UEFA FINANCIAL FAIR PLAY REGULATIONS UPDATE
The European governing body of association football, UEFA, introduced their Financial Fair Play (FFP) Regulations in 2009 and they came into effect in the 2011-2012 season, with the aim that football clubs would not spend more than they earn, thereby endangering their long-term survival. At the time, the former UEFA President, Michel Platini, stated:
„The teams who play in our tournaments have unanimously agreed to our principles…living within your means is the basis of accounting but it hasn’t been the basis of football for years now.”
The aim, therefore, of UEFA is to promote financial stability and sustainability in European football, by encouraging clubs to operate within their means and limit the market inflation of wages and transfer costs.
The crux of the FFP Regulations is the break-even requirement, whereby clubs must not spend more than the income that they generate, and that they must balance their books over the course of three years.
In terms of revenue, only the outgoings of clubs in respect of transfers, employee benefits (including wages), finance costs and dividends will be considered over income from matchday sales, TV revenue, advertising, finance, player sales and prize money.
Funds spent on infrastructure, training facilities or youth training will not be included.
The English Premier League agreed to adopt similar Rules with effect from the 2025-2026 season.
The latest version of the FFP Regulations, now known as the Financial Sustainability Regulations (FSR) and, for the first time, clubs are subject to a new squad cost rule in order to apply better control over player wages and transfer costs.
The new rule limits spending on player and coach wages, transfers and agent fees to 70% of club revenue, with effect from the 2025-2026 season.
There are special rules on so-called ‘related party transactions’ which must be accounted for at a fair value in determining the financial situation of a club, for the purposes of the FSR. These transactions, which, for example, include a loan to a club from its owner or a sponsorship deal with a company owned by a shareholder, can be used to inflate or deflate artificially a club’s financial situation. Thus, potentially allowing a club to circumvent the FSR rules on financial sustainability and, as mentioned, such transactions must be accounted for accordingly.
Clubs that break the FSR Regulations face a range of penalties, which, ranked in order of severity, are as follows:
- Reprimand/Warning
- Fines
- Points deduction
- Withholding of revenue from a UEFA competition
- Prohibition to register new players for UEFA competitions
- Restrictions on how many players a club can register for UEFA competitions
- Disqualification from a competition in progress
- Exclusion from future competitions
Particular mention should be made of the long-running case brought by UEFA against Manchester City FC, which began 18 months ago following a four-year investigation, in respect of alleged breaches by the club of the FSR.
The club face 115 charges, some of which date back to 2009, and the club deny all the charges, stating that they have a “body of irrefutable evidence” against them.
The outcome of this important case is expected to be known shortly.
As will be appreciated, the FSR are detailed and involve complex legal, financial, accounting and valuation issues.
We advise clubs on the application of these Regulations and further information is available from our Managing Partner, Dr Lucien Valloni, by emailing him at ‘valloni@valloni.ch’.