Financial Fair Play: A Messi Situation

A teary-eyed Lionel Messi said goodbye to Barcelona on Sunday morning. Addressing a crowd largely made up of current and former teammates, Messi expressed his love for the club and his desire to stay. Messi who came to Barcelona as a 13 year old said goodbye to the club after 21 years. After years of speculation if Messi would ever leave the club he finally has. Why? It would appear Messi is the first high profile casualty of Financial Fair Play regulations. In the future, history may record today as a win for the financial health of the game.

Financial Fair Play was introduced by the Union of European Football Associations (UEFA) in 2010. The premise was simple. Many European soccer clubs were in massive debt because they spent inordinate amounts of money on players, staff etc. in the hopes of winning competitions. In reality, most of them just ended up in massive debt. UEFA recognized this and introduced FFP as a safeguard to protect clubs and overall, the health of the game in Europe. The rules are quite clear: Depending on the amount of debt a club owes there is a limit on how much they can spend on transfers and/or player wages etc.

Barcelona could be considered a case study for FFP. At one point Barcelona was the first club in any sport to surpass 1.4bn in annual revenues. Now the club reportedly has a gross debt of over 1.4bn. This has been largely due to poor management of transfers and the losses from Pandemic have only made things worse. If Barcelona had kept Messi on the salary from his last contract the club would have had salaries represent 110% of the club’s earnings. Even with Messi willing to take a 50% pay cut the club would still have been in breach of FFP regulations. This is because without Messi on their books the club would still hold wages that are 95% of club’s earnings way above the recommended 70% by La Liga. Javier Tebas, the La Liga Chief, had said a month ago that for Messi to stay, Barcelona would have to significantly lower their wage bill and no leniency would be shown. As it’s happened Barcelona were unable to do this, and Messi is gone.

Financial Fair Play regulations have been mocked at times by the football community. A great example of this being when Manchester City’s ban from the Champions League for breaking FFP rules was overturned by the Court of Arbitration for Sport. According to reports at the time, many felt City was “getting away with it” or that FFP was a “joke”.

Consequently, this Messi situation is a major win for FFP. As the Barcelona President put it “The club is above everything - even above the best player in the world.” This has shown that the FFP regulations can be taken seriously. If the FFP regulations can prevent Messi from staying at Barcelona, then every other club around Europe is on notice now. There is no way this was an easy decision for Barcelona or La Liga for that matter. Messi was the face of the franchise and the league. Will the financial losses from sponsors from losing Messi outweigh the losses from keeping him? We will find out soon enough but most likely not. La Liga will still remain one of the top 5 leagues in Europe. At the end of the day rules are rules. If rules are to be effective, they must be applied equally across the board. If European super clubs are to improve their debt without the formation of a super league, then more tough decisions lie ahead. Some may not like it, but Financial Fair Play is working exactly as intended.

David Abunaw is a rising second year law student at the University of Pennsylvania Law School and Sports Events Chair of the Entertainment & Sports Law Society. Connect with him about sports and entertainment on Instagram: @davidako10 and Twitter: @davidabunaw.