UEFA FINANCIAL FAIR PLAY

 

I wanted to provide an article which set out the facts of UEFA's Financial Fair Play regulations.

 

Something you could refer to for reliable information.  The regulations are 91 pages long and in an attempt to help people understand them, and to understand them better myself, I’ve read them again and put the important points to Premier League clubs below.  Everything in this is fact and not opinion.

 

Firstly though, some straightforward points:

 

  • The rules apply to all clubs entering any UEFA Competition
  • Clubs have to break even.  A maximum loss can be made of EUR 45 million for the period assessed before the 2013/2014  and 2014/2015 seasons.  This figure then decreases.
  • Fair value has to be demonstrated.  So a club’s owner cannot sponsor the match ball for £200m or anything like that.  Any transactions above UEFA’s estimated fair value will only have their fair value counted.  So if a club receives £40m for a sponsorship only worth £5m then only £5m will be counted. 

 

These are the aims of the rules:

 

a) to improve the economic and financial capability of the clubs, increasing their

transparency and credibility;

b) to place the necessary importance on the protection of creditors by ensuring

that clubs settle their liabilities with players, social/tax authorities and other

clubs punctually;

c) to introduce more discipline and rationality in club football finances;

d) to encourage clubs to operate on the basis of their own revenues;

e) to encourage responsible spending for the long-term benefit of football;

f) to protect the long-term viability and sustainability of European club football.

 

Rules you maybe weren't aware of:

 

  • Each club must have an approved youth system, with approved coaching at all age levels.  Provision must also be made for the education of all footballers in the youth system.
  • Each club captain must attend an annual UEFA course on refereeing matters.
  • Each club must establish and a apply a policy to tackle Racism.
  • Head coach must hold the higest UEFA coaching badge available in that country or equivalent.  Assistant coach must hold second highest at least.

 

FINANCIALS:

 

  • Clubs can’t have any overdue fees to others clubs.
  • Clubs cannot owe employees or the tax authorities money.
  • All clubs must prove they are financially able to complete the season.

 

BREAK EVEN REQUIREMENT

 

This is what UEFA say:

 

Relevant income is defined as revenue from gate receipts, broadcasting rights,

sponsorship and advertising, commercial activities and other operating income,

plus either profit on disposal of player registrations or income from disposal of

player registrations, excess proceeds on disposal of tangible fixed assets and

finance income. It does not include any non-monetary items or certain income

from non-football operations.

 

Relevant expenses is defined as cost of sales, employee benefits expenses and

other operating expenses, plus either amortisation or costs of acquiring player

registrations, finance costs and dividends.

If a licensee’s relevant expenses are less than relevant income for a reporting

period, then the club has a break-even surplus. If a club’s relevant expenses are

greater than relevant income for a reporting period, then the club has a breakeven

deficit.

 

 

The acceptable deviation is EUR 5 million. However it can exceed this level up

to the following amounts only if such excess is entirely covered by contributions

from equity participants and/or related parties:

a) EUR 45 million for the monitoring period assessed in the licence seasons

2013/14 and 2014/15;

b) EUR 30 million for the monitoring period assessed in the licence seasons

2015/16, 2016/17 and 2017/18;

c) a lower amount as decided in due course by the UEFA Executive Committee

for the monitoring periods assessed in the following years.

 

 

In addition, the Club Financial Control Panel reserves the right to ask the

licensee to prepare and submit additional information at any time, in particular if

the annual financial statements reflect that:

a) employee benefits expenses exceed 70% of total revenue; or

b) net debt exceeds 100% of total revenue.

 

Income from other sources:

 

'Relevant income is defined as revenue from gate receipts, broadcasting rights,
sponsorship and advertising, commercial activities and other operating income,
plus either profit on disposal of player registrations or income from disposal of
player registrations, excess proceeds on disposal of tangible fixed assets and
finance income. It does not include any non-monetary items or certain income
from non-football operations.'

 

IMPORTANT FOR FAIR VALUE:  Relevant income and expenses from related parties must be adjusted to reflect the fair value of any such transactions.

 

Relevant income is decreased if the elements a) to h) in paragraph 2 include any

items below (detailed in part B):

i) Non-monetary credits

j) Income transaction(s) with related party(ies) above fair value

 

Income transaction(s) with related party(ies) above fair value

For the purpose of the break-even result, the licensee must determine the

fair value of any related party transaction(s). If the estimated fair value is

different to the recorded value then the relevant income must be adjusted

accordingly, bearing in mind, however, that no upward adjustments can be

made to relevant income.

 

The full document:  http://en.uefa.com/MultimediaFiles/Download/uefaorg/Clublicensing/0...

 

I hope this has helped you get a better grasp on it, any questions please ask.  I'm not saying I'll be able to answer them but someone may!

 

Tags: FAIR, FINANCIAL, FOOTBALL, PLAY, REGULATIONS, RULES, UEFA

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Basically, it doesn't stop another Chelsea or Man City happening, it just makes it more difficult.  A owner can go out and spend £500m on players and win the league etc but not take part in europe.  They would then need to break even for three years before being allowed to compete in europe.

 

Owners will find a way of financing the club too.  I am sure these guys have more money to spend on lawyers etc then UEFA do!

 

Also, who is to say sponsoring the match ball or paying for an executive box is fair or not...?  Who is to say there can't be a auction for such a thing by two companies, one just happens to belong to one of the owners friends...?  If a club get an legitimate over sized offer for an advertising board because the company is a hugh fan, why should a club not be allowed to accept that offer...?  It is a business afterall!  Would you stop Dairy over charging for their products because it is unfair to it's opposition...?

 

As I said, it won't stop the financial goings on but it will make it harder for clubs to work around it!

It's a UEFA estimate, I think they use KPMG. 

Great article.

 

I've been wanting to read up on this for a while.

 

Cheers TCIR.

It really does piss me off when the 2 captains read out a statement before a match about racism.

 

Let football be football, let politics be politics.

 

I wish we broke away from these muppets tbh.

'Uefa's estimated fair value' got the alarm bells ringing pretty much straight away for me. I might just be a skeptic but seems its gonna come down to Uefa's discretion which I don't see as a good thing.

 

Jimmy, don't think I've heard one of these statements but unless they are really annoying sounds like a good thing to me, as long as there is any racism around it's still too much, and I'm sure they cant change the opinions of many adults but they are role models to a lot of kids.

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