5 Things to Know About Financial Fair Play
May. 16, 2014
GENEVA (AP) — Manchester City and Paris Saint-Germain received the heaviest sanctions Friday when UEFA announced the first set of punishments in its "Financial Fair Play" project to control spending by European football clubs.
City and PSG were fined 60 million euros ($82 million) each and ordered to limit their Champions League squads to 21 players next season instead of the normal 25.
Seven other clubs were penalized among the 237 clubs whose finances were assessed after qualifying for this season's Champions League or Europa League.
Here are five things to know about Financial Fair Play:
WHAT IS FFP?
Since July 2011, UEFA has monitored the annual accounts of all clubs entering its two club competitions.
UEFA requires clubs to approach break-even on football-related business — television rights fees, buying and selling players, salaries, sponsor deals, tickets sales, prize money.
The complex accounting rules encourage clubs to spend on long-term projects — stadiums, youth training — which do not count as losses for FFP purposes.
UEFA lets club owners cover losses up to 45 million euros ($62 million) in the 2011-13 assessment period just completed.
Clubs judged to have broken the spirit or letter of FFP rules faced sanctions from a warning to being barred from UEFA competitions in the 2014-15 season onward.
WHY IT WAS INTRODUCED:
After being elected UEFA president in 2007, Michel Platini said he feared clubs which ran up huge debts chasing success were effectively cheating and risked ruin if banks or owners withdrew support. Leeds was often cited, a 2001 Champions League semifinalist then penniless and relegated from the Premier League within three years.
Debate intensified after the Manchester United-Chelsea final in 2008 featured two English clubs carrying combined debts of $1.6 billion-plus.
Amid a global economic downturn, the 2009 offseason saw steep inflation in transfer fees and salaries, driven upward by a few elite clubs.
Platini described Real Madrid's offseason splurge on Cristiano Ronaldo, Kaka and others as "excessive," while Manchester City's spree was "financial doping," according to Arsenal manager Arsene Wenger.
Weeks later, UEFA had consent to act and Platini pledged it would be tough. Champions League expulsions were threatened, even if they would be unpopular with clubs, fans and broadcasters.
Early on, Platini said "85-90 percent" of club owners supported FFP as a way to stop player salaries spiraling up. Allies included Chelsea's Russian owner Roman Abramovich and AC Milan's Silvio Berlusconi, then prime minister of Italy.
Over time, an aim of FFP appeared to shift. Spending only what a club could afford became spending only what it earned.
The business model Abramovich followed in 2003 — buy a club with potential, spend heavily to improve fast, accelerate building a global brand — was, if not outlawed, certainly made tougher.
However, Man City and PSG have both ended title droughts to win two league trophies each since being bought by sovereign wealth from Abu Dhabi in 2008, and Qatar in 2011, respectively.
JUDGING THE CLUBS:
Platini's first major hire for FFP was Jean-Luc Dehaene, a former prime minister of Belgium, who died Thursday — a day before the sanctions were announced.
Dehaene led a panel including lawyers, academics, economists who assess accounts and, this season, asked for more information 76 of 237 clubs. In recent weeks, nine clubs negotiated with the panel to reach agreed sanctions. Platini has long said UEFA wants to help clubs, not hurt them.
Man City was the most reluctant club to settle ahead of potential referral to a judging panel, led by lawyer Jose Cunha Rodrigues of Portugal. There, clubs have no bargaining position and more severe sanctions could have been applied in June.
UEFA typically points to Arsenal and Borussia Dortmund as clubs growing their teams and businesses properly in the FFP era.
Still, both have become selling clubs to national and Champions League rivals.
Bayern Munich routinely takes Dortmund's best players who have picked up runners-up medals before joining the German giant.
Bayern chief executive Karl-Heinz Rummenigge also leads the 200-member European Club Association, a key UEFA stakeholder shaping the FFP rules.
"We have some black sheep and these black sheep have to wash white," Rummenigge said in 2012 in a veiled jab at PSG.
Bayern and Manchester United are front-runners in maximizing their brands and commercial strength, which makes both models of FFP compliance.
An apparent contradiction of FFP is that more than $1 billion of United's revenue since 2005 has been used to service debt from the American Glazer family's leveraged buyout.
Man City, meanwhile, is the biggest FFP victim despite effectively having no debt, no prospect of bankruptcy and an owner who invested more than $1 billion of new money into the sport.