Football’s Transfer System is Failing, FIFPro Study Finds
Thu 15th Oct 2015 | Money & Finance
The 3 billion Euro a year football player transfer system which is intended to redistribute wealth among clubs is failing all but a few elite teams, according to a study published today.
The research by Stefan Szymanski, a professor of sport management at the University of Michigan, found that “a significant fraction of the transfer market is controlled by elite clubs who circulate top players among themselves.” Very little trickles down to “grass roots’’ football, he said.
At the same time, the system overseen by FIFA impedes the freedom of movement of players. Footballers, some who face harassment for complaining about unpaid wages, have to appeal to a “slow and cumbersome” resolution process to get out of binding contracts, the report found.
“The transfer system is not only unfair to players, it also promotes the opposite of what was intended,’’ Szymanski, co-author of the best-selling book “Soccernomics,” said. It “sustains the dominance of the elite clubs by ensuring that they are the only ones with financial muscle to afford the transfer fees payable for the very best players.”
FIFPro, the players union which represents 65,000 players around the world, has filed a complaint about the transfer system to the European Commission saying it was anti-competitive, unjustified and illegal. FIFPro, which commissioned Szymanski’s 20-page report, wants the Commission to explore how FIFA’s transfer rules harm players as well as small and medium-size teams and their supporters.
Football transfer regulations date back to 1890, when they were introduced by the English Football Association to compensate smaller teams for releasing players to bigger clubs. The rules, which FIFA and the Commission updated in 2001 to ensure “competitive balance”, are not working, Szymanski said in the report. FIFA’s Transfer Matching System found that between 2011 and 2013 the largest 25 clubs in the world accounted for between 51 percent and 58 percent of transfer spending.
In the English Premier League, which generates billions in revenue each year, 72 percent of transfer fees were exchanged by its 20 member clubs, Syzmanski, said, citing 2014 research by accountancy firm Deloitte. Only £8 million pounds of the fees – less than one percent - went to the 48 clubs inEngland’s third-tier and fourth-tier divisions.
It’s difficult for small and medium-size clubs to benefit from the transfer system because it is “to a significant extent a lottery” outside their control, Szymanski said.
The system also creates a barrier of entry for clubs trying to break into the inner circle of top teams, Szymanski said. Between 2009 and 2011, Manchester City spent £357 million on transfer fees and an extra £390 million on wages to challenge for the Premier League title.
“The transfer rules tend to restrain competition between clubs rather than promote it, do little to support competitive balance, solidarity or club stability,” Szymanski said.
Transfer fees would be much lower and fairer if they were based exclusively on the costs to clubs of training a player, and the system would be more competitive, he said. A 2013 study by KEA European
Affairs found that only 1.8 percent of transfer fees in Europe were being paid out to a player’s former clubs in solidarity payments.
FIFA’s regulations are also failing thousands of footballers around the world by shackling them to clubs against their will, Szymanski said.
In a 12-country survey in 2012, FIFPro found that 42 percent of players did not receive salaries on time and in one-third of cases their wages were more than three months late. Trapped by the transfer regulations, some had faced harassment for complaining: 16 percent were forced to train alone at unsociable hours such as at midnight, 12 percent were victims of violent acts and 10 percent had been bullied.
“The present system is weighted against the players,” Szymanski said. “The club can exert pressure on the player in order to achieve its own ends while the player has few options when the club fails to respect the contract.”
For leaving a club without permission, a player could face a fine of 10 times his salary, Szymanski said, citing a 2009 ruling by the Court of Arbitration for Sport in the case of Shakhtar Donetsk and Brazilian player Matuzalem Francelino da Silva. The Swiss Federal Supreme Court subsequently ruled the verdict was an excessive restraint on his freedom.
FIFPro consulted its member countries in Europe in a supportive piece of research that highlights clubs relegated due to financial insolvency (in 2014/15) and the story of Stelios Tsoykanis, one of the estimated 600 players affected.
Posted by: Kev Howland
If you have any football business related news stories you’d like to share then please contact us – firstname.lastname@example.org
To subscribe to our range of football newsletters including news, products and jobs CLICK HERE.
Wed 26th Apr 2017 | Money & Finance
The business model carried out by the owners of Watford FC is unlikely to be adopted by too many sectors outside of football, but by hiring and firing a conveyor belt of managers, they have managed to...
Wed 26th Apr 2017 | Money & Finance
Newcastle United and West Ham United have been targeted by HMRC for alleged Tax and National Insurance fraud. Officers are understood to have raided the offices at St James’s Park and the London...
Thu 20th Apr 2017 | Money & Finance
Premier League clubs’ revenues increased to a new record of £3.6bn in 2015/16, according to Deloitte, the business advisory firm. Analysis of the financial results of Premier League clubs...
Thu 13th Apr 2017 | Money & Finance
CEO, Lewis Holland and the team at DiscountIF team have been studying various merchandise stores of football clubs in the UK. This article was originally posted here. We’ve compiled a short list...