Football's governing bodies implement Financial Fair Play regulations to ensure clubs manage their finances responsibly and avoid spending more than they earn.
Without these rules, similar to salary caps in other sports, clubs would be overtaxed and would not only face penalties but also risk their survival being threatened by possible relegation.
Let's look at the Financial Fair Play rules now.
When was Financial Fair Play introduced?
UEFA first created its Financial Fair Play scheme in 2009 after discovering that more than half of the 655 clubs under its jurisdiction had suffered financial losses in the previous year. UEFA first implemented the rules in the 2011-12 season.
What are UEFA's key Financial Fair Play or “Financial Sustainability” regulations?
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Clubs are required to reach a break-even point during a reporting period, which is calculated as the difference between relevant income and relevant expenses. This allows the club to utilise cost controls and ensure that they do not incur more losses than their revenue can cover.
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This does not include costs for infrastructure, training facilities and youth training.
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The club must break even over a three-year period.
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Clubs are allowed to spend no more than 70% of their total income on wages, transfer fees and agent fees during a reporting period.
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Club owners are allowed to use their own funds to cover expenses and provide financial support, but UEFA will launch an investigation if they inject money into the club through sponsorship deals with companies they are involved in.
What are the Premier League's key Financial Fair Play or “profit and sustainability” regulations?
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Clubs must not record losses of more than 105 million pounds ($137 million) over the previous three seasons.
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£90 million (about $117 million) must come from “certain funds,” meaning the club can lose up to £15 million (about $19.5 million) of its own money every three years. Any losses above this amount but below £105 million must be guaranteed by the club's owners. If this is not guaranteed, or if the club exceeds the £105 million limit, the club will be in breach of profit and sustainability rules.
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Clubs must pay transfer fees and taxes on time.
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Clubs must submit annual reports and disclose all payments made to agents.
What are the penalties for not complying with Financial Fair Play rules?
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Reprimand or warning
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fine
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Points deduction
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Seizing revenue from UEFA competitions
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Ban on registering new players in UEFA competitions
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Limit on the number of players a club can register in UEFA competitions
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Disqualification from a competition already in progress
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Exclusion from future competitions
Which clubs have been penalised for breaching Financial Fair Play rules?
Eight clubs, including Paris Saint-Germain, Inter, AC Milan, Juventus and AS Roma, have been fined for 2022 for failing to comply with UEFA's break-even requirements.
Premier League club Manchester City are currently facing 115 charges for allegedly breaching the league's profit and sustainability rules – charges which they strongly deny and have filed legal action against the Premier League.
A number of teams have been penalised for breaching the rules in the 2023-24 Premier League, including Everton, who received a 10-point deduction before it was reduced to six following an appeal.
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