else.
It took a High Court case to get rid of ‘retain and transfer’, but although these long contracts aren’t quite the same thing – most professional footballers probably wouldn’t mind the idea of being ‘tied’ to Chelsea with a very plump contract for the majority of their careers – that shift in control might easily attract the interest of the European Commission, upon whose grace the entire European football transfer eco-system exists in the way that it does.
UEFA wouldn’t give a damn about Britain having Brexited if the Commission started asking difficult questions, and people within football sometimes seem to forget how strange the buying and selling of human beings can look from the outside.
And this loophole is also being closed to protect clubs themselves. Sure enough, everything looks rosy for Chelsea at the moment, at least in terms of the amount of money they’re spending. Any fears that fans may have had that the new owners would rein in the extravagance of the Abramovich years are already largely forgotten.
After that weird three-month period when the club as a business was effectively put into cryogenesis while the removal of Abramovich and his replacement with Boehly and his deeply pocketed backers was arranged, the financial sluice gates have reopened and have since been flowing as fast as ever since then.
But the value of your portfolio may go up as well as down. It’s common knowledge that this new rush of American owners believe the Premier League to be undervalued, but those theoreticals count for nothing if, say, something goes wrong elsewhere in a world which seems to be in a parlous state. Presumably, for example, the possibility of failing to reach the Champions League has been budgeted into everything. After all, it can hardly be said that a failure to qualify for this competition hasn’t had ramifications for a football club before.
No-one is saying that Chelsea are going to ‘do a Leeds’, but part of the point of Financial Fair Play being introduced in the first place was to prevent that sort of precipitous fall from happening to clubs as regularly as it had been. Second, third, fourth, fifth and sixth places in League One are all currently occupied by clubs who have played Premier League football in the last 25 years. Four of these five of these clubs – Ipswich Town, Derby County, Bolton Wanderers and Barnsley – have had spells in administration while the other (Sheffield Wednesday) has had extremely close shaves with it.
And older Chelsea supporters will already know that their club had its own near-death experience in the early 1980s. Years of debt building up, which came about as a result of a combination of factors – building the massive East Stand that is still in place at Stamford Bridge just as the 1973 Oil Crisis was hitting and a toxic combination of downward-spiralling crowds and reduced performances on the pitch – took them close to bankruptcy.
These lengthy amortised contracts have benefits but they come with potential risks too. Eight-and-a-half years is a long time to have a contract hanging around on the books, especially as spending is continuing to ramp up every year in the meantime. Add this to Todd Boehly’s consortium owning Chelsea for just eight months, and it’s not good for the club to be making this sort of extremely lengthy financial commitment, even if they are eminently affordable right now.
There is a lot to be critical of UEFA for, but the decision to close this loophole looks like good governance, for the good of players and all clubs. New rules were introduced last summer, and it was always likely that these would need further refining as this season progresses. And while this story is directly related to Chelsea, this is a rule change that will significantly benefit players seeking to leave clubs in a more general sense. We don’t want to go back to times when clubs held most of the cards in their contractual relationships with players.
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