Financial Fair Play: UEFA’s rules governing football clubs - All you need to know

FFP’s main objective is to prevent clubs from spending more than they earn in revenues. It also aims to prevent clubs from getting into financial trouble that could affect their long-term survival.

Essentially, FFP is a regulatory tool to prevent clubs from spending more than their stipulated budget, which could inadvertently plunge them into debts.

How does Financial Fair Play work?

UEFA permits football clubs to spend no more than €5 million (£3.9 million) over what they earn in each three-year assessment period. There is, however, a new limit of 30 million euros (previously 45 million euros) if the owners of the club or a related party can cover these losses.

What is counted under the Financial Fair Play regulations?

To comply with the Financial Fair Play regulations, the Club Financial Control Body (CFCB) stated that only a club's outgoings in the area of transfers, employee benefits (including wages), amortisation of transfers, financial costs and dividends will be included.

It will not include revenue from gate receipts, TV revenue, advertising, merchandising, or money spent on infrastructure, training facilities, or youth development.

The football clubs found to have breached the UEFA’s Financial Fair Play regulations will face a total of eight separate punishments. Here’s how they are ranked based on the nature of the violation.

Reprimand / Warning 

Fine

Points deduction

Withholding of revenue from a UEFA competition

Prohibition to register new players for UEFA competitions

Restrictions on number of players a club can register for UEFA competitions

Disqualification from a competition in progress 

Exclusion from future competitions

What are the criticisms of the Financial Fair Play regulations?

The first and the most notable drawback of the Financial Fair Play regulations is the rules creating a bias between the wealthiest clubs and teams fighting to secure European football.

Sponsorship is not an area which the FFP can easily meddle in. Any sponsorship revenue received by a club, after having had their sponsorship deals investigated and given a clear record, will be considered an exemption from Financial Fair Play.

Earlier this year, UEFA President Aleksander Ceferin confirmed that plans are in place to abolish the Financial Fair Play regulations and replace them with a salary cap and luxury tax.

As per reports, clubs in European competition would be allowed to spend 70 per cent of their revenue on salaries. Any team that breaches the new rules will have to pay a luxury tax where 'the equivalent or more' of any overspend would go into a pot to be split among other clubs.

Featured photo: AFP / Fabrice Coffrini