Atletico find there’s more to Financial Fair Play than just “Break-Even”
The term “Financial Fair Play” is often used when talking about the need for a club to meet UEFA’s Break-Even requirements. However, UEFA’s FFP rules run to around 90 pages and cover significantly more than just the need for a club to balance their debits and credits. UEFA have just announced that 23 clubs have had their UEFA prize money withheld under the banner of “Financial Fair Play”. One of the 23 is reigning Europa League and Super Cup champions Atletico Madrid. The clubs’ ‘crime’ is to have ‘overdue payables’ (material overdue tax, and transfer fee liabilities). The clubs are therefore being punished under the FFP banner for something other than failing the Break-Even test.
This is a highly significant event and strongly suggests that UEFA are serious about imposing the FFP rules in other arrears of the requirements. The 23 clubs have to provide an update on the position by 30 September and the Press Release hints at potential further punishments to come. Atletico owe around E115m in tax to the Spanish government and have reportedly agreed a E15m a year repayment schedule (at 4.5% interest). I calculate that Altletico deal will take 10 years to pay off the debt at that rate. Although FFP rules allow clubs to have ‘overdue payables’ as long as there is a repayment in place, UEFA appear to be signalling to Atletico that a decade-long year repayment plan is not enough and further punishments will follow if they don’t reduce the outstanding amount by other means.
The UEFA FFP rules spell out the criteria that clubs must meet to receive a license to compete in UEFA competitions. They have put in place 8 possible punishments that could be imposed on a non-compliant club:
1 Reprimand / Warning
3 Deduction of Points
4 Withholding of Revenue from UEFA competition
5 Prohibition to register new players for UEFA competitions;
6 A restriction on the number of players that a club may register for UEFA competitions
7 Disqualification from a competition in progress
8 Exclusion from future competitions
The 23 clubs have already reached the 4th level of punishment - Paris St-Germain and Man City will be watching nervously to see how far down the table UEFA will ultimately go.
Most football fans are now broadly aware of the Break Even requirements in the FFP rules, but it seems a good time to outline the other requirements of a Financial Fair play rules.
The FFP rules spell out the minimum sporting, infrastructure, personnel and administrative, legal and financial criteria required for a club to be granted a UEFA license. Other than the Break-Even criteria, the overwhelming majority or the UEFA requirements are already covered by existing Premier League rules. So when people talk about there being no FFP rules in the Premier League, it isn’t entirely correct; it’s only really the Break-Even requirements that are not already in place. Although this might change as Premier League club directors met last week to discuss an initial proposal to introduce Break-Even requirements.
It is worth noting that the Premier League is ahead of UEFA in certain wider FFP-related areas. Following the Portsmouth debacle, the Premier League do not now allow clubs to fall behind on their tax liabilities and would even approach the tax authorities directly if that were to happen.
There is also no specific “Owners and Directors Test” within the FFP rule-book – the Premier League (post-Portsmouth and Thaksin Shinawatra at Man City) now has a very rigid test in place and uses a Business Intelligence company and Home Office sources to vet potential new owners (although, as Blackburn fans would attest, the investigations do not vet the owners for managerial competency).
In addition to the Break-Even monitoring, the UEFA rules require that a club has the following in place:
- A written and approved youth development programme
- At least three youth teams (u10, 10-14, 15-21)
- Annual medical examinations for first team squad
- Player registration for all aged over 10
- Written contracts with professional players
- Attendees at pre-season Refereeing and Laws of the Game sessions
- A racial equality practice
- A stadium for UEFA competitions within the territory of the member association
- A stadium meeting UEFA’s Infrastructure Regulations
- Year-round training facilities
- Dressing rooms and a medical room
Personnel and Administrative criteria
- A club secretary, general manager, Finance officer, medical officer, medical doctor, physiotherapist, security officer, stewards, supporter liaison officer, qualified head coach, assistant coach, head of youth development, qualified youth coach for each youth team,
- Agreed to abide by UEFA rules (inc FFP rules)
- A written contract with their football body
- Structure charts and give financial details of any subsidiary
- Annual/Interim financial statements
- No overdue payables to other clubs
- No overdue payables towards employees or social/tax authorities
- Published details of any post balance sheet events
- Financial confirmation that it is a going concern
It is interesting to note that any failure in respect of any of the above requirements would seemingly incur one of the 8 punishments (although failure to have an Under 10 team youth team for example would probably result in a warning, rather than a more weighty sanction).
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