25 July 2022
Football
Sports Business
Commercial / Contracts
Introduction
There is a scene in the ultra-popular anime series Dragon Ball Z which perfectly reflects today’s soccer climate. In the “Namek Saga,” arch-villain Frieza has been involved in an arduous battle with the series’ heroes (spanning many, many episodes). During the battles, Frieza undergoes numerous visual transformations, in an effort to boost his power levels. However, just when the heroes think the tide may be turning in their favor, Frieza unveils his final form. Accompanied with his transformation are the following haunting words: “It would be a relatively simple matter to obliterate you all in my current form, but rather than do that, it will be far more satisfying to leave you with one final vision more terrifying than [anything]! Consider this my parting gift to you! A nightmare beyond [comprehension]! Witness my true, ultimate form!!!.”
Soccer is cyclical. All the great teams eventually break up. Formations become obsolete. Generational talents fade away into obscurity, and iconic managers retire. However, in the wake of Kylian Mbappé’s (“Mbappe”) contract extension (the “Contract”) with Paris Saint-Germain (“PSG”), fans may need to come to terms with the fact that they may be witnessing another shift to the soccer landscape. This shift will not necessarily play out solely on the field. It will be in the locker-room. The training facility. The boardroom. The transfer market.
Despite the valiant efforts of UEFA’s Financial Fair Play regulations (“FFP”), the Contract may have just unveiled soccer’s final form: a hyper-focus on player power which renders rivals unable to compete fairly for services.
Why is the Contract Problematic, Anyway?
On the face of it, the Contract looks like any other in the über-commercialized era of soccer. A three-year contract extension until 2025. Mbappe was set to be a free agent at the end of this season. The world’s most prodigious young talent, a World Cup winner, Mbappe was set to be the most sought-after name in the transfer window. This meant that he could have his pick of any suitors. Ordinarily, in a “fair” market, clubs (buyers) would compete amongst each other for a free agent’s services. Principally, this would be done on the basis of wages, but could include other things like incentives, playing opportunities in the Champions League, and token gifts. Indeed, Mbappe had been openly flirting with European champions Real Madrid but, at the last moment, things changed. What happened? What could PSG have offered that got Mbappe to turn down the opportunity to play for the world’s biggest club, the reigning European champions, and his “childhood” dream team? It could not have simply been the fact that Paris is hometown, surely? No.
Sky indicated that the PSG offer surpassed the terms of the Real Madrid deal, which included a £110 million ($137 million) signing bonus and £20 million ($25 million) of annual net salary. The signing bonus would also be in the region of £100 million ($125 million) with a monthly salary (£4 million / $5 million) that doubles his current PSG pay. The initial reports courtesy of ESPNFC's Julien Laurens stated that both head coach Mauricio Pochettino and sporting director Leonardo are going to be forced out at the end of the season. Sky Italia reporter Gianluca Di Marzio told Sky Sports News that Mbappe could have “more power in the group… the possibility to be captain, probably to say something in the future of the coach, the future of the sports director." (Own emphasis).
One player. Earning the highest salary. With the ability to influence the squad, the bench, and the front office. That is a kind of power never seen before in soccer. To understand why player power can actually be deleterious to a team, it is helpful to look at some illustrative examples.
Player Power Played Out
While no direct comparison exists for Mbappe, the closest example is perhaps that of Lionel Messi. On the pitch, Barcelona developed a sense of Messidependencia – a reliance on their former star’s mercurial abilities to lift the team out of any slumps. The idea then was to construct a team around Messi, to bolster and support him. However, Messi did not pick the team that took to the pitch, neither did he decide on who would be the coach. In fact, “[n]one of the more than 30 players signed at a cost of over €800 million [from 2014-2019 had] been his friends or former team-mates.” So while Messi may have had a say in approving certain transfers, his power did not overtly extend to the boardroom level.
The best illustrative example is that of LeBron James. Back in 2010, James was a free-agent and decided to join the Miami Heat, a seismic event known as “The Decision.” Moving down South, James and his Olympic teammates Dwayne Wade and Chris Bosch decided to form a veritable “superteam.” The Big 3 would go onto to appear in four consecutive NBA Finals, winning two championships. In James’ subsequent stops at the Cleveland Cavaliers and, currently, the Los Angeles Lakers, he has played the role of world’s best player and shadow general manager. He has recruited players to his teams, decided on moves to make, and had a direct say in how the roster around him looks. As CBS Sports describes this paradoxical reality: “He often forces his decisions on GMs and coaches who must abide. Those decisions are often ill-advised. But LeBron is also so talented it all, mostly, works out anyway.”
And mostly works out it does. Miami has two championships to show from James’s time there. The Cavaliers famously came back from 3-1 down to topple the Golden State Warriors. The Lakers won the 2020 championship in a COVID-bubble. The problem is this, what happens when that player who wields so much power suddenly decides it is time to leave? In the five seasons following his departure, the Heat made the playoffs twice. The Cavaliers have not made the playoffs.
The goals of general managers and players can oftentimes be diametrically opposed. Teams want to set up their infrastructure for sustainable, viable and continued success. The longevity of the team is such that prudent planning for the future is in their best interest. On the other hand, players deal with the looming threat of injury risks or talent drop-offs. They want to win titles and maximize their potential earnings in the now, because they have no idea when that may suddenly be cutoff.
Therefore, it is necessary to have an adequate system in place which attempts to address and balance these competing interests.
Can You Cap that Power?
There are terms often used in American sports such as “going all in” or “maximizing a championship window.” This is essentially making decisions now that may impact the future, whether it be in the form of trading draft picks for star players (a la the Rams) or offering high value backloaded contracts. However, the in-built salary cap model through the various collective bargaining agreements ensures that mortgaging the future should eventually, at least in theory, have a hard reset date. Once the various contracts expire, a team can start from a clean slate in constructing a roster. That construction is left to the general manager in consultation with the coaching staff and cap management experts.
European soccer has no salary cap. Since 2010, UEFA has operated under FFP which prevented clubs from spending unsustainably and outside of their means. However, in April 2022, UEFA approved a new set of rules called the Financial Sustainability and Club Licensing Regulations (“FSCLR”). The change brought about by “[the] need for wholesale reform of financial regulations and new sustainability initiatives.” The FSCLR comprises of three pillars: Solvency, stability and cost control.
But these tenets relate to fiscal issues like a squad cost rule, overdue payables, and football earnings requirements. So while the Contract could be scrutinized under these grounds, it fails to address the salient problem: power. Mbappe has an (seemingly) unfettered discretion in deciding how the team will be constructed, and how it will be managed. This kind of incentive cannot be measured in purely pecuniary terms. It is an authority given personally and would never reflect on any balance sheet. The organic limitation on this power would be way of the player’s contract, which outlines his roles and responsibilities as a footballer. No intimation could be gleaned from this that there are general manager functions.
Yet, by going beyond this traditional scoping the goalposts have been shifted. Teams wishing to compete for star players will not only have to deal with gargantuan wage demands, but players will also want increased say in how a team can be modelled in their image. With no natural limitations in place, it seems that policing this sort of deal will be far harder than that of financial misconduct. And what if the star player decides to move on, and leaves their team saddled with the high-value contracts of players they essentially picked themselves? It does not take long to see that unfettered player power can end up ruining a club far quicker than any financial mismanagement.
Conclusion
Never before has one player been given so much power to shape a team. The phrasing touted boastfully after the extension, belied the true problems that lay beneath. “Kylian C’est Paris” (Kylian is Paris) PSG proudly stated after the announcement. And they could not have been more correct.
Just as The Decision did before, “The Contract” could represent a watershed moment for the sport of soccer. PSG could have “simply obliterated” everyone by continuing to buy the best players. But much like the Z Fighters found out with Frieza, sometimes when you think you have seen it all, a final, even more frightening, form is revealed.