Ask clubs about the impact of Financial Fair Play rules on their outgoing spending and the immediate need to arrest the multiple breaches to the Fair Play rules done by several big clubs in the same league, you’ll find that not many want’s to play by the rules in the book.
Whether it be the European Super League proposal or the ludicrous free-spending of Europe’s elite – primarily in the Premier League – the signs are bleak in regard to the sustainability and competitiveness of the game adored worldwide.
In a bid to combat and somewhat control the financial might of the world’s richest clubs, Financial Fair Play (FFP) laws have been introduced by the Premier League and UEFA in the past decade. Such rules have been laid out to facilitate sustainability and prevent financial doping.
But what exactly are these rules, and how are they violated by Europe's biggest clubs?The basic premise of FFP which was founded in 2009, was to ensure that clubs were not spending more than they earned and, in doing so, prevent them from falling into financial trouble which could threaten their existence.
In 2009, UEFA discovered that more than half of 665 European clubs suffered financial losses over the course of the previous year, and at least 20% of the clubs analysed were believed to be in financial danger. This sparked the governing body into action.
This brought football’s governing body under a uniformity to create a sule book for spending and earnings designated to all European clubs under the UEFA umbrella.
Recently, the Premier League have unanimously agreed in principle to introduce new financial fair play regulations at a meeting in London in June.
The profitability and sustainability rules (PSR) that have capped how much money clubs can spend over the last decade are set to be scrapped from the start of the 2025-26 season and replaced with a similar “squad cost control” rule to the one UEFA adopted in 2022.
From 2025/26 season, clubs will only be allowed to spend a set percentage of their annual turnover on the wage bill for the first team and its coaching staff, plus the amortised costs of their transfer fees and all agents’ fees.
Amortisation is how transfers are accounted for in club’s financial reports, with the cost of acquiring players, including fee and salary, spread out over the length of their contracts.
The major difference between the Premier League and UEFA regulations will be that the Premier League will operate a two-tier system, with clubs playing in European competition only able to spend 70 per cent of their turnover, while clubs not competing in Europe able to spend 85 per cent.
What is counted under the Financial Fair Play regulations?
To comply with the Financial Fair Play regulations, the Club Financial Control Body (CFCB) stated that only a club’s outgoings in the area of transfers, employee benefits (including wages), amortisation of transfers, financial costs and dividends will be included.
It will not include revenue from gate receipts, TV revenue, advertising, merchandising, or money spent on infrastructure, training facilities, or youth development.
UEFA’s FFP Regulations
UEFA’s FFP rules have altered over the years, with the latest adjustment coming in July 2023. They are now referred to under the moniker ‘Financial Sustainability’.
The overview on their website reads: “The development, introduction and continued evolution of the financial sustainability system remains as one of UEFA’s most ambitious and successful financial projects.
“Implemented through the UEFA club monitoring process, it sets a framework to which clubs that play in UEFA men’s club competitions agree to abide by. It relies on the cooperation of clubs to declare a complete and genuine financial position.
“The system monitors through three key pillars – solvency, stability, and cost control – the financial sustainability of the clubs participating in the Champions League, the Europa League and the Europa Conference League (UCL, UEL and UECL respectively). The monitoring is done throughout the whole UEFA season.”
Premier League FFP’s Regulations
The Premier League’s FFP rules are now referred to as the Profit and Sustainability Rules (PSR). The regulations state clubs must not make a loss greater than £105m over the past three seasons.
However, there are caveats. Clubs can only lose £15m of their own cash in those three campaigns, which means no more than £15m extra on outgoings like transfer fees, wages, paying off former managers contrasted to their income through television payments, player sales, season tickets and more.
Anything above that and up to the £105m threshold must then be guaranteed by owners buying shares – known as ‘secure funding’ or bankrolling the club. Premier League sides are then required to submit their financial plans for the next two season to explain how they will avoid going into the red.
The league has several financial rules in place, including requirements for clubs to pay transfer fees, salaries and tax bills on time. They must also submit accounts annually and disclose payments made to agents.
Which Clubs Have Broken FFP Rules Since They Were Implemented?
Manchester City are perhaps the most high-profile club to have allegedly broken FFP laws.
The Citizens are said to have made over 100 breaches of the Premier League’s rules following a four-year investigation conducted by the governing body. The 2022/23 treble winners are due to be represented in a trial later in 2024.
In 2014, the Manchester club and Paris Saint-Germain were charged with breaking UEFA’s FFP rules. These two clubs were among several to breach UEFA’s ‘break-even’ rule (essentially outspending their income) and were subsequently handed €60m fines (€40m suspended).
PSG had their UEFA squad reduced to 21 players and were handed transfer spending restrictions as well as two-year squad salary restrictions. City, meanwhile, also had their squad size reduced and suffered similar transfer limitations.
In 2022, eight clubs, including PSG, Inter, AC Milan, Juventus and Roma, were fined for failing to comply with UEFA’s ‘break-even’ requirement.
The 2023/24 Premier League season saw a number of teams fall foul of PSR and be hit with point deductions as a result.
EVERTON
In November 2023, the Premier League handed out a ten-point penalty deduction to Everton for breaching its PSR rules for the 2021/22 season. The Toffees dropped from 14th to 19th as a result.
In their response, they revealed that they were “both shocked and disappointed by the ruling of the Premier League’s Commission”.
The Merseyside club were said to be confident of overturning the verdict through the appeal process and eventually saw the punishment reduced to six points in February 2024, boosting their chances of Premier League survival after becoming just the third side ever after Middlesbrough and Portsmouth to be given a points deduction.
NOTTINGHAM FOREST
Nottingham Forest also were hit with a four-point penalty in March 2024 for breaching PSR rules and dropped from 17th place into the relegation zone as a result. Forest admitted to the breach but remain likely to appeal the verdict.
The East Midlands outfit’s defence revolved around the sale of Brennan Johnson, who they could have sold to Brentford last summer before June’s PSR deadline before extracting a bigger fee from Tottenham.
Forest also argued their losses were due to essential playing squad investments to avoid relegation, but an independent panel dismissed the defence.
