Thursday, July 18, 2013

Milan Playing Fair

There is a lot of confusion and skepticism about UEFA’s new Financial Fair Play (FFP.) Which is understandable when big teams can’t afford a steal of €15 million on a good player and other clubs spend €60 million or more on a player that is great, but doesn’t seem worth such obscene transfer fees. But I think that the confusion can be straightened out pretty easily if you look at the basic tenets and purposes of FFP. And I am proud to say that whether by design or necessity, Milan is one of the biggest clubs that is becoming FFP compliant.

Gone are the days of luring established players to Milan with big wages, now we must grow our own champions

I think the biggest misconception is that FFP was designed to level the playing field. But it was actually originally intended to force clubs into responsible spending. So many clubs had so many millions in debt, and we have seen a number of clubs get into huge difficulty with their leagues and their debtors, even to go so far as to not be able to pay their players. So it wasn’t meant to make Pescara competitive with Barcelona or Manchester United, it was more of a business intervention so that clubs would be able to stay solvent.

The other big misconception is that clubs can’t spend exorbitant amounts of cash on big players. That is not true at all. FFP basically just looks at income versus expenses, requiring that clubs balance their budgets and stop incurring so much debt. If those clubs can bring in exorbitant amounts of income, they can spend whatever they want. It's almost more of a reality competition of business skills, and the clubs who already had big income and name recognition have a huge advantage over the rest of the European clubs. So you might think that there is nothing fair about Financial Fair Play at all.

Like losing a couple of limbs, it still hurts to see them wrapped in money

On the pitch, you might be right. It hardly seems fair that teams like PSG and Manchester City have more talented players on their benches than most clubs have in their starting lineups. But it actually hasn’t necessarily translated into the overwhelming success that you would think. It seems that having endless amounts of money to buy all of the best players doesn’t necessarily translate into teamwork, success, or even good football. So maybe it isn’t so unfair after all.

Because so many clubs had so much debt, FFP is being phased in over time. Clubs do not have to be 100% compliant overnight, but there are punishments for not meeting the FFP guidelines on time. Punishments as simple as warnings or fines or as serious as being disqualified from UEFA competitions. Last year, Malaga was one of the first clubs to feel the sting of FFP, receiving a ban from UEFA competitions for one year or more, pending appeals for failing to comply. So UEFA will be enforcing their regulations, we’ll see if they continue to do so if the really big clubs fail to comply.

Devisive or decisive? Either way, Milan is becoming FFP compliant with this duo on board.

But that is not really our business, as to whether or not other clubs’ books are balanced. It’s not our business to determine what is or isn’t fair financially. We should concern ourselves more with how to help our own club comply. Milan took some painful and possibly even unwise steps toward FFP compliance last year, and many of us thought that was the end of the world, figuratively speaking. While I am still not convinced it was as much a plan as a necessity because of other poor financial decisions and consequences, it certainly seemed at the time like Milan cut off its nose to spite its face. Only to their credit, they used it as an opportunity to achieve FFP compliance. And it is working. And we are still competitive on the pitch, too.

As much as we would like to be making big signings of established players, we are preparing for a more successful future. Maybe it was part poor business in the beginning, but Milan have made bigger strides toward FFP compliance than probably any other Serie A club. And we still finished 3rd last year. With even more reinforcements this summer, but spending very wisely, we should potentially be even more competitive this season.

Berlusconi learning to replace "champagne football" with juicebox football, but it just may work long term

Milan are quickly learning how to navigate the FFP waters. Investing in our youth system is an expense that does not fall within FFP restrictions, so we bought Centro Sportiva Vismara for the next 10 years and are upgrading the facilities and investing in some talented youth, too. They have realized that growing our own top players is much cheaper than buying them later. And having brought in De Sciglio, Cristante, and Petagna so far from the youth sector, our future looks very bright both on the pitch and in our books.

Another way that Milan is ahead of the FFP compliance game is by looking to build new revenue. Not only by growing the Milan brand worldwide with more communication (I believe the official Milan Twitter and Facebook accounts have more followers than any other Serie A teams’ respective accounts,) and increasing brand awareness with tools like the Seconda Pelle book, Google hangouts with high profile players, and more. But also by looking to try to purchase the San Siro as well as more imminently the Hippodrome horse racing track adjacent to the stadium to create a shopping and dining area which will increase revenue by the retail sales and also by increasing the appeal (and thus hopefully the attendance) of the stadium, too.

Marketing the Milan brand will produce longterm dividends

Just when I was giving up hope for Milan’s management, they have turned a bad situation into a strength. I am not sure if we can be competitive with teams like PSG and Manchester City who spend like there is no tomorrow, but I like to think that what we lack in endless funds, we make up for with heart and strength and determination, both of the players on the pitch and the fans in the stands and watching worldwide. Milan have a long way to go, the basic ability for fans to see the games due to Serie A’s horrible TV rights track record is seriously lacking, for one. And it can be a nightmare to have access to official Milan merchandise or to purchase tickets for a home game when you live outside of Italy, for example. But in so many ways, we are ahead of the game.

It is unlikely that we could win the Champions League or even the Scudetto this year, but with the system we are putting in place now, it won’t be long. And the other teams are far behind us in restructuring for fiscal responsibility, so maybe we will be able to take advantage of that and win more than one in a row at some point. We won back to back European titles in 1989 and 1990 and three Scudetti in a row in the early ‘90’s, too, so stranger things have been known to happen. Just look at this past season, we thought our team was left for dead after seven or eight games, and we came back to take third. Because we are AC Milan. Regardless of other teams and where they stand with FFP compliance, I am happy to know that Milan are playing fair.

This post inspired by the music of Prodigy