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UEFA Adopts Financial Fair Play Rules to Reign In Big Spenders

None of the major European soccer leagues have salary caps or any restrictions on player payrolls that resemble those in place in any of the North American professional sports leagues.  As a result, player salaries regularly outstrip club income, especially at the big clubs competing for both their league championships and the Champions League title, clubs such as Manchester United, Liverpool, Real Madrid, Barcelona and Inter Milan.

UEFA has now adopted Financial Fair Play rules, to be phased in over a six year period, which will require that clubs break even over a rolling three year period if the clubs wish to play in the Champions League or Europa League.  The clubs will also be assessed on a risk basis taking into account salaries and debt.  While this new rule will not eliminate the advantage held by high revenue clubs like Man U and Real Madrid, it will restrain the spending of owners with virtually limitless funds who care more about winning than about the money spent to get there, such as the owners of Chelsea, Manchester City and AC Milan.  It will begin to restore a modicum of balance to European soccer.

Whether the new rule will work as intended will not be known for a number of years.  It is, however, the first attempt at bringing some element of rationality to player salaries in European soccer and is to be commended as such.  There is no salary cap in any major European league that compares to anything found in any North American professional league and, at least partly as a result, the competitive balance of the major soccer leagues in Europe is non-existent.  Each year, the battle for the championship and places in the Champions and Europa Leagues involve mostly the same clubs and the more interesting competition is found at the bottom of the league.  The most intense competition comes at the bottom of the table at the end of the season as clubs battle to avoid relegation and the resultant loss of tens of millions of dollars.  It is usually much more exciting than the same old fight at the top.  Hopefully, over the next decade, this rule will begin to change that.

Full post as published by Sports Biz on May 28, 2010 (boomark / email).