Newcastle United Takeover Exemplifies the Need for Financial Fair Play Law Reform

Published in The Zeitgeist

Newcastle United Fans raise a Saudi flag to celebrate their new owners and the vast wealth they will bring to the club to sign players and develop their facilities/institutions. Photo: Owen Humphreys/AP Newsroom

For nearly a century, football, known as soccer in the United States, has reigned as the world's most popular sport, captivating fans from Argentina to Russia, Canada to Indonesia. In Europe alone, football generated a staggering $29.8 billion in revenue last year and provided employment to millions of people. Recently, the biggest event in the last twenty years of football took place in an unexpected location: Newcastle, England.

On October 7th, 2021, Newcastle United Football Club was officially acquired by the Public Investment Fund of Saudi Arabia (PIF), chaired and primarily controlled by Mohammed bin Salman al Saud, the heir to the Saudi throne. This acquisition marks a significant shift in football club ownership, as PIF, valued at $450 billion, now accounts for three-quarters of the value of the English Premier League, the richest football league on earth. With the financial means to acquire players from any league, Newcastle United's purchase has far-reaching implications for the sport.

While this purchase may be cause for celebration among Newcastle United fans, it has raised concerns about the potential consequences if not properly regulated by the UK government and English Football Associations. Without adequate oversight, Newcastle could assemble a super team by acquiring the best players and staff from around the world, diminishing competition and lowering the sport's entertainment value. Moreover, as a small English city, Newcastle is not traditionally an attractive destination for football players, leading to inflated wages that could drive up player prices across the board, thus hindering smaller teams' financial capabilities and stifling local or small-business football development.

The Newcastle United purchase underscores the urgent need for reform of Financial Fair Play (FFP) laws. FFP regulations aim to prevent clubs from overspending within a defined budgetary framework over multiple seasons. While these laws appear sound in theory, they suffer from significant flaws that warrant reform.

UEFA President Aleksander Ceferin at last year’s meeting where they discussed possible additions to FFP. Photo: Fabrice Coffrini/AP Newsroom

The foremost and arguably most significant issue with Financial Fair Play (FFP) laws is their lack of proper enforcement. It has become a running joke among football fans that clubs like Paris Saint-Germain and Manchester City continuously flout FFP regulations, acquiring multiple big-name players with apparent impunity. Paris Saint-Germain's recent acquisition of Lionel Messi, Neymar Jr., and Kylian Mbappe onto a single team is a testament to this disregard for FFP restrictions. These clubs exploit loopholes in the laws and face minimal fines for their infractions, rendering the penalties easily affordable. It is imperative for governments and UEFA to intervene and address this issue. Punishments must be clearly defined to prevent wealthy clubs with large fan bases from circumventing them, and UEFA's integrity must be upheld by prosecuting corruption and closing existing loopholes. Reforming FFP begins with the rigorous enforcement of existing laws.

Furthermore, the current iteration of Financial Fair Play laws is inadequate in curbing the influence of big corporations and affluent individuals, such as the Public Investment Fund (PIF), in football. Additional regulations are necessary to prevent entities like PIF from distorting competitions with their financial power.

Another crucial aspect of regulation would be mandating a minimum number of homegrown players on each team. Many leagues perpetuate a legacy of colonialism, with La Liga, for instance, poaching top talents from South America, Germany attracting Eastern Europe's best players, and the UK tapping into its former colonies for talent. This monopolization of top-tier players by certain leagues deprives clubs worldwide of equitable opportunities and drains resources from less affluent regions.

Without substantive reforms to FFP laws, the disparity between football clubs, both domestically and globally, will continue to widen, eroding the sport's entertainment value, jeopardizing hundreds of thousands of jobs, and stifling opportunities for athletes to advance their careers through meritocracy. Without intervention, the future of the world's most beloved sport hangs in the balance.