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Indian Super League and the need for Financial Fair Play Rules

*Written by Joseph Pious


I

Introduction


Financial Fair Play (FFP) rules in football were introduced by the UEFA (Union of European Football Associations) as a set of regulations to promote financial stability and sustainability within football clubs. The primary goal of FFP is to prevent clubs from spending beyond their means and accumulating excessive levels of debt. Overall, it ensures sustainability and financial health of football clubs in the long run.

However, the Financial Fair Play (FFP) rules implemented by UEFA do not directly apply to the Indian Super League (ISL). FFP regulations are specific to European club competitions organized by UEFA. In addition, individual football leagues and governing bodies around the world may have their own financial regulations to ensure sustainable financial practices within their respective leagues. For example, the premier league agreed new financial rules recently and will be out of step with UEFA, allowing a higher percentage to be spend in England. (1)

The governing body of football in India, the All India Football Federation (AIFF) does not have any established FFP regulations. India’s biggest club competition, the ISL, functions around certain guidelines and rules issued by the league operators, the Football Sports Development Limited (FSDL). These guidelines do not provide for any FFP rules but only mentions a salary cap of 16.5 Crore rupees to be maintained by every Club in the league. The said guidelines provides for sanctions in the form of fines and deduction of points on clubs violating the given salary cap.

If we look at the current transfer market in ISL, it is very evident that some clubs are overspending way over the salary cap bringing in foreign players for humongous transfer fees. It is not every club, but a select few, with rich owners violating the rule highlighting the sole purpose of requiring established FFP rules in order to maintain a level playing field and sustainability of the league.



ISL Transfer Market and Financial Regulations


The Indian Super League (ISL) is the biggest football league in India, having played a significant role in the development and promotion of football in India. The league operates on a franchise system, with teams representing various cities across the country. The All India Football Federation (AIFF) and the Football Sports Development Limited (FSDL) are the primary governing bodies responsible for organizing and overseeing the league's operations. The ISL follows a unique format where a limited number of franchise-based teams participate in a league-cum-knockout tournament. It features 12 teams each owned by prominent individuals, business groups, or sports organizations.

The richest club in the league, Mohun Bagan Super Giants is owned by prominent industrialist and entrepreneur Sanjiv Goenka under the R.P Sanjiv Goenka Group. The club was formed as a result of merger between ATK (formerly known as Atletico de Kolkata), a successful franchise in the Indian Super League (ISL), and I-league team Mohun Bagan FC. This merger marked a significant shift in the ownership of Mohun Bagan FC, as the club became part of a larger professional football setup, with Goenka acquiring a majority stake in the team. (2) Another strong competitor in the league, Mumbai City FC, is owned by the City Football Group (CFG), which also owns English Premier League club Manchester City. Under CFG's ownership, Mumbai City FC has made notable investments in building a strong squad and improving their infrastructure. (3)

Mohun Bagan has stunned the league with the transfer of Australian forwards Jason Cummings who featured in the Qatar World Cup last year. With a market value of 9 Crore rupees, the player has signed a three year with Mohun Bagan deal for an undisclosed fee. The cub has also brought in Albanian forward Armando Sadiku having a market value of 5 crores. This has increased the foreign player strength in the squad to nine, which also includes the likes of arguably the best player of last season- Dimitri Petratos, best midfielder in the league- Hugo Boumas and Paul Pogba’s brother, Florentin Pogba. (4)

Mohun Bagan and Mumbai City FC made recent headlines, with each club securing record transfers of Indian players, Anirudh Thapa and Akash Mishra respectively. It is rumoured that the Clubs paid a whopping 3 Crore rupees to secure these transfers, though the exact fee is undisclosed. Mohun Bagan has signed Thapa in addition to the team comprising of a pool of highest paid Indian players, Ashique Kurunian, Liston Colaco, Manvir Singh, Subashish Bose and Pritam Kotal.

The league runs along the guidelines issued by FSDL and AIFF. However, both these operators does not provide for any established FFP rules for the league. The only codified mention of a financial regulation is given under the ISL Coach & Player Selection Guidelines 2021-22, wherein a salary cap of 16.5 Crore rupees is required to be maintained by every club in the league. (5) Article I (XX) of the said guidelines states that “any club found to have exceeded the salary cap, knowingly or otherwise, shall be liable for action/sanction by the league, with possible penalties including without limitation, any or all of the following: fine; and/or deduction of points.” (6)

If we look at the recent ISL transfer market history, the above-mentioned guidelines exist only on paper and not in practice. It is merely a farce for rich clubs like Mohun Bagan and Mumbai City FC which is clearly evident from their humongous spending’s. While the ISL rules on foreign players allows signing of a minimum of 4 and a maximum of 6 foreign players in a team, Mohun Bagan has 9 foreigners on big pay scale in addition to the Indian players. (7) It is of no doubt that such a squad is working way above the salary cap and justifying otherwise would be a mockery of the football community.



Why ISL need FFP Rules?


The Financial Fair Play (FFP) rules, in addition to reducing the risk of financial instabilities and potential bankruptcies, helps level the playing field by creating a more competitive environment in football. Without financial constraints, wealthy clubs could spend exorbitant amounts of money on player transfers, wages, and other expenses, giving them a significant advantage over less affluent clubs. FFP helps prevent the emergence of a small group of financially dominant clubs and allows for fair competition based on sporting merit rather than financial power. FFP encourages clubs to invest in youth development and nurture local talent rather than solely relying on expensive transfers. With stricter financial limitations, clubs are incentivized to focus on their academy systems and training facilities, fostering the growth of home-grown players and supporting grassroots football.

It was not long ago that ISL Club FC Pune City was shut down due to financial reasons. Survival in ISL is hard, especially considering how every club has to pay around 13-16 Crores to the league as franchisee fee before every season. This is only possible with strong financial backing. Even though clubs receive a small profit from the central pool, the losses they suffer every season is huge. With Clubs like Mohun Bagan and Mumbai City FC splashing cash around, buying players left, right and the FSDL showing a blind eye towards the violation of the salary cap, the league has become a two-three team competition; to quote in the terms of fans, a farmer’s league. The infusion of money without any regulation has made the league non-competitive, and suffering losses year after year has made the survival of clubs along the bottom line very hard.

Honouring the salary cap by the clubs is one issue, but the league not taking action against its violation or clearing out the loopholes is a major problem for the sustainability of the league. It will not be wrong to assume that the league operators want regular cash inflow and strong franchisees, and in order to flush out weak owners, the salary cap is being treated as a mere sentence on paper. However, the organizers are failing to understand the possible repercussions of this practice, which can only affect the health of the league and health of the owners.



Conclusion


Since taking over Mohun Bagan, Sanjiv Goenka has had only one vision; to make his team the best in India and Asia. It can be this ambition and the requisite financial backing that is attracting world cup players to the squad. Competing in the AFC is a big deal, winning is glory, but requires a strong and experienced squad. Mohun Bagan, Mumbai City, Bengaluru FC are all in engaged in this process and the requirement of a salary cap is not coming in their way in achieving the same.

However, this glory may be achieved at the sacrifice of the ISL, with glimpses of an already non-competitive league in the making. The future is dark, with a probability of clubs like Northeast United FC and East Bengal FC shutting down in the coming seasons or being demoted to lower leagues due to financial constraints to compete in the ISL. The situation would be worse with newly promoted clubs unless a big takeover swoops in and rescues the clubs survival.

These possible repercussions highlight the need for FSDL and AIFF to establish FFP rules for ISL, I-League and the proposed promotion relegation system. Instead of a salary cap on teams, a proper break-even system through limitations on spending’s and sources of revenues should be established by the league. This would help create a level playing field and not make a mockery of the league.


*The author is a lawyer from India.








(The image used here is for representative purposes only)



References

1. Dorsett, R. (2022, November 8). Premier League clubs agree new financial rules, with EFL sides to be offered increased payments. Sky Sports. https://www.skysports.com/football/news/11661/12742070/premier-league-clubs-agree-new-financial-rules-with-efl-sides-to-be-offered-increased-payment

2. ATK removed, it's Mohun Bagan Super Giant from June 1. The Hindu : Breaking News, India News, Sports News and Live Updates. https://www.thehindu.com/sport/football/atk-removed-its-mohun-bagan-super-giant-from-june-1/article66863420.ece

3. Staff, R. (2019, November 28). Manchester City owners to buy 65% stake in India's Mumbai City FC. U.S. https://www.reuters.com/article/soccer-england-mci-india-idINKBN1Y20LU

4. Indian Super League 23/24. Football transfers, rumours, market values and news | Transfermarkt. https://www.transfermarkt.co.in/indian-super-league/startseite/wettbewerb/IND1

5. Hero ISL’s new regulation gives push to more Indian players on-field. (n.d.). Indian Super League. https://www.indiansuperleague.com/press-releases/hero-isls-new-regulation-gives-push-to-more-indian-players-on-field

6. Article, I (XX), ISL Coach & Player Selection Guidelines 2021-22

7. Nag, U. (2022, October 1). How many foreigners can play in ISL. Olympics.com. https://olympics.com/en/news/indian-super-league-isl-foreign-players-play-rule-football





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