UEFA's Financial Fair Play (FFP) rules
UEFA's Financial Fair Play (FFP) rules were introduced to combat the excessive spending and debt that has plagued European club football over recent years. Despite the fact that FFP is a relatively new concept, it has already had a significant impact on the world of professional sport.
How does it work?
FFP is a set of regulations that was first implemented by the Union of European Football Associations (UEFA) in 2009 to stop clubs from spending more than they earned and accumulating debts. It was designed as a way to protect clubs from falling into long-term financial trouble and was meant to help stamp out what UEFA president Michel Platini called "financial doping" within football.
The main rule under FFP
The main rule under FFP is that clubs must break even in terms of spending over three years. They are also required to balance their finances and pay back any losses they incur.
Enforcement by the Club Financial Control Body (CFCB)
These regulations are enforced by the Club Financial Control Body (CFCB). The CFCB lists outgoings in the areas of transfers, employee benefits including wages, amortisation of transfers and finance costs and dividends as being included in a club's income. However, this does not include revenue from gate receipts, TV revenue, advertising, merchandising or funds spent on infrastructure, training facilities and youth development.
Punishments for breaking FFP rules
Several clubs have been punished for breaking FFP over the past few years, with Paris Saint-Germain and Manchester City both being fined EUR60 million after not meeting the requirements of the rule. They are expected to repay this amount over the course of a three-year period, but UEFA has the authority to order them to make up their losses sooner.
Wealthy owners and circumvention of FFP rules
A number of wealthy owners have been responsible for the massive spending at many clubs. For example, Russian oil and gas billionaire Roman Abramovich has been behind Chelsea's monumental transfer spending since 2003, paying off debts and injecting cash flow at the club.
One of the ways that clubs have been able to circumvent FFP rules has been through their owners' own financial endowments, which can help cover the costs of over-spending. This has been particularly prevalent at top European clubs such as Chelsea and Manchester City, where wealthy owners have pumped in money into the club to help them reach their goals.
The majority of club owners in Europe have used their wealth to fuel a huge rise in spending at the clubs that they own, and this has resulted in a significant increase in the level of debt that is being owed at many of these clubs.
Improving FFP regulations
There is no doubt that a major change needs to be made to the rules of FFP, as there are some foreign investors who have found ways around them in order to purchase teams for a substantial sum. The governing bodies of European football need to look at these examples and find solutions that can improve the current regulations and allow for more sustainable funding.
It is important to note that FFP has only been in place for a few years and so there is still plenty of time to find solutions that can improve the rules. In the meantime, some clubs have managed to bypass the regulations, but they are still facing a stiff penalty for their transgressions.
