In this series so far, we have explored UEFA's Financial Fair Play Regulations (FFP) framework, as well as the history and inception of the rules in Part 1.
We then delved deeper into the rules and regulations of UEFA's FFP Regulations, as well the Premier League's stance on Profitability and Sustainability in Part 2.
Penultimately in Part 3, we turned our focus to the some of the sanctions and punishments that may be implemented when breaches of FFP rules have been upheld. We also included some in depth analysis around how some of the top clubs are successfully using financial amortisation models to spread expenditure and maximise profit over the course of a player's contract.
Finally, we look to the future and what may be in store for the footballing world, as UEFA and the Premier League deliberate on various new measures.
The new UEFA financial sustainability rules came into force in June 2022. They are based on three pillars: solvency, stability and cost control. These new rules allow clubs to incur losses of €60m over three years, compared to the previous allowance of €30 million. UEFA's FFP regulations are due to be amended further next year, by implementing rules that restrict clubs to spending a fixed percentage of their revenue per annum on wages, transfers and agent fees. This limit currently stands at 90% in 2023, but will drop to 80% in 2024, before reducing further to 70% from 2025. This is an area to watch carefully, as the Premier League have decided that their own rule alterations will diverge from UEFA's, with its figures being considerably higher. Clubs will also be required to settle overdue payables withinspecified timeframes.
In addition, given the recent record on spending in the Premier League January transfer window, UEFA are set to implement rules limiting the maximum of length of contracts to 5 years. This will cap the level of amortisation for clubs looking to spread the transfer cost across the duration of a given player's contract, thereby alleviating the 'loophole' above. However, it is believed that any club's current contracts will not be affected by this. The clubs should, therefore, continue to benefit from existing amortisation techniques and allowing it to retain these players, whilst complying with financial rules.
Measures being implemented in England
A new independent football regulator is set to be formed via the statutory medium, which will have the power to vet and scrutinise clubs on their finances and behaviour. Againstthe backdrop of the Premier League's charges against Manchester City, as well as the turmoil that ensued in the footballing world shortly after the announcement of the European Super League, the new body's purpose will be to promote financial sustainability and sound corporate governance models.
The government's publication of the White Paper on football has also put in place the road that will pave the way toward a new dimension of footballing regulation. These recommendations comes off the back of the Fan-Led Review of Football Governance, dating back to late 2021. Going forward, club owners and executive directors will be subject to new tests and “stronger due diligence” on their sources of wealth.
Concluding thoughts
It is evident that FFP rules work for big and small clubs in different ways. In the case of wealthy clubs, in theory at least, it promotes competition by ensuring that teams don't acquire players at any price, in order to achieve short term success on the pitch. For smaller clubs, it allows them to protect themselves financially, so that there are no more instances of teams such as Leeds United and Burton Albion, fallinginto administration.
There are however many loopholes that have and are continuing to be exploited, especially by clubs with bigger spending power via their revenue, whether real or as some would have it confected, as well as clubs that have wealthy ownership consortiums willing to write off debt and make up financial differences on the books. It remains to be seen how UEFA, FIFA and the Premier League will collectively respond to these loopholes and whether 'trickle down' economics should be reconsidered as an achievable objective for these leagues.
Perhaps the new independent regulatory body is the answer, which will aim to promote financial sustainability and redistribute the lop-sided financial wealth of the Premier League across the top 3 divisions of English football.
Regardless, the governing bodies owe it to the “Beautiful Game” to make the system work and the stakes have never been higher.
