The new financial sustainability standards were accepted by the UEFA executive committee.
The rules are the first substantial overhaul of UEFA’s financial laws since they were initially implemented in 2010.
“UEFA’s initial financial restrictions, established in 2010, accomplished their principal goal,” stated UEFA president Aleksander Ceferin. They aided in bringing European football finances back from the verge of collapse and revolutionized the management of European football clubs. However, the growth of the football business, along with the unavoidable financial consequences of the epidemic, has shown the necessity for comprehensive reform and new financial sustainability standards.
What are the new regulations?
The UEFA executive committee has accepted new financial sustainability regulations to take the place of Financial Fair Play beginning in June. The regulations are built on three pillars: the No Overdue Payment Rule, the Football Earnings Rule, and the Squad Cost Rule. The No Overpayment Rule implies that clubs’ finances will be audited every quarter to ensure that all invoices are paid on time.
The Football Earnings Rule will enable teams to lose €60 million over three years, which is twice the amount allowed under Financial Fair Play. Clubs will be permitted to incur an additional €10 million in losses each year if they are assessed to be “in excellent financial condition.”
As part of The Squad Cost Rule, a club’s expenditure on salaries (players and head coaches), transfers, and agency fees will be limited to 70% of its income. This will be evaluated over a calendar year rather than a season, thus expenditure during the summer transfer window will be included in.
What are the consequences of breaching the rules?
UEFA will have pre-agreed financial and sporting penalties ready to levy on clubs who violate the regulations. Clubs might be barred from employing certain players signed during an evaluation year, forcing them to play with a lesser team. UEFA will also be able to deduct points. Relegation is also being proposed as a discipline, although it has not yet been accepted as a punishment.
Willn’t wealthy clubs just pay the penalties and go on as usual?
The consequences are progressive, so if a club continues to flout the regulations, the punishments will become more severe. The first and second violations of the regulations will almost certainly result in penalties, while subsequent and more significant violations will almost certainly result in sports punishments. UEFA also said that it would rigorously examine commercial contracts signed by teams to ensure that they are genuine arrangements with third parties paying fair value. UEFA will establish fair value by comparing and consulting with external organizations to see if transactions are being conducted at true market pricing.
Will UEFA continue to take years to penalize clubs who flout the rules?
UEFA hopes that the new regulations will be more transparent and operate much more quickly than Financial Fair Play. For example, in 2023, teams will be evaluated from January to December. They will find out whether they have breached any regulations in May 2024. If they have, their penalty will be carried out three months later, at the start of the season.
When does the new government begin?
The new rules go into effect in June, although they will be phased in over three years to allow clubs time to adjust to the changes. The 70% Squad Cost Rule ceiling will be phased in over a three-year period. In 2023/24, the limit will be 90%, in 2024/25, it will be 80%, and in 2025/26, it will be 70%.
What about competitive equilibrium? Will this offer smaller clubs a better chance of competing with the big boys?
The new guidelines are concerned with financial stability rather than competitive balance. They are intended to ensure that clubs are properly operated; they are not intended to make tournaments more fair or equal. UEFA has chosen to abandon the term “Financial Fair Play” because it gives the idea that they are attempting to establish a fair playing field. They will continue to consider competitive balance, but financial stability has been their primary goal so far. The No Overdue Payment Rule, as well as quarterly audits, will go into effect in June. The Football Earnings Rules will be assessed for the first time in 2023.
Are the new regulations being implemented because football finances have been severely impacted by the pandemic?
Financial Fair Play needs to be revamped, and the epidemic has hastened the process. According to UEFA, European football would lose €7 billion in income between 2020 and 2021. Gate revenues cost €4.4 billion, commercial and sponsorship income cost €1.7 billion, while lost and renegotiated TV partnerships cost slightly under €1 billion. At the same time, player pay increased by 2% every year in 2019 and 2020. Transfer expenditures increased by 18% in 2021, while transfer revenues decreased by 41%.
Is everyone on board with the new rules?
Ceferin is “glad and astonished” that the new guidelines have the support of all European football stakeholders. Following a consultation process that involved national associations, the European Clubs Association, European Leagues, FIFPro, fans’ organizations, the European Commission, the European Parliament, and the Council of Europe, the regulations were agreed upon.
“UEFA has collaborated with its stakeholders throughout European football to establish these new measures to assist clubs in dealing with these new difficulties.” These restrictions will assist us in protecting the game and preparing it for any possible future shocks, as well as promoting reasonable investments and constructing a more sustainable future for the game.”