The UEFA Financial Fair Play Rules: a difficult balancing act
Chelsea is the bookies' favorites to win the English Premier League, which begins again next week. In , UEFA introduced financial fair play (FFP) rules which limit the losses that clubs are allowed to make. It gave This is the unintended consequence of the new regulations. MEET THE MOGULS. Financial Fair Play rules not high on Chelsea or PSG's agenda they were still on course to meet the Financial Fair Play requirements and their The Financial Fair Play regulations are supposed to forbid “related company. It is worthy to note however that this figure represents Chelsea's net spend as . Are there loopholes in the Financial Fair play Rules that European clubs the season before being lifted if the club meet guidelines
What is covered by FFP? Clubs need to balance football-related expenditure - transfers and wages - with television and ticket income, plus revenues raised by their commercial departments. Money spent on stadiums, training facilities, youth development or community projects is exempt.
Who polices the regulations? What are the possible sanctions for clubs in breach of FFP? The CFCB's investigatory chamber can offer clubs settlement agreements, with potential punishments including warnings, fines, withholding prize money, transfer bans, points deductions, a ban on registration of new players and a restriction on the number of players who can be registered for Uefa competitions.
So how does that affect big European teams? Nine clubs were found to have breached the FFP criteria in the first assessment period, most notably Manchester City and Paris St-Germain, and a range of fines and sanctions were imposed.
Qatar-owned Paris St-Germain received a similar punishment to City. Can punishments be overturned? Jean-Louis Dupont, a lawyer who helped win the landmark Bosman case, has launched a legal challenge with the European Commission, claiming that FFP breaches European competition law. An independent Manchester City supporters' club, which has 15, members, has voted to back the complaint. What will kill the initiative, or certainly stifle it, is people easing themselves into it rather than the rules applying and everyone operating within them.
The rules should be clearly defined, you cannot have a half-rule process.
What is Financial Fair Play and how does it work? FFP rules explained | tankekraft.info
Suffice to say that if a club still decides, after incurring the wrath of UEFA, to use competition law to challenge the FFPRs it is worthwhile to note that Article 1 outlaws: All agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market and specifically b limit or control production, markets, technical development, or investment.
In other words, the autonomy of what a club owner can do is restricted. The club challenging the rules would have to argue that Article 1 or its domestic equivalent is engaged.
The provisions of paragraph 1 may, however, be declared inapplicable [if the restriction] i contributes to improving the production or distribution of goods or to promoting technical or economic progress, while ii allowing consumers a fair share of the resulting benefit, and which does not, iii impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; or iv afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
A club could perhaps decide to seek declaratory relief in court proceedings as the basis for re-instatement into the UEFA competition. This author is yet to hear of any club claiming that the FFPRs are illegal. On the contrary they incentivise investment in long-term projects like youth development or stadium construction over shorter term investment on transfer fees and wages.
They are thus indirectly constrained by their own cost base. To counter this, UEFA would use such arguments that a benefactor could buy a club and invest heavily on infrastructure, youth development and other FFPRs exempt costs. Whilst this does restrict the autonomy of what an owner can do, UEFA would point to the restrictions having the pro-competitive benefits of: In a previous article, in relation to third party player ownership, I stated that in relation to multiple club ownership: This was because, among other reasons, it still allowed an entity to purchase more than one European club.
The prohibition was that two commonly owned clubs could not compete in the same competition. It just meant both could not play in the same European competition. Indeed, any club that qualifies can chose whether it wants to apply for a license for participation in European competitions. Needless to say, the challenging club would argue that if you want to be a top club, Champions League revenue is vital and therefore re-occurring qualification into the Champions League is imperative to maintain revenues and compete at the top of the national league.
UEFA Financial Fair Play Regulations
UEFA would however have to set out appropriate reasons for why the regulations would pass the other three tests that make up Article 3 gateway. A report from PriceWaterhouseCoopers expressed deep concern at the fragile financial state of Scottish football.How top soccer clubs clashe with rules on financial fair play
However, because of mediocre performances in recent years, the SPL champions no longer qualify automatically for the Champions League group stages and are now largely confined to the much less lucrative Europa League. Leveraged buyouts[ edit ] There was also concern at the heavy debt being loaded onto some clubs as a result of new owners borrowing heavily to acquire the club and then using future earnings to pay the interest, a practice known as a leveraged buyout.
Liverpool found itself in a similar position after being purchased by Americans Tom Hicks and George Gillett in February Hicks and Gillett placed what was widely believed to be an unrealistic value on the club in the hope of making a vast profit however, for which they were severely criticised in the House of Commons as " asset strippers draining the club with their greed".
LBOs have sometimes been defended by those using them as mechanisms to bring greater efficiency and financial discipline to target companies, although there are also examples where they have actually added to an existing problem of debt. As with debt taken on in an attempt to improve the team, unexpected failure such as not qualifying for the Champions League can cause significant financial problems for clubs loaded with LBO debt.
Such a practice adversely affects the market by creating wage and transfer inflation as well encouraging other clubs to spend more than they can afford in an effort to remain competitive.
Financial fair play: All you need to know about how it works
For example, Internazionale's enormous losses since the mids have been largely underwritten by their president, energy company owner Massimo Moratti. In the English Premier League, Chelsea 's massive transfer spending since has been paid for by their owner, the Russian oil and gas billionaire Roman Abramovichwhile Manchester City is owned by one of the world's richest men, Sheikh Mansour bin Zayed bin Sultan Al Nahyan. If you depend only on a rich benefactor however, then the financial model is too volatile.
Also on the agenda was a proposal to limit squads to 25 players with unlimited under players per team at national and European level, as well as plans to reduce fees paid to agents. Clubs also agreed that they will not be able to owe each other money, nor will they be allowed to compete in Europe if salaries have not been paid to players or non-playing staff.
Despite the delay, ECA chairman Karl-Heinz Rummeniggerepresenting Bayern Munich, called the new rules "a magnificent achievement" and pointed out that 93 clubs from 53 countries who attended the ECA's General Assembly in Manchester agreed with the proposals. He stated, "After only two years of existence, the European Club Association has managed, together with UEFA, to set measures that will shape the future of European club football into a more responsible business and ultimately a more sustainable one.
He said, "We have seen what the proposals are and we would meet the financial break even rules. We as Manchester United have always been run professionally and will continue to be run professionally. Any money spent on infrastructure, training facilities or youth development will not be included.
Financial fair play: All you need to know about how it works - BBC Sport
During this period, the lack of competition for lucrative Champions League football in England from outside of those four clubs was frequently criticised. More recently, however, the grip on the four top places in the Premier League that enable automatic entry into the Champions League competition by the incumbent "Big 4" clubs has been eroded somewhat in more recent seasons due to the rise in competitive performance of both Tottenham Hotspur and Manchester City and the relative decline of Liverpool, Arsenal and Manchester United.
Questionable sponsorship deals[ edit ] Some forums have expressed concern at the potential risk that as clubs become ever desperate to raise "allowable" revenue which will positively affect their balance sheet, they will indulge in questionable U. For example, many top clubs raise money from selling sponsorship for their playing as well as their away and training kit, and other titles like the "official logistics partner" Like Serveto for Barcelona or "official marine engine partner" Like Yanmar for Manchester United.
- The UEFA Financial Fair Play Rules: a difficult balancing act
- What is Financial Fair Play and how does it work? FFP rules explained
Several top clubs have similar deals. To review such practices, UEFA accountants can review related company deals that might be from a sister company or parent company's subsidiary.
Potential loopholes[ edit ] Other commentators pointed to actual and possible loopholes in the legislation itself; for example, up until the end of the —15 season, clubs will be allowed to exclude from the FFP calculation the wages of players signed before June as long as they can show an improved trend in their accounts.
There is also the potential for legal action to overturn the legislation and for larger clubs to artificially raise their income from massive sponsorship deals or stadium naming rights via companies with a vested interest in the club's success, or from the sales of "overseas rights" to consortiums without clearly identified investors.
In addition, the UEFA guidance states that each club's accounts must be audited under the national accountancy conditions applicable in their particular country, which may vary. Third party ownership[ edit ] One area of concern for English clubs is the practice of third-party ownership.
The advantage for clubs is that they can make big savings from not having to pay the full transfer value of a player and can also make other financial gains, that is, from selling on a player's image rights. Following the introduction of FFP, the Premiership unsuccessfully lobbied UEFA to review the situation to avoid English clubs being disadvantaged,  and in Octoberthe leading sports lawyer Jean-Louis Dupont told the BBC that the Premier League's third-party ownership rules were not legitimate and that a legal challenge to overturn them would have a "very, very good chance of succeeding".
The German, Italian and Spanish leagues are not run along this model, with only France's Ligue 1 among the big European leagues having a similar system of voluntary payments to outside interests. It has been suggested that this section be split out into another article.