UEFA & Football League Financial Fair Play Regulations

Objectives of the Regulations

to improve the economic and financial capability of the clubs;

to place the necessary importance on the protection of creditors;

to introduce more discipline and rationality in club football finances;

to encourage clubs to operate on the basis of their own revenues;

to encourage responsible spending for the long-term benefit of football; and

to protect the long-term viability and sustainability of European club football.

UEFA Club Licensing System v Football League Compliance

European Cup Competition (License application) v Domestic League Dynamic (accounts application)

From 2013/14 season UEFA monitoring requirements will include Financial Fair Play adherence

From 2012/13 season FL will ensure Financial Fair Play adherence

Aiming for a Deflationary Effect

Clubs to spend no more than they earn (with exceptions)

Infrastructure investment permitted

The Debt v Loss Debate

UEFA Break Even (ish)

Acceptable Deviation Levels

Monitoring Period

Number of Years

Years Included in the Calculation Acceptable Deviation (€m)

T-2 T-1 T Equity investment

Non-equity investment

2013-142014-152015-162016-172017-182018-19

233333

N/A2011-122012-132013-142014-152015-16

2011-122012-132013-142014-152015-162016-17

2012-132013-142014-152015-162016-172017-18

4545303030> 30

555555

Football League Break Even (ish)

Reporting Period Reporting Period Equity Contributions

Reporting Period Acceptable Deviation

Total Acceptable Deviation

2011/12 £8m £4m £12m

2012/13 £6m £4m £10m

2013/14 £5m £3m £8m

2014/15 £3m £3m £6m

2015/16 £3m £2m £5m

2016/17 onwards £3m or lower onwards £2m or lower >£5m

Record-breaking 10 year, £400m shirt stadium and Etihad campus deal

Manchester City and Etihad: Case Study

Definition of Related Party Transaction

– a club will fail the "related party" test if money comes in from a "close member" of the club owner's family who "has significant influence over the [club]".– City are confident that they can demonstrate that Etihad's chairman, Sheikh Hamed bin Zayed al-Nahyan, and vice-chairman Sheikh Kaled, both half-brothers, do not exert any influence over City.

Players under contract before 1 June 2010

“If a licensee reports an aggregate break-even deficit that exceeds the acceptable deviation and it fulfils both conditions described below then this would be taken into account in a favourable way.

i) It reports a positive trend in the annual break-even results (proving it has implemented a concrete strategy for future compliance); and

ii) It proves that the aggregate break-even deficit is only due to the annual break-even deficit of the reporting period ending in 2012 which in turn is due to contracts with players undertaken prior to 1 June 2010 (for the avoidance of doubt, all renegotiations on contracts undertaken after such date would not be taken into account).

This means that a licensee that reports an aggregate break-even deficit that exceeds the acceptable

deviation but that satisfies both conditions described under i) and ii) above should in principle not be

sanctioned.”

An Early Loophole- Annex XI Definition

An Early Loophole- Annex XI Definition

Player Date SignedLength of Contract (in years)

Expiry of Contract

Eligible for Annex XI Qualification?

A June 2009 5 June 2014 Yes

B June 2009 4 June 2013 Yes

C June 2009 3 June 2012 Yes

D May 2010 5 May 2015 Yes

E July 2010 5 July 2015No, as the contract was signed after the 1 June 2010 deadline

Financial Fair Play Rules Timeline

Clubs can take advantage of Annex XI(2) wage exemption

Acceptable deviation = €22.5m per season

When applying for a UEFA license, clubs will have to adhere to the FFPRs too

Clubs to supply 2 years worth of accounts

FFPR in force(first monitoring period)

2013-14

(Second monitoring period) 2014-15

Clubs to supply at least 2 years worth of

accounts

Acceptable deviation = €15m per season

Acceptable deviation = €10m per season

(Third monitoring period) 2015-16

2018-19

The earliest possible date clubs may be

required to breakeven

(One year to go)2012-13 season

Accounts from this season will be used for the license application

(Two years to go)2011-12 season

Accounts from this season will be used for the license application

27 May 2010

FFPRs approved and published by

UEFA

• UEFA: Club Financial Control Body

• Football League: Financial Fair Play Panel

• UEFA's general secretary, Gianni Infantino, has recently stated “There may be intermediate measures. We would have to ask why, maybe there would be a warning, but we would bar clubs in breach of the rules from playing in the Champions League or the Europa League. Otherwise, we lose all credibility.”

• UEFA sanctions: expulsion, docking points, fines, refusal of application PLUS withholding prize money or limiting the number of players registered for European competition

• FL sanctions: transfer embargo or fine

UEFA and Football League Sanctions

Football League Fine Calculation Illustration

Percentage of the Excess Excess Calculation (rounded up)

1% of the Excess between £1 and £100,000; £1,000

20% of the Excess between £100,001 and £500,000; A maximum of £80,000

40% of the Excess between £500,001 and £1,000,000; A maximum of £200,000

60% of the Excess between £1,000,001 and £5,000,000; A maximum of £2.4m

80% of the Excess between £5,000,001 and £10,000,000 A maximum of £4m

100% of the Excess over £10,000,000. No Maximum

Rules/sanctions in force by 2013-14 (UEFA) and 2012-13 (FL) season

Leeway for a transitional period

A phased approach obviously beneficial for clubs

Pure break-even not required for some time in both sets of rules

Talk Takeaways