KEIR RADNEDGE REPORTING —- UEFA’s new crackdown on club spending labours under a deceptively technocratic label. Financial Sustainability Regulations sounds like a system to power floodlights with wind turbines and solar panels.

Instead, this is Financial Fair Play With Teeth. At least, that is the idea.

Only the European football federation has ditched the ‘fair play’ label out of apparent embarrassment at the manner in which mega-rich clubs such as Paris Saint-Germain and Manchester City drove a state-endorsed coach and horses through its loopholes.

Hence UEFA went back to the drawing board, not only to plug the evident holes but also take account of how FFP had been wrecked by the financial devastation suffered by the European club game from the Covid-19 pandemic.

The new big stick which president Aleksander Ceferin and his accountants will wield is the imposition of a 70pc squad cost limit to the pay of players, managers and agents when set against club revenue.

The new regulations will be applied initially in June 2022 with a gradual implementation over three years to give clubs time to adapt. Formal imposition of the new regime begins with season 2025-26.

Average ratio

The necessity for a gradual implementation was set out by Andrea Traverso, UEFA’s director of financial sustainability.

He said: “The average squad cost at the moment is closer to 90pc than 70pc but, before the pandemic it was between 60-70pc. Now that spectators and sponsors are coming back we expect the ratio to come down naturally but still it remains challenging for a number of clubs.”

Talk of a salary cap was always wide of the mark because of the legal impossibility of enforcement. However UEFA believes that the squad costs limit will be harder for clubs to circumvent because this would risk breaches of national tax laws.

The new controls will not address the ever-expanding financial gap between the haves and the have-nots. Obviously a Manchester City or PSG, with multi-million income from media rights and sponsors, will still be able to vastly outspend a Sheriff Tiraspol or Malmo FF.

Penalty for failure

Punishment is another issue entirely. Traverso said: “There will be gradual financial sanctions and then sporting sanctions from the third year. These could include prohibitions on the use of certain players, squad limits, the deduction of points. There is a palette of sporting measures.”

One penalty still under discussion is enforced relegation from, say, the Champions League to the Europa League.

Ceferin, welcoming the new rules after their approval by UEFA’s executive committee, said: “UEFA’s first financial regulations, introduced in 2010, served their primary purpose. They helped pull European football finances back from the brink and revolutionised how European football clubs are run.

“However, the evolution of the football industry, alongside the inevitable financial effects of the pandemic, has shown the need for wholesale reform and new financial sustainability regulations.

“These will help us protect the game and prepare it for any potential future shock while encouraging rational investments and building a more sustainable future for the game.”

UEFA statement:

Given their name, it is no surprise that the key objective of the new regulations is to achieve financial sustainability. These will be achieved through three key pillars: solvency, stability, and cost control.

For solvency, the new no overdue payables (towards football clubs, employees, social/tax authorities, and UEFA) rule will ensure better protection of creditors. Controls will be performed every quarter and there will be less tolerance towards late payers.

The new football earnings requirements are an evolution of the existing break-even requirements and will bring greater ability to club finances. To ease the implementation for clubs, the calculation of football earnings is similar to the calculation of the break-even result. While the acceptable deviation has increased from €30 million over three years to €60 million over three years, requirements to ensure the fair value of transactions, to improve the clubs’ balance sheet, and to reduce debts have been significantly strengthened.

The biggest innovation in the new regulations will be the introduction of a squad cost rule to bring better cost control in relation to player wages and transfer costs. The regulation limits spending on wages, transfers, and agent fees to 70% of club revenue. Assessments will be performed on a timely basis and breaches will result in pre-defined financial penalties and sporting measures.

The new regulations will come into force in June 2022. There will be gradual implementation over three years to allow clubs the necessary time to adapt.

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