Friday, May 05, 2006

Euro Parliament's inquiry into football structure

Should EU internal market rules apply to football clubs? Is there fair competition for TV football rights? Did the Bosman ruling do more harm than good? Does football offer a model for social integration? These and other issues were tackled by members of the European Paliament at a hearing on “Professional Football – Market or Society?” Because of the commercial power of European football clubs, decisions made by the European Commisaion on football matters often impact on Asia directly.

“The organising structure [of football] should comply with the economic legislation in the Internal Market”, said Toine Manders (MEP, Netherlands). While not wanting to affect the autonomy of sport, he wanted “a debate on how to comply with the economic aspects of professional sport”. UEFA CEO Lars-Christer Olsson said “The internal market concept for sport is a false concept”, since there was already a strong framework to protect what he called the “existing European sports model”.

Olsson also told European Union lawmakers that football was losing its identity because wealthy clubs are signing players for their commercial value rather than their ability. "An example of just how bad the problem is, is what we call the 'Asian factor' where a club buys a player from Asia purely to gain commercial links, paying him big wages and leaving him on the sidelines," he said.

He also hit out at the "hoarding of players" by big clubs. "Too many big clubs are just going out and buying the best players and leaving them on the bench and so depriving the fans of seeing them, and also depriving other clubs at which they could play from having them. We have surveyed the fans and 66 percent of them say that they feel the game has lost its identity because not enough clubs are using local players," he said as quoted by Darren Ennis of Reuters.

Angelika Niebler (MEP, Germany) asked if it would be better to leave it to the associations to regulate themselves. “Football has become big business”, said Karl-Heinz Rummenigge, president of Bayern Munich FC. He said a new mechanism was needed to ensure “equality of competition”. With clubs like Real Madrid having hundreds of millions of euros at their disposal, “you can’t talk about fair competition”. And, he said, the capacity of Chelsea FC to sustain huge losses thanks to the wealth of its owner, Roman Abramovich, distorted the market.

"We have a €200 million turnover and Chelsea, who as everyone knows are owned by Roman Abramovich, have [a comparable] turnover. We make a €35 million profit; this is required for our investment. Chelsea lost €204 million; Mr Abramovich obviously stumped up for it. This [makes for] unequal competition but we are playing against each other in the Champions League. This is not acceptable," he said.

English Premiership champions, Chelsea reacted angrily to the accusation that its spending distorts the sporting value of European competition. "It is total nonsense to suggest that this is somehow uncompetitive or unequal," Chelsea's director of communications Simon Greenberg told Matt Scott of The Guardian. "There are clubs who are not as transparent as Chelsea with regard to their finances. It is our publicly stated position that we will try and break even in 2010 and thereafter hopefully make profits. Football is a free market and to suggest our position is not acceptable is ludicrous. "These comments may have been made in order to play up to this particular audience or because of other issues surrounding our two clubs at the moment."

Chelsea's budget this summer will include what is believed to be the offer of a £121,000-per-week contract to secure the services of Bayern's influential midfielder Michael Ballack, a development that Scott has no doubt helped incite Rummenigge's comments. "The reference to Ballack as the 'other issue' was clear, although the qualified comments about making profits from 2010-11 hint that this has now become an aspirational target to which the club would prefer not to be held hostage," he commented.

Competition law expert Temple Lang identified four issues which the EU should continue to address: rising prices of broadcasting licences; the threat of rights being bought up by one company; the risk that only important matches may be shown; and restricted new media broadcast rights. New media, he added, “benefit small and local clubs by ensuring that local audiences can see their favourite clubs on television”.

Joseph Muscat (MEP, Malta) said that with pay TV and similar developments “a popular sport is becoming a luxury good”. Reacting to calls for more regulation, Mr Olsson said the EU was behaving “like an elephant in a porcelain shop.” He said the market should be left to regulate itself.

By scrapping the rules limiting the number of foreign players per club, the European Court of Justice’s Bosman ruling “led to total deregulation in European sport”, undermining fair competition and causing “considerable damage to football in Europe,” according to Frédéric Thiriez, President of the French Professional Football League. It caused an explosion in player salaries and transfer fees and an ever-growing gap between rich clubs and their competitors. He said it was “high time for Europe to respond” or European football “will go bust.”

Jean Luc Bennahmias (MEP, France) said that as “things are not sufficiently regulated” there is no level playing field. Ivo Belet (MEP, Belgium) proposed creating a special EU statute for football, exempt from rules on the free movement of workers. Mr Olsson said new UEFA rules guarantee a minimum of home-grown players in a football club - they should secure a brighter future for young talent and "keep the football dream alive".

From next season, clubs entering UEFA competitions must have four 'locally-trained' players, defined as players who have been registered for three seasons or years with the club between the ages of 15 and 21. A question mark remains over whether the rule is in breach of EU competition law. "We don't say whether the rule is right or wrong, but whether it is legal," Thomas Kurth, the G14 general manager, told the hearing. "The rule could clearly be construed as a breach of EU treaties on non-discrimination and free movement and creates potential legal and financial challenges for clubs."

Can professional football go hand in hand with social integration? Ibrahim Salou, a Ghanaian-born player in the Belgian football league, answered by citing his own experience. Only 17 when he was recruited to play in Germany, Mr Salou, who spoke no German and had no friends when he arrived, ended up playing in Belgium. Having learned Dutch and married a Belgian, he has come to appreciate that, as he put it, "football is one of the best means to bring people together."

Alexander Lambsdorff (MEP, Germany) asked about a salary cap or a draft system – as in some American sports, where the team at the bottom of the league gets first choice of promising young players. According to Matt Scott, the parliamentarians appeared receptive to the Bayern president's proposal to introduce a Europe-wide salary cap that would ensure the restriction of clubs' permissible outlay.

"We could have a salary cap: when a big proportion of turnover is spent on wages clubs are going to be in the red," said Rummenigge. "We should have an overall salary budget capped at, say, 50% of turnover. Across Europe there should be harmonisation. 80 to 85% of professional clubs in Europe are losing money. The pressure of competition leads to misinterpretation," he said.

“Under the current UEFA system,” said Arnd Krüger of the University of Göttingen, “the rich clubs become richer”: the more money they have, the more they succeed. He called for a separate European league. Mr Olsson said this was unrealistic, with Mr Rummenigge also “not a fan of a pan-European superleague”, saying that “we [already] have a system, which is a good one. People in Germany want a Bundesliga, Italians want their Serie A, the Spanish want their Primera Division.”

Noting that Rummenigge was also speaking as a representative of the G14 group of clubs, of which Chelsea are not a member, Matt Scott reported that Rummenigge "reiterated the stance of the organisation that the self-appointed elite clubs should benefit from perpetual participation" in Europe's premier club competition: Though he stopped short of demanding a breakaway closed league, Rummenigge said that since Bayern Munich have "taken part in the Champions League on 12 occasions it is fair that there should be a body where participation is guaranteed [for certain clubs]".

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