Matt Scott: F1’s turbo-charged financial fuel provides a warning for football

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“To sell a bargain well is as cunning as fast and loose.” William Shakespeare, Love’s Labour’s Lost

Football fans today must be as literate in financial matters as in the intricacies of the midfield-diamond formation or of the Cruyff Turn. Recent reports that some clubs will face regulatory sanctions in the first application of UEFA’s Financial Fair Play environment show that to be the case, and columns such as this owe their existence to money’s ever-growing role in the world’s biggest sport.

The game generates billions upon billions of dollars per year in television, sponsorship and match-day income for its participant clubs and associations yet still, for some, that is not enough. Last week its general secretary, Gianni Infantino, justified its FFP measures with these words: “UEFA is providing leadership to protect European football from greed, reckless spending and outright financial insanity. It is only through good governance that we will be in a position to protect European football for the long term. By ensuring that clubs live within their own revenue in a sustainable manner.”

Infantino’s commentary will no doubt divide opinion and already there are dark hints of legal challenges to his rules from their signatory clubs. Some feel there is no place for dirigisme in football. For them, it is a game born of hopes and dreams whose fulfilment at times depends on the reckless gamble of a club board to push the team to a new level. For others, the game really is in the grip of a financial insanity that has caused an inflationary spiral. This camp says the inflation reverberates throughout the game as agents demand ever-higher salaries for their clients, irrespective of their contribution to the team.

If indeed UEFA does press ahead with the most draconian sanctions against its licensed clubs, these arguments are likely to be played out at the Court of Arbitration for Sport later this year. But for all the railing and gnashing of overspending clubs’ teeth, and the inevitable legal wrangling that will eventually ensue, these are mere symptoms of a cure for a different risk to the health of the game.

Indeed, it turns out football competitions are far more efficient than one of their rivals for sports fans’ affections. This week the Daily Telegraph reported that Formula One’s total annual revenues for 2013 were estimated to be $1.7 billion. Yet of this overall sum less than half made its way into the teams’ pockets.

(If the retained profits diverted to the organisations’ reserves are counted, UEFA’s distributions to football might be considered to have amounted to €1,973.5 milion; FIFA’s to $1.072 billion. This would raise their distributions to football to 89.83% and 77.34% respectively.)

Although the biggest teams, Red Bull and Ferrari, also subsidise their performance in ways that UEFA frowns upon in its FFP rules, the major difference between the financial models of football and of Formula One is that in the latter the teams’ incomes are almost exclusively derived from the central disbursements of the central commercial operator, Formula One Management.

This has left the entire F1 grid beholden to the caprices of the heavily indebted, private-equity-owned FOM, and to a degree to the demands of the biggest teams. As was proved with the formation of the Formula One Teams Association in 2008, they are not happy about this, and this team collective became a threat to the FOM establishment. Yet, as higher prize money for the likes of Ferrari and Red Bull was offered, their commitment to the collective waned. Along with Sauber they pulled out of FOTA in 2011 and within three years the organisation was disbanded. A divide-and-rule strategy had served the sport’s paymasters well.

Given the flexibility for the biggest teams to earn the majority of their incomes not from central distributions from UEFA and the leagues but from their own match-day and commercial activities, it might seem that the dynamic in football is completely different. But paradoxically the opposite is true: the biggest teams hold sway just as they do in F1. The sum of the whole is stronger than its individual constituent parts but the current constituency is only an accident of history and tradition. However toxic the outcome, the opportunity will always be there for the biggest clubs to create a competition that concentrates their incomes among themselves, with a much smaller regard to the current collective in domestic leagues and among the participants who make up the numbers in the Champions League.

This means that although football governing bodies have proved their efficiency they remain beholden to the biggest clubs whose commitment to the collective cause cannot be guaranteed forever. This produces a balancing act for the governing bodies of maintaining the status quo while appeasing the biggest income drivers’ demands. One way to appease them would be to shovel ever-greater wedges of prize money into the biggest teams’ hands, just as they have in F1. But the table above shows there is not much spare cash left over to do that. And in any case it is not a healthy way of running a sport.

Formula One’s lesson for football is clear. Keeping the big teams happy is very important but there has to be limits. The recent disbanding of the FOTA movement proved that the divisions of FOM’s divide-and-rule strategy ran deep and the infighting grew terminal. This has threatened the very existence of a number of the back-marker teams on the grid, whose slothful participation is an essential part of any race. Four drivers fighting for a three-place podium would not excite anyone at all.

FFP is a far more creative answer to the risky environment of top-level sport: although Infantino at UEFA is the hawkish spokesman for the rules talking of harsh measures against those clubs in breach, he is by no means going against the grain of what the biggest clubs want. Infantino, UEFA and its president Michel Platini have variously been described as “dangerous” “meddlers” who are “killing football”. But it seems to me that they are playing a delicate game with real aplomb.

For the risk to those who would break in to the elite of the game with their turbocharged spending is that one day there will be no elite to break into at all because it has broken loose and gone it alone. Every day UEFA must keep its bargain with the biggest clubs going, and for all its detractors, with FFP it is selling it well.

Journalist and broadcaster Matt Scott wrote the Digger column for The Guardian newspaper for five years and is now a columnist for Insideworldfootball. Contact him moc.l1552959372labto1552959372ofdlr1552959372owedi1552959372sni@t1552959372tocs.1552959372ttamt1552959372a1552959372.