Financial fair play in professional football

16 November 2022 - Sven Wassmer

Recently, the economic sustainability of clubs or “financial fair play” has been a very topical issue, firstly because of the complaints of many clubs and organisations about “state-run clubs” and the announcement of the Spanish League (LFP) to report the two best known state-run clubs, PSG and Manchester City, for breaching the regulations on financial fair play, and secondly because UEFA has just modified and renewed its regulations on the economic monitoring   of clubs.

Sven Wassmer, PhD Abogado & Rechtsanwalt +34 91 319 96 86

First of all, it is interesting to note that the name of the regulation, which applies to all clubs that have qualified for participation in European competitions such as the Champions League, Europa League or Conference League, has changed. UEFA no longer speaks of “financial fair play” but of ensuring sustainability, as evidenced by the new name “Financial Sustainability and Club Licensing Regulations” (FSCLR). While financial sustainability is its main objective, the FSCLR is based on three pillars: solvency, stability and cost control of clubs.

The principle of solvency involves the prohibition of clubs from having certain types of unpaid debts, for example to tax authorities, employees (including players) or other clubs. This principle is not new, but UEFA has tightened it up with the new regulations.

Interestingly, the new regulations are more lenient with clubs in terms of stability. Whereas the old regulations set the upper limit of losses a club could incur over a three-year period at €30 million, the FSCLR raises this limit to €60 million, with the possibility of increasing it by a further €10 million if a club is financially sound. This may come as a surprise, but it is because UEFA now places increased emphasis on the third principle, cost control.

With the new regulations, UEFA limits squad costs to a maximum of 70% of the club’s revenue. Squad costs in this context include items such as transfer costs, staff salaries (including player salaries) and fees paid to agents. In order to allow clubs to adjust their expenses, UEFA has set a transitional period of two seasons during which the limit is still higher than 70%.

By means of this new regulation, UEFA not only intends to guarantee a more sustainable future for professional football, but also to achieve fair competition at European level.  It will be intriguing to see whether UEFA achieves its goals with this new regulation, especially with regard to the “state-run clubs”.

Finally, it should be mentioned that regulations on financial control of clubs also exist at national level, some of which have led to very positive results, such as the regulations introduced by the Spanish League.