The particular effects of sanctions, as well as compliance issues – or lack thereof - of the FFP Regulations and EU competition law have already beenpreviewed in the previous texts. In this final installment discussion will turn to the possible consequences of Financial Fair Play for clubs competing in the Polish Ekstraklasa.
Polish Ekstraklasa in the context of other European leagues – or where do we currently stand
Right at the outset it must be noted that the comparison between the top division in Poland and its British, German and Spanish counterparts ranksthe Polish top tier in a rather unfavorable position. The total income of all the clubs competing in the Barclays Premier League in 2011/2012 season amounted to2,917million euros; Bundesliga amount totaled 1,872 million, and in the Spanish Primera Division it was 1765 million.Comparing the sum of 84 million euros in revenues achieved by the Ekstraklasa clubs in the analogous period, it becomes fairly clear that we are talking about two completely different worlds.
Recalling the acceptable deviation within the ‘break-even’ requirement (discussed in the first article) – approximately €15 in equity investments and €1.5 millionwithn no equity investments – it can readily be observed that failure to meet the conditions for Financial Fair Play will probably not pose a serious problem for a club competing in Ekstraklasa. Of course, one can not exclude such developments in the future; however, the sums with which we are dealing at the moment preclude this from happening. It is hard to imagine that a derogation in the mould of acceptable deviation,which – as a rule of thumb – represents only a small percentage of club’sfinances were taken as a serious issue where it is roughly two thirds Legia Warsaw budget (63 million PLN in the alleged 100 million PLN budget of Legia).
What could make the Polish football officials nervous?
An important element will be the matter of arrears, i.e. overdue payables. The Spanish side Malaga C.F.have already been punished in this respect under the Financial Fair Play (discussed here). A balanced approach to finances and curbing bad business practices prevailing in the world of football – which are just some of the goals pursued by UEFA with the adoption of the FFP – would be extremely difficult to achieve without the use of severe sanctions against clubs not complying with such basic principles of business ethics like the payment of fees within a certain specified timeframe. Articles 49 and 50 of the „Club Licensing and Financial Fair Play” document state clearly that financial arrears will be punished by sanctions.The Polish Football Association (PZPN) in a document outlining the operation of the FFP within the national licensing system - overseen by them - also drew attention to the fact that delay in payments to other clubs (transfers), as well as to club’s own employees are prohibited. Violations will be punished severely – Polish FA, in accordance with UEFA guidelines, includes these violations in the category of mandatory criteria. This in turn means that in case of failure it is possible that a licenseto play in a European competition will not be granted. Such decision may have very serious and significant financial repercussions for the infringing club - the money obtained from the participation in competitions at the European level can prove of great assistance in balancing the books.
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Wisla Krakow illustrate the above example very clearly. The total spending-to-revenue level was at 60% in the title-winning 2010/2011 season; then it skyrocketed to 95 % in the 2011/2012 season when Wisla finished 7th. Looking further afield, Pogoń Szczecin, Korona Kielce, Widzew Łódź or Górnik Zabrze spent over 100% of their revenues over the same period of time. Polonia Warsaw have not been granted a license to compete in the Ekstraklasa this season and have been relegated to the fifth tier of Polish football were one of the first clubs to feel the effects of the new sanctions regime at the disposal of PZPN. Huge debts of the owner Ireneusz Król owed to Polonia players (the salary of Łukasz Piątek has not been paid for over 3 months – his contract was terminated by PZPN) have formed the grounds for the decision to punish the club. It is a fairly regular occurrence to hear of such and similar situations at other clubs – like Widzew or ŁKS, whose problems read like a neverending saga – so the importance of this issue is definitely worth emphasising in communications with the relevant stakeholders.
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The above analysis shows that the Financial Fair Play in its current format may also apply to clubs whose aspirations are not as high as the Champions League or the Europa League. Implementation of the relevant provisions into national regulations means that financial prudence will resonate, in one way or another, with all clubs competing in the top division.
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Michał Kramar
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