UEFA Financial Fair Play: How Will It Affect the Champions League?
June 4, 2011
New financial regulations are set to be implemented in the 2013-14 season that give European Football’s governing body the right to ban teams from Champions League or Europa League participation.
UEFA Financial Fair Play (FFP) rules are, however, surprisingly flexible. Michel Platini and UEFA are not looked upon too fondly, particularly in the English media, but in this case they have shown a degree of understanding with clubs and the fans.
In these new regulations, UEFA has shown its intent to crack down on clubs overspending, forcing them to limit losses over several seasons but in this they have also used common sense.
Common sense is not a phrase largely associated with this organisation but this time they have made sure that an important implementation such as FFP follows a basic structure but is not too strict in its cause.
The FFP monitoring will start next season and continue through the 2012-13 season where clubs will only be allowed maximum losses of around €45 million ($66M, £27M) over this period. The application of these rules is not straight forward as much of club expenses are not included within the new FFP assessment.
Clubs such as Manchester City have spent a ridiculous amount of money in the past couple of seasons and it would be easy to assume that if they continue they will get banned from European competition.
This is unlikely to be the case. Manchester City have spent well over €200 million since being purchased by the Abu Dhabi United Group in 2008 but the UEFA Financial Control Panel do not directly assess the club’s annual financial statement as much of the expenditure is not taken into account in FFP rules.
Clubs like Manchester City also spend a great deal on things such as youth development, which is something that is not counted by FFP regulations. This knocks a nice amount off the annual expenditure for many big clubs. This also applies with such things as stadium or training facility expansion.
Big money transfers do not take up as much as you may think as well as player acquisition costs are divided across the length of the player’s contract. For example, a player signed this summer in a €40 million deal on a four-year contract would only equate to €10 million a year.
That means that for the 2011-12 season which is inside the monitoring period they would only make a loss of €10 million based on that transfer. This may sound like clubs are getting away with it but at the same time it levels out over time and still gives the big clubs the opportunity to make big-name signings.
These regulations are set up to stop excessive spending and do a good job of it. With inflated transfer fees in the current market and some ridiculous player wages it is a necessity that UEFA bring in new regulations financial expenditure. These rules obviously adhere to loopholes and give big spenders such as Chelsea and Manchester City the chance to keep on making big money signings.
UEFA understands that if a club shows a trend of spending big but are also competing for titles or moving upwards in stature then they will be granted license to play in Champions League or Europa League. This will no doubt cause great dismay for clubs with less financial power.
The global reach of a club is key as they must show that their development on the pitch is matched off the pitch is terms of revenue. This new implementation is a positive outlook from UEFA who have realised that that the issue of inflation in football needs to be tackled but that the appeal of competitions such as Champions League is crucial. Of course, banning big clubs such as Real Madrid from the Champions League for spending too much on Cristiano Ronaldo would help no one—particularly not UEFA, as it would directly effect them commercially.
Evidently there will be much debate over the concept of FFP in the coming seasons and why UEFA have been so flexible in their implementation. It seems that European football’s governing body has for once acted on a key principle, that football is for the people and that the fans want to continue watching the beautiful game at its very best.