Futbol Finance: Financial Fair Play Revamp

Financial Fair Play (FFP) was agreed in principle by the governing body of Europe, UEFA, in 2009 to prevent clubs from spending more than they earn to try to avoid long-term financial problems. The FFP rules stated that clubs must break even over a three-year period. These regulations provided sanctions for clubs who overspent with fines and potential disqualification from European competitions. For bigger clubs with wealthy owners, it was a check on their spending so they couldn’t spend a lot of money without consideration of revenue. At the same time, this benefitted the bigger clubs because as they made more revenue, they could spend more than the smaller clubs who made less in revenue. Due to the pandemic, UEFA allowed for owners to inject more money into their clubs if they can prove the losses were caused by the pandemic.

This is where UEFA has come in and is now looking to revamp FFP. UEFA will set out proposals to implement a salary cap and luxury tax to replace the current FFP system by next year akin to the NFL and NBA. Under this new system, clubs in European competition would be limited to spending a fixed percentage of their revenue on salaries. Any clubs found breaching the cap would have to pay a luxury tax, in which the overspend would be put in a pot to be redistributed. People within the sport believe that this system would be more transparent than the original FFP rules put in place, but only time will tell whether or not that is the case.

When FFP was first announced, many thought this would be a positive for the sport. 12 years later, many now claim that FFP is ineffective and even non-existent. Big clubs still continued to spend big money as we saw moves like Gareth Bale to Madrid for 101 million euros (119 million USD) in 2013 or the biggest transfer ever when Neymar moved to Paris Saint-Germain in 2017 for 222 million euros (261 million USD). To say that FFP didn’t do too much to limit the spending of clubs is an understatement. As we saw more money get poured into the sport and richer owners like Nasser Al-Khelaifi of PSG start to take over clubs, FFP didn’t do much to limit their spending.

Manchester City were even caught by UEFA for inflating their sponsorship deals to try to skirt the FFP rules to be able to spend more money. They were originally handed a two-year ban from European competitions along with a 30 million euro fine, but this was later overturned by the Court of Arbitration for Sport (CAS). This made FFP seem like it was non-existent to fans and other clubs. After this summer’s transfer window for PSG where they brought in the likes of Lionel Messi and Sergio Ramos, fans and media questioned how they were able to make all of their signings under FFP. Lille centerback Jose Fonte chimed in about PSG’s spending, "I just want to understand the Financial Fair Play in France. Every single club is restricting their spending. They can’t buy a lot, they can’t get players on big wages but then PSG comes and it looks like there’s no law." Fonte is speaking for many fans and other clubs who are seeing clubs like PSG and Manchester City seemingly spend all of the money they want without seemingly having to worry about FFP. Hopefully this is a step in the right direction to try to bring more balance to the sport when it comes to spending and to give smaller clubs a better opportunity to compete within their domestic leagues and European competitions.