Financial Fair Play - Article by Football Agents & Intermediaries

Football Agents - Financial Fair Play Rules

Financial Fair Play - Article by Football Agents.org.uk

This time last year Financial Fair Play (FFP) was making headlines across the football world. UEFA hit Manchester City with a massive fine, around £42million, and restricted their Champions League squad to just 21 players. This summer Financial Fair Play has again hit the headlines, but for completely different reasons.UEFA has decided to make changes to the regulations regarding Financial Fair Play; they have decided to “relax” the restrictions around club spending making it easier for clubs to throw millions at strengthening their squads.

So why the sudden changes? Just a year after hammering teams like Manchester City and PSG for breaching the previous rules?  Further what about other teams who have gone along with Financial Fair play are they now being punished in the wake of the changes?Financial Fair Play has been at the forefront of Michel Platini’s campaign as UEFA president since it was approved in 2010.

But what was its purpose?

Well, quite simply UEFA say “Financial Fair Play is about improving the overall financial health of European football”. Figures show it’s definitely served its purpose with collective losses by clubs down by 70% over the last three years, highlighting the economic growth across European football, contrary to the rapid economic downturn across Europe as a continent.The rules stated that a club is not allowed to spend more than they earn, therefore preventing them from accumulating masses of debt and as a result stabilising many clubs for the future. However the rules were criticised as they were seen to be protecting clubs that are commercially rich and hampering the growth of smaller clubs with ambitious owners looking to invest heavily in their squads.Due to the improving financial situation within European football, UEFA have decided to relax the break-even regulations. Now, they are allowing clubs to make a loss if they can present a sustainable business plan and show how they will re-balance the books within a three-year period.

UEFA hope that the new relaxed laws will encourage new investors to invest in clubs across Europe, making the game more competitive at the top level. The aim of Financial Fair Play though is not to make all clubs equal in size and wealth, rather to encourage clubs to build for the future instead of constantly seeking a quick fix through continual heavy spending on the club’s squad.

They have done this by encouraging investment in youth and the improvement of the club’s infrastructure. Also by setting the acceptable deficits in absolute monetary terms rather than percentage terms, the break-even regulations have been made less restrictive to smaller and medium sized clubs so that in time, they have the potential to grow and expand.So what happens if a club does break Financial Fair Play regulations? There are a number of different punishments and sanctions that could be imposed on a club. The punishment is decided by UEFA’s Club Financial Control Body. The severity of the punishment depends on various factors (such as the trend of the break-even result). The different punishments include:

• Warning
• Reprimand
• Fine
• Deduction of points
• Withholding of revenue from UEFA competition matches
• of registration of new players for use in UEFA competitions
• Restrictions on the number of players a club may register for use in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for UEFA competitions
• Disqualification from competitions or exclusion from future competitions
• Withdrawal of a title or award.

However in a number of cases the Club Financial Control Body have decided that the purposes of Financial Fair Play can be met through a rehabilitative approach as opposed to a punitive approach. In these cases the Club Financial Control Body have reached settlement agreements with the club, combining financial contributions with other restrictive constraints to ensure the club return to a financially stable state in the future.Among the other changes UEFA have made to Financial Fair Play are:

• Any money spent on women’s and youth football by clubs will not count towards their losses
• ny sponsor or outside investor that contributes more than 30% of a clubs annual income will be investigated, to see if they are linked to the ownership of the club
• Clubs who play in leagues where they don’t generate as much income from TV deals and ticket revenue will not be judged as harshly as clubs that play in leagues generating large amounts of revenue.

Opinion of Football Agents?  

For what it is worth, the changes made to the Financial Fair Play regulations by UEFA are positive and perhaps a back down by the Regulators against pending Court litigation.The old system meant that the rich would stay rich whilst the poor would remain poor. The new system offers scope for change and growth amongst the smaller clubs, yet it’s still strict enough to control spending and maintain the seemingly healthy economic climate across European football. Hopefully over the coming years we will see the effects of these changes with football becoming more competitive across Europe rather than being solely dominated by the usual superpowers.

 
New Cash New Clubs?

The news provides further positivity to the lower league or premiership clubs and new cash injections to other non-top 4-5 clubs will result in greater competition. Had it not been for the likes of money introduced to Chelsea and Manchester City, competition would be stifled.  For instance, apart from Manchester United, Arsenal and Blackburn Rovers (remember them?) no other team would have won the Premiership had it not been for the money.  Perhaps one could also add Blackburn Rovers to that list of money injection.  Financial Fair Play, in Football Agents opinion, in its old form would create and maintain that in-equality.  The new relaxation is welcomed.

Article written for football agents and intermediaries by Danny Hughes