Summer Soccer Transfers

By Alex Reiner ’18 and Jonathan Kaner ’18

https://drive.google.com/file/d/0B_-LhRtWdaK4UXJOa2hoMUt0bnM/view?usp=sharing

 

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The Financial Issues Surrounding Soccer

By Matthew Engler ’18

Paris Saint Germain is a French professional soccer team founded in 1970. The club, originally french owned, was taken over in 2011 by Qatar Sports Investments and Chairman and CEO Nasser Al-Khelaïfi. The new owners revamped the club through mass spending and investment of new players. Over this past summer, PSG paid $263 million for Barcelona player Neymar da Silva Santos Junior(ESPNFC). This was $100 million more than the previous world record transfer fee(Paul Pogba). The fee itself costs as much as some teams stadiums, let alone one player.

UEFA, or the Union of European Football Association, introduced financial fair play regulations for the 2011-2012 club season. Since then, these regulations have acted as financial boundaries for clubs to follow to prevent mass spending, and therefore diluting the competitiveness of certain leagues. Framework spending would be laid out each year for specific clubs and UEFA would deliver sanctions to clubs who overstepped their boundaries. In theory, these sanctions should prevent clubs from overspending. However, these sanctions have failed to provide any change or properly be implemented. This lack in effectiveness has allowed the $263 million transfer of Neymar to go unpunished and un regulated.

The increase spending of football clubs throughout Europe are destabilizing and volatilizing the transfer market. World football alone has its own economy within its market. The English Premier League, one of the five top leagues in Europe, spent over £1.4 billion on players alone last transfer window. This spending has been on a sharp upwards trend. In 2007, the English Premier League spent a total of £400 million(The Telegraph). Its spending has more than tripled ten years later, and with rising transfer fees, the spending is predicted to increase.

This begs the question, how can UEFA solve this spending problem? As discussed before, UEFA’S initial attempt at a reducing unfair financial acts through sanctions failed to be implemented, and did nothing to put an end to out of control spending. A solution could include what some consider a “salary cap”. In American sports leagues such as the NBA and the NFL, each team has a certain amount of money they can spend on players salary. In the NBA for example, if a team were to breach their salary cap they end up paying what is called a luxury tax to the league. This luxury tax tends to be very expensive and helps to prevent teams from overspending on players. The one problem with this is there are no transfer fees in American sports leagues. Players are not bought and sold, rather they are offered various contracts. In the football market players are usually bought out of their contract, through either an offer from another club or a breach of a release clause. This means the current PSG player Neymar is actually costing PSG close to half a billion dollars due to the five year contract they have to pay him on top of the $263 million release clause they paid Barcelona.

These issues will remain in the footballing world until proper financial fair play regulations are imposed on the transfer market. This multi billion dollar industry is relying on some sort of financial framework to prevent possible market failure, and therefore the destruction of the game of football.