UEFA approves new rules to scrutinize football club finances

UEFA Director Financial Sustainability and Research Andrea Traverso during the news conference on Thursday. (Reuters)

NYON, SWITZERLAND: UEFA approved new financial monitoring rules for European football clubs on Thursday, giving up on “fair play” and lowering expectations it can solve the competitive imbalance in the Champions League.
The “Financial Fair Play” system in place since 2010, and known as FFP, will be replaced in June by “Financial Sustainability” regulations.
“Competitiveness cannot be addressed simply by financial regulations,” UEFA project leader Andrea Traverso said at a briefing, adding the words “fair play” had been misinterpreted to mean “we create a level playing field.”
“This is why we changed the name,” he said, describing a “huge, complex exercise to get a consensus” across European football for a financial review that became inevitable after the disruption caused by the COVID-19 pandemic.
The Champions League has been dominated by the wealthiest of clubs that are able to afford rising player salaries and huge transfer fees. Over the past decade, the most unlikely club to reach the final was Tottenham — which currently has the 10th-highest revenue in world football. Only Spanish and English clubs won the Europa League.
The new rules were praised last week by the Spanish league for “restricting the ability of state-owned clubs to commit financial doping.” That statement did not identify clubs but clearly targeted Manchester City and Paris Saint-Germain — owned by the rulers of Abu Dhabi and Qatar, respectively.
By 2025, clubs playing in UEFA competitions will be limited by the “squad cost rule” to spending 70 percent of their revenue on salaries and transfers or face financial and — eventually — sporting sanctions.
After two years of financial penalties, persistent rule-breaking clubs could be barred from selecting certain players in UEFA competitions, have points deducted or be banned from a competition.
“The deterrents are there,” Traverso said. “As from a certain moment (clubs) would be so harshly penalized that I think it would be quite dissuasive.”
Although some clubs were excluded for one season from the Champions League and Europa League under the old FFP system, the most celebrated case saw Man City defeat UEFA to get a two-year ban overturned at the Court of Arbitration for Sport.
UEFA-appointed investigators had accused Man City of inflating the value of sponsorship deals with companies from Abu Dhabi.
From June, UEFA said it will evaluate all commercial deals — not just those suspected of being too closely related to club owners.
“We believe the way (the rules) are refined is becoming more and more difficult for clubs to go around,” Traverso said, acknowledging “our capacity of investigations are somehow limited because we, as you well know, are not the police.”
Minutes before the UEFA briefing, Man City were the subject of a fresh report of financial wrongdoing published by Der Spiegel. The German magazine’s reports in 2018 using internal club documents led to the UEFA ban and Man City’s successful appeal at CAS.
City have not commented publicly on the latest allegations.
The new financial rules will take effect at a time when the Champions League is worth about €2 billion ($2.18 billion) total prize money from UEFA each season for the 32 clubs who qualify. Total revenue for all UEFA club competitions is €3.5 billion ($3.8 billion) annually through the 2023-24 season.
A revenue rise of about 40 percent is predicted when the Champions League expands in 2024 with a 36-team league stage and 100 extra games in total per season.
Under the new rules, club owners can cover losses of €60 million ($65 million) over three years — double the amount allowed when FFP was launched a decade ago.
Extra leeway is now being given to clubs judged to be in “good financial health,” which can make additional annual losses of €10 million ($10.9 million).
Clubs face more regular and stricter checks on paying debts on time, including wages, transfer fees to other clubs and social taxes.
The success of the new rules — and acceptance by skeptics who have doubted UEFA's will to act against wealthy clubs which are a big draw for viewers, broadcasters and sponsors – could depend on how effectively they are enforced.
The UEFA-appointed investigation unit is chaired by Sunil Gulati, the former United States football federation president who is an economics lecturer at Columbia University.