As the transfer season begins to kick in some people may have heard the term Financial Fair Play (FFP) floating around. You may not know what this means so here is a basic run down of the rules and why they have come into place.
With the recent trend of rich business owners taking over clubs this has seen an inflation in transfer fees for players who would not normally command such a large price. This also leads to large wage packets for players and thus creates an uneven playing field, as smaller clubs struggle to keep up. A UEFA report showed that almost half of Europes top clubs were losing money and others were showing serious losses.
- Clubs will instead have to live within their means by ensuring that their expenditure is not more than the revenue they generate through their activities — the “break-even rule”.
- When the new rules are fully enforced, clubs will only be allowed to enter European competition if their generated revenues – money from sources such as television rights, gate receipts, competition prize money and sponsorship – is equal to or greater than their expenditure
- Clubs are also barred from owing money to other clubs, players, tax authorities and social service departments.
- The break-even requirement, banning clubs from spending more than their generated revenues, will take effect for the financial statements of the reporting period ending 2012.
- The first season where a club could be barred from European competition will be 2013-14.
- Money invested in stadiums and youth development does not count in the expenditure for FFP purposes. The main targets are high wages and high transfer fees.
- Benefactors are allowed to contribute up to a maximum of 45 million euros for the 2013-14 and 2014-15 seasons together.
- This will be reduced to 30 million euros for the period covering 2015-16, 2016-17 and 2017-18.
As it stands clubs like Manchester United, Manchester City and Chelsea would fail these requirements. These are just the basic points of the rules. There is a 91 page document fulling explain all aspects of the rules on UEFA.com but really I couldn’t bring myself to read all of it….or any of it really.