Financial Fair Play: Understanding the rules that govern football
Financial Fair Play rules have become one of the most discussed topics in world football recently, following the Premier League's decision to deduct points from Everton and Nottingham Forest.
Many fans agree or at least believe that the clubs mentioned above have broken some FFP rules. However, not everyone understands the rules, especially considering that some bigger clubs in England and outside of England seem to spend ridiculous amounts of money without getting any sanctions.
A perfect example is Chelsea, who have spent over £1 billion in the last five windows. Under the free-spending Todd Boehly, the Blues seem to have no limit on their spending. The London club is like Manchester City, which can afford to keep a £90 million defender and a luxurious player that costs £100 million on the bench for several games. Both clubs have reportedly been charged for spending breaches, but nothing seems to have been done to them, while Everton, Nottingham Forest and Leicester City are facing the music for their wrongdoings.
Away from England, Barcelona are struggling to sign players, while Real Madrid can afford to sign Jude Bellingham for over £100 million while preparing to sign Kylian Mbappe on a weekly wage deal that could break records. In Germany, everyone except Bayern Munich cannot do what they like with their money; they have to be careful not to incur the wrath of UEFA or whoever makes the rules. Meanwhile, Paris Saint-Germain spends without restraint in France, while it appears everyone in Italy has a spending problem.
So, what exactly is the 'FFP Rules' everyone talks about? Is there any difference between the spending rules in La Liga, the Premier League and other leagues? Are certain clubs immune to these rules?
In this article, we attempt to explain everything you need to know about Financial Fair Play to fans who buy match tickets from vetted resellers on Seatsnet.
What is Financial Fair Play?
The UEFA Financial Fair Play Rules (FFP) are a set of regulations established to prevent professional football clubs from spending more than they make in the pursuit of success. The rules also prevent clubs from getting into financial difficulties, which might threaten their long-term survival in their bid for success.
The rules were established in 2009 by UEFA, Europe's top governing football body. That year, UEFA discovered that more than half of 665 European clubs recorded financial losses over the previous year, with at least 20% of the clubs analysed believed to be in financial danger.
However, a small proportion of these clubs were able to sustain heavy losses year-on-year due to their owners' wealth.
The Problem of Wealthy Owners
Several European clubs have had instances where they spent more than they earned due to their wealthy owners, who helped the club financially through their personal finances, paying off debts, injecting cash flow and providing added monetary support.
However, these wealthy owners and their uncontrolled deep pockets have adversely affected the football market, creating steep wage bills and transfer inflation. This has encouraged smaller clubs to spend more to keep up with demands and maintain their reputation as competitive clubs. For example, Manchester City and PSG are backed by mega-rich owners open to spending money. However, if they are allowed to spend as they desire, it will kill competition, as the clubs can buy their way to success due to their owners' largess.
So, the rules have been set up to stop such occurrences, with the clubs expected to spend what they earn within a specific financial framework.
Sanctions and Punishments
UEFA also stipulated sanctions for faltering clubs. Examples of the sanctions include transfer bans, the withholding of prize money, hefty fines, point deductions, and restrictions on squad size. The regulations also prevent financial "doping," which involves clubs getting money from outside sources.
They were implemented at the outset of the 2011–12 football season, and so far, at least a dozen top European clubs have faced some form of sanction for breaking the rules. Between 2013 and 2023, PSG, Manchester City, Málaga, Chelsea, AC Milan, AS Roma, Inter Milan, Juventus, Marseille, Real Betis, Sporting CP, Porto, Manchester United, and Barcelona have been penalised for breaking FFP Rules.
Different Names, Different Leagues
Although UEFA's financial regulations have remained wildly known as FFP rules, the governing body has changed the official moniker to 'Financial Sustainability'. This is in keeping with UEFA's latest adjustment to the regulations, which began in July 2023.
The new framework, found on UEFA's official website, monitors the financial sustainability of clubs participating in the Champions League, the Europa League, and the Europa Conference League through three key pillars: solvency, stability, and cost control.
Meanwhile, different leagues have regulations, most of which follow the UEFA's rules. The purpose of the different regulations for different leagues is to mirror the financial realities of the league, although such laws do not contradict UEFA's sustainability rules.
Premier League Rules
The Premier League recently unveiled its own 'FFP' regulations, which they termed Premier League Profit and Sustainability Regulations (PSR).
In simple terms, PSR stipulates that clubs must not make a loss greater than £105m over the past three seasons. However, clubs can only lose £15m of their own cash in those three campaigns, meaning that no more than £15m extra is permitted to be lost on outgoings like transfer fees, wages, and paying off former managers compared to their income through television payments, player sales, season tickets, and more.
Anything above that and up to the £105m threshold must be guaranteed by owners buying shares—known as 'secure funding' or bankrolling the club. Several other financial rules also apply, including requiring clubs to pay salaries, transfer fees, and tax bills on time. They must also submit accounts annually and disclose payments made to agents.
Like the FFP rules and UEFA's Financial Sustainability Regulations, PSR intends to keep the spending of Premier League clubs honest and within their earnings. There have been several tweaks and changes to the rules to close up several loopholes that 'smart' clubs like Chelsea and Manchester City have exploited in recent seasons.
Guilty Clubs
So far, Everton and Nottingham Forest have been found guilty of breaking the sustainability rules, and both sides have suffered points deductions, increasing their chances of being relegated this season. Ten points were initially deducted from Everton, later reduced to six points after the Toffees appealed, while Forest was docked four points recently. Although they are playing in the Championship, Leicester City were recently charged, and the Foxes have begun legal proceedings to clear their name.
Meanwhile, Manchester City, who were handed 115 charges for bridging FFP rules, are walking about free, without any sanctions yet. The Cityzens allegedly broke UEFA's rules, according to a report by German publication Der Spiegel, which claims that leaked emails show Man City lied in their financial reporting. According to the report, City lied that their official sponsor, Etihad Airline paid their official £67.5m obligation to City for the 2012-13, 2013-14 and 2015-16 seasons. However, the leaked emails that Etihad Airline only paid £8 million, with the rest allegedly coming from the Abu Dhabi United Group.
Before the 115 charges, UEFA had banned City from the Champions League for two years for breaking its own rules. However, the Court of Arbitration for Sport revoked the verdict because most of the alleged breaches were not adequately established. The Premier League has now charged them, and according to Richard Masters, the CEO of England's top domestic competition, a date has been set for the case to be heard.
We can expect that the outcome of the case will significantly affect Premier League spending and probably make the league more competitive.
