The financial crisis is over, for football at least. With losses for European clubs surging 30% in 2010, debts continue to increase at a time where finance in the continent is in a precarious situation. With this in mind, UEFA has created Financial Fair Play (FFP) rules, designed to ensure football clubs exist for years to come.
In essence, FFP acts as a guarantee for clubs to create a sustainable legacy and live within their means. UEFA general secretary Gianni Infantino stated “the problem is that all clubs try to compete. A few of the biggest can afford it, but the vast majority cannot.” The governing body’s chief intention is to stop clubs overspending and “buying” titles, but also to stop clubs creating huge swathes of debt and potentially fall into financial meltdown. The demise of both Rangers and Portsmouth serve as stark reminders of the damage that owners can do with reckless management and overspending respectively.
The exact details have yet to be confirmed and laid out by UEFA, but exemptions are allowed for clubs to set their finances in order over the coming years. Teams will be allowed to incur a loss over successive seasons, but accumulating debt will have to be balanced (e.g. selling players). Allowances will be made to clubs for short term investments in the health of the club including academy investment, youth/community projects or stadium improvement that have long term benefits. In the case of Manchester City, a team built upon Abu Dhabi’s finances, the money spent upon the sustainable elements of the club may relieve some of the sanctions imposed by the regulations. Their £100m project on the surrounding area of the Etihad stadium is designed with the future in mind, as opposed to their huge spending of previous seasons.
Questions have been asked about what can be done to stop clubs breaking the rules and the punishments they can deliver. UEFA has tentatively rolled out a structured system varying from penalties to squad size, fines and potential exclusion from the Champions League or Europa League. Cynics may sneer at the idea, and retort that UEFA would never dare exclude some of football’s biggest clubs from one of the greatest international competitions. However, it’s worth remembering that these regulations were developed in conjunction with clubs such as Manchester United and Bayern Munich, both ardent supporters of the scheme. UEFA have already withheld prize money from 23 clubs in Europe in accordance with regulations and show no signs of hesitation in punishing the bigger teams. Clubs will still be able to compete in all domestic competitions, but no team will take the loss of profits from European TV and stadium attendance lightly.
Particular attention will probably be paid to the implications of FFP in Spain, where the effects could potentially be very far reaching. Over the past decade, La Liga has been characterised and dominated by the two-horse race between Real Madrid and Barcelona. Fuelled by excessively one sided TV deals and spending well over their profits, both clubs will have to radically re-think their long term strategies, or face the proposed penalties in Europe. Barcelona vice-president Javier Faus himself admitted last year that the club had debts of over €300,000,000 which needed to be settled, seemingly putting an end to the summer spending of previous seasons.
FFP’s influence will potentially be huge. It will define Michel Platini’s legacy as UEFA president, with the implications affecting his potential application for FIFA president. Loopholes in the framework may exist to be exploited over the coming seasons, but UEFA believe it essential to the future of the game. Ultimately, it seemingly spells an end for the legacy of rich ownership and cash injections for European clubs. When asked about the legacy of FFP, Gianni Infantino said “I would say what is over is the sugar daddy who can put hundreds of millions into [the] clubs. This will no longer be possible”.