Can’t Buy Success: FFP Levels the Playing Ground

What is Financial Fair Play, and when was it introduced?

UEFA established Financial Fair Play (FFP) to ensure that football clubs are not spending more than the amount of money they earn and, in doing so, prevent them from ending up in a financial mess that may jeopardise their long-term survival. In UEFA’s words, they needed to “improve the overall financial health of European football”.

FFP regulations were also introduced to prevent clubs from overspending across several seasons within a set budgetary framework.

Implementing FFP started at the beginning of the 2011/12 season, and the rules were agreed to in the fall of 2009, September, by the Financial Control Panel of UEFA.

In 2009, a review by UEFA discovered that over 332 clubs, which amounts to more than half of all European clubs, suffered financial losses over the previous year. However, a few survived their heavy losses through the cash injections of their owners.

With the constant rise in transfer fees and players’ wages, clubs have found it challenging to keep up with FFP rules, and they are in breach of the regulations.

The Punishment for not obeying Financial Fair Play rules?

The rules allow for eight separate punishments to be meted out against clubs for breaking regulations, and they are;

1. Reprimand / Warning

2. Fines

3. Points deduction

4. Withholding of revenue from a UEFA competition

5. Prohibition to register new players for UEFA competitions

6. Restrictions on how many players a club can register for UEFA competitions

7. Disqualification from competition in progress

8. Exclusion from future competitions

Premier League’s FFP regulations

The Premier League’s FFP rules are called 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 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 be guaranteed by owners buying shares – known as ‘secure funding’ or bankrolling the club. Premier League sides must then submit their financial plans for the next two seasons to explain how they will avoid going into the red.

The league has several financial rules requiring clubs to pay on-time transfer fees, salaries and tax bills. They must also submit accounts annually and disclose payments made to agents.

Which clubs have broken FFP rules since they were implemented?

Manchester City is perhaps the most high-profile club that has 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 will be represented in a trial later in 2024.

Manchester City’s alleged PSR violations. Source: Anfield Edition on X

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 and 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 several teams fall foul of PSR and be hit with point deductions.

The Nottingham Forest Situation

Nottingham Forest was hit with a four-point penalty in March 2024 for breaching PSR rules and dropped from 17th place into the relegation zone. Forest admitted to the breach but remains 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 more significant 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.

The Everton Saga

Anyone who closely follows the Premier League will know that in recent weeks, an unprecedented punishment for financial regulations has been doled out to Everton, a Premier League mainstay who has been in England’s top division since the 1954-55 season. As a result of breaches of the Premier League’s financial rules, Everton were given a whooping 10-point deduction. It was later reduced to 6. However, very recently, they had a further 2 point deduction. 

The reason for docking these points comes down to losses over three years. Everton violated PSR rules by exceeding the maximum losses allowed during the three-season period ending 2021/22. The maximum losses permitted in this window (adjusted to the impact of COVID, youth development and other costs) came to £105 million. Everton’s losses during this period reportedly amount to £124.5m, hence the Punishment.

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