UEFA’s Financial Fair Play rules were intended to ensure a more balanced financial playing field between small and large football clubs in Europe. In specific, the rules stipulate how much debt clubs may carry and that their financial operations must be soccer related. But the rules as they now stand are not fair, or clear. There are too many ways for clubs to get around the rules, and when big clubs are found guilty of breaches, they are either not punished or receive a slap on the wrist and given yet another warning. This practice, in essence, enables the big clubs to maintain their financial, let alone sporting, advantage. Thus, FFP institutionalizes practices that work to the detriment of those they were allegedly intended to protect.
What is the Financial Fair Play Rule?
The Union of European Football Associations (UEFA), which regulates soccer in the 55 member nations of Europe, created the Financial Fair Play rule (FFP) to “improve the overall financial health of European club football.” The original rule was created in 2010 and implemented in a phased manner by 2015. The rule’s intent was to address the fact that many European clubs recorded a year-end loss most seasons, and several made up those losses with funds obtained from sources outside of soccer proper.
The FFP rule requires clubs to spend only what they generate in income from soccer operations and to balance their year-end books. If a club does not comply with these rules, they will be warned, limited to a shorter roster during competition play, or even face a ban from participating in tournament play.
A close reading of the rules reveals that there are loopholes (regulatory gray areas) which the more affluent clubs can use to circumvent the rules while avoiding major consequences. The rules need a rewrite to be made stricter and more transparent, but they also need to be applied as intended.
Breaking Even
For example, a section of the FFP rule is called the ‘Break-even Requirement’ (pg. 58). The clause’s intent is to make sure that a club’s expenses do not exceed their income. The first problem with the clause is that it stipulates an “acceptable deviation” which means that a club is allowed to have a €5 million deficit and yet is considered to have complied with the break-even requirement. Then what do the words mean?
To take it further, there is another part of the clause that states that a club can actually have a €30 million deficit so long as it “is entirely covered by contributions from equity participants and/or related parties.” According to UEFA, “any entity that, alone or in aggregate together with other entities which are linked to the same owner or government, represent more than 30% of the club’s total revenues is automatically considered a related party.” [Emphasis mine.]
To break down the wording above, what this means is that for those who want to spend more than the allotted €5 million deviation, they can do so up to €30 million, so long as a related party, sponsors/other businesses, are the ones paying the deficit. It is particularly noteworthy that though FIFA strenuously objects to any national government interference with its nation’s football operations and will act to suspend a national federation that has allowed “undue influence or interference” FIFA is perfectly ok with a government’s bailout of a club.
The main problem with this is that for clubs with wealthy government owners such as French club Paris Saint-Germain (whose owner/president, Nasser Al-Khelaifi, represents the Qatari government’s investment trust which has billions of dollars at its disposal) can use their other businesses (such as the income of a nation’s investment trust) as the fair contribution of “related parties” who are paying the deficit. This recycling of money with potentially no direct link to soccer, into an otherwise struggling and/or mismanaged club, is a monumental loophole.
Enforcement of the Rule
The second problem with FFP is with its enforcement of punishments for those clubs who do not abide by the rules. One prime example would be the Spanish football club Barcelona. The club is facing a possible transfer ban if they do not pay ‘owed past purchases,’ reported Forbes on Oct. 10, 2023. But this is not the first time Barça have been in violation of FFP. The Blaugrana were also found guilty of spending more than they had initially reported for the record signing of Neymar – who, when purchased in 2013, was thought to be the next Pelé.
In the summer of 2022, Barcelona, despite not having the money in hand to do so, signed three star players—Robert Lewandowski, Raphinha, and Jules Kounde. It was then reported that current squad players at Barça agreed to take salary cuts so that the club could register the new hires in time for their coming season. In all three of these transfers, the club, who went into staggering debt to finance their purchases, incurred such a negligible punishment that the Catalan club in essence did as they pleased.
This season, Everton was punished for violating the rules and was docked 10 points in the Premier League. They could have been fined or given a transfer ban/restriction but instead they punishment saw them, a the time of the punishment, sent to 19th place which was just above last place Burnley.
What punishments could look like if FFP was actually followed
If sanctions were given based on the rules, Barcelona would have actually had a transfer ban which means they would not be able to buy any new players as well as give raises to any current players other than what was already in their contracts. Barcelona would have never gotten Neymar, which is significant as he would have either stayed at Santos or most likely have gone to Real Madrid, as they were the main competitor aside from Barça. Lewandowski and co., bought in 2022, would have never gone through as they did not have the money at the time of the negotiations.
Now, Manchester City and Chelsea are being looked into for violating the rules and could also face a puinishment. In their case a possible punishment could be relegating them to the Championship where they would have to earn their way back into the top flight league. Of course the investigation began last year, yet both teams are being given all this time to collect league funds, potential Champions League funds, as well as funds if either team were to win the league this year. Yet Everton, who is not thought of as a similar caliber team, got punished immediately. Click here to see a fuller list of possible punishments for breaking the rule.
Conclusion
UEFA’s Financial Fair Play rules need to be revamped and then fully applied. As they now stand, due to their numerous loopholes and UEFA’s reluctance to enforce their own statutes, the rules, in essence, institutionalize the inequity they were meant to redress.
Photo: UEFA Respect Logo- Shutterstock – user: Dmytro Larin – ID: 480130429
