UEFA Approve Financial Fair Play Regulations

[Urinal Mint]

New financial regulations to come into force during period ending 2012

UEFA announced today that their Executive Committee has unanimously approved proposed financial fair play regulations within football.

An official statement read:

“After a phased implementation over three years (2010, 2011, 2012), the main cornerstone of the regulations, the 'break-even requirement', enters into force for the financial statements of the reporting period ending 2012, to be assessed during the 2013-14 UEFA club competitions season.”

The new financial restrictions, the brainchild of UEFA president Michel Platini, are being brought in an attempt to restrict the excessive spending that has left a number of European clubs in financial ruin.

Upon the committee's approval, Platini said, “We have worked on the Financial Fair Play concept hand-in-hand with the clubs, as our intention is not to punish them, but to protect them. We have an agreement with the clubs. The philosophy is that you cannot spend more money than you generate.”

The UEFA statement listed the three ‘main pillars’ of the new regulations:

1. Break-even requirement – clubs must not spend more than they generate over a period of time.
2. No overdues payable during the season - towards other clubs, employees and/or social/tax authorities).
3. Provision of future financial information – to ensure clubs can meet their future obligations.


Could be very interesting with the likes of Liverpool and Man Utd with their excessive debts and high interest payments they have to keep up with.

[Compo's Hat]

Remember, this is just a "working paper," the final version will be very different.

[bobbybottler]

I'm not sure about Liverpool, but I understood that Manchester United FC runs at an operating profit and have done for many seasons, and that the debts weighing upon it have not been created by inappropriate levels of expenditure compared to gross income. Or have I got that wrong?

[handbags_harris]

I'm sure somebody else can come up with the required level of detail bb, but as far as I understand it Man Utd are able to service their debt, although it has taken some hefty income in the form of transfer fees to be able to service it this year. There is the possibility I am wrong however

[Messiah]

There was something about this on ssn yesterday and they mentioned Man City would be allowed into the Champions League if this was implemented right now.

[Silver Fox]

Wouldn't they need to qualify for it first?

[Messiah]

Wouldn't they need to qualify for it first?

Well obviously, yes. But they were refering to their net spend vs their profit. They would be punished in the current plan and would miss out on the CL.

[Sun Tzu]

Seems utterly stupid.

Man City can afford to spend as much as thy like and it is daft if this rule would affect them. Why should a team that has a backer with unlimited resources not use those resources ?

The point surely must be to stop teams like Pompey and Leeds who spend money they do not have and cannot pay back.

It would be like telling a lottery winner that they can;t spend the money they have won, just the money they earn from their day job !!

[Wycombe Royal]

Man City can afford to spend as much as thy like and it is daft if this rule would affect them. Why should a team that has a backer with unlimited resources not use those resources ?

The reason, in my opinion, is that if said "backers" decide to up and leave who is going to pay the huge wage bill because without the backers their revenues won't be enough to cover it.

[Hoop Blah]

I guess those clubs supported by a Sugar Daddy/Consortium would be able to get round this by the way they report the investment from their backers.

If that changes from being a loan (as I think they usually are now) to just an injection of cash, either as a donation or in return for a nominal share, service or product (Abromovich buy a shirt with his name on for £100m perhaps) then their income would match expenditure.

The difference would be that they'd nolonger be in debt for that amount.

[Sun Tzu]

Man City can afford to spend as much as thy like and it is daft if this rule would affect them. Why should a team that has a backer with unlimited resources not use those resources ?

The reason, in my opinion, is that if said "backers" decide to up and leave who is going to pay the huge wage bill because without the backers their revenues won't be enough to cover it.

I don't think a club owner can just up and leave though. They remain liable for the contracts they have entered into.

And you can make the same argument about any other type of revenue. If you make commitments for 3 years based on a revenue plan and then fail to generate the revenue who pays the bills ?

To ignore a totally valid source of income must be wrong and is simply a way of making sure the big clubs stay at the top and no one else can break through. It would be valid to take steps to ensure individuals have the wealth but if a billionaire owns a football club why is his money less reliable than future season ticket sales or shirt sales ?

[Hoop Blah]

The owner wouldn't be liable for the contracts, the club would be surely?

The owner couldn't just walk away without selling it to somebody (unless they wanted to just wind the thing up), but if they really wanted to I'd have thought they could sell for £1 to anyone they wanted to if they just wanted out and didn't care about the price they got.

[Sun Tzu]

The owner wouldn't be liable for the contracts, the club would be surely?

The owner couldn't just walk away without selling it to somebody (unless they wanted to just wind the thing up), but if they really wanted to I'd have thought they could sell for £1 to anyone they wanted to if they just wanted out and didn't care about the price they got.

In that case the new owner is responsible, note I said the 'owner' was responsible. So the responsibility passes. And if there are regulations to ensure any owner has the capability to take on the financial responsibilities of the club then the issue as raised is still covered. I would have thought you effectively have a 'bond' posted which is the safeguard that the club is financially able to meet it's obligations. It isn't really important whether that is backed by personal guarantees or financial projections of income is it ?

[Wycombe Royal]

Man City can afford to spend as much as thy like and it is daft if this rule would affect them. Why should a team that has a backer with unlimited resources not use those resources ?

The reason, in my opinion, is that if said "backers" decide to up and leave who is going to pay the huge wage bill because without the backers their revenues won't be enough to cover it.

I don't think a club owner can just up and leave though. They remain liable for the contracts they have entered into.

And you can make the same argument about any other type of revenue. If you make commitments for 3 years based on a revenue plan and then fail to generate the revenue who pays the bills ?

To ignore a totally valid source of income must be wrong and is simply a way of making sure the big clubs stay at the top and no one else can break through. It would be valid to take steps to ensure individuals have the wealth but if a billionaire owns a football club why is his money less reliable than future season ticket sales or shirt sales ?

Yes the owner would be responsible but the current owner could just let the club go to into admin and not pay wages and other debts and thus effectively letting the club fold. For a lot of this rich owners the clubs are just a hobby and losing the club is chick feed in terms of their wealth.

Personally I would like to see rules in place that mean all clubs have to be self financing and break even WITHOUT any investment from the owners. It owuld produce a much more level playing field and would encourage proper financial management and would turn football clubs into a proper business. Finance could still be raised through loans and share issues but not through a rich owner throwing money at his hobby.

[Seal]

I'm sure somebody else can come up with the required level of detail bb, but as far as I understand it Man Utd are able to service their debt, although it has taken some hefty income in the form of transfer fees to be able to service it this year. There is the possibility I am wrong however

This wouldn't effect United at all. They always turn over a profit, around £60m pa, and they use that to service the interest on their debt. Therefore as they are receiving more than they spend, and pay all their bills on time they are fine. There's no rule about having a loan outstanding, just as long as it's serviced correctly. Same analogy as almost everyone in the country who has a mortgage and pays it back on time every month.

In principle this would be hugely impactful on Man City and Chelsea, but it will be incredibly complex to enforce, but in principle a worthwhile and honourable step.

[Hoop Blah]

The owner wouldn't be liable for the contracts, the club would be surely?

The owner couldn't just walk away without selling it to somebody (unless they wanted to just wind the thing up), but if they really wanted to I'd have thought they could sell for £1 to anyone they wanted to if they just wanted out and didn't care about the price they got.

In that case the new owner is responsible, note I said the 'owner' was responsible. So the responsibility passes. And if there are regulations to ensure any owner has the capability to take on the financial responsibilities of the club then the issue as raised is still covered. I would have thought you effectively have a 'bond' posted which is the safeguard that the club is financially able to meet it's obligations. It isn't really important whether that is backed by personal guarantees or financial projections of income is it ?

But if the original owner was able to cover it, and then sold it up to someone else for a quid (who couldn't cover the finanical obligations) then they have just walked away.

The club would then be fined, kicked out of competitions, wound up or whatever, but the owner has just walked away, albeit to be replaced by a new one.

[Sun Tzu]

But if the original owner was able to cover it, and then sold it up to someone else for a quid (who couldn't cover the finanical obligations) then they have just walked away.

They couldn't sell to someone who couldn't cover the obligations, as I said !

Meaning they can't just walk away. The options would be to fold the club, or achieve a sale to a party who was able to meet the obligations.
[/quote]

[Hoop Blah]

But if the original owner was able to cover it, and then sold it up to someone else for a quid (who couldn't cover the finanical obligations) then they have just walked away.

They couldn't sell to someone who couldn't cover the obligations, as I said !

Meaning they can't just walk away. The options would be to fold the club, or achieve a sale to a party who was able to meet the obligations.

[/quote]

Why not?

Unless I've missed something, the regulations seem to point to the club being penalised, not the owners being tied to the club unless the nest guy coming in can cover everything.

[Sun Tzu]

But if the original owner was able to cover it, and then sold it up to someone else for a quid (who couldn't cover the finanical obligations) then they have just walked away.

They couldn't sell to someone who couldn't cover the obligations, as I said !

Meaning they can't just walk away. The options would be to fold the club, or achieve a sale to a party who was able to meet the obligations.

Why not?

Unless I've missed something, the regulations seem to point to the club being penalised, not the owners being tied to the club unless the nest guy coming in can cover everything.[/quote]

I think we are coming at this from different angles..

You (if I understand it) are trying to work out how the rules as stated apply

I have been coming at it in terms of how I think things should work (ie not penalising clubs with owners prepared to invest money in them)

The current proposal seems (as I said) to be very much in favour of existing big clubs and effectively stops a small club breaking into European competition

[PieEater]

The current proposal seems (as I said) to be very much in favour of existing big clubs and effectively stops a small club breaking into European competition

Personally I would like to see rules in place that mean all clubs have to be self financing and break even WITHOUT any investment from the owners. It owuld produce a much more level playing field and would encourage proper financial management and would turn football clubs into a proper business. Finance could still be raised through loans and share issues but not through a rich owner throwing money at his hobby.

To be self financing you are ensuring that the bigger clubs (fanbase wise) have an financial advantage over the smaller clubs, and the CL set doubly so. Hardly a level playing field.

The only option for smaller clubs (and probably all clubs) is to screw the fans with higher ticket prices.