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FFP for Dummies. All you need to know about UEFA’s Financial Fair Play Regulations.

Football-wise, 2014 will not only be remembered for the World Cup in Brazil. This year will also determine the credibility of UEFA’s highly controversial Financial Fair Play (FFP) Regulations. The FFP debate will soon be reaching a climax, since up to 76 European football clubs are facing sanctions by the UEFA Club Financial Control Body (CFCB). This large number of clubs includes two heavyweights: Manchester City and Paris Saint-Germain. On paper they face a potential disqualification from one or more editions of the UEFA Champions League. This would most certainly jeopardize the great ambition their billionaires-owners have for them and would vindicate FFP as a powerful mechanism capable of reigning in even the world’s richest football clubs. Whether this will indeed occur shall remain uncertain until the beginning of May, when UEFA is expected to announce the details of the (potential) disciplinary sanctions. However, in order to grasp the likely consequences of a sanction we offer you the definitive short introduction to FFP.

It is in the view of curtailing the, sometimes dramatic, losses made by an increasing number of football clubs, that UEFA’s Executive Committee decided to introduce the FFP Regulations in May 2010. The stated aims of FFP, stipulated in Article 2 of the Regulation include, inter alia, improving the economic and financial capability of the clubs; increasing their transparency and credibility; introducing more discipline and rationality in club football finances; encouraging clubs to operate on the basis of their own revenues; and protecting the long-term viability and sustainability of European club football. On UEFA’s own website a further aim was mentioned, namely to decrease pressure on salaries and transfer fees.

To achieve these aims, UEFA has introduced the break-even requirement[1]. By this requirement, clubs must demonstrate that their revenue exceeds or equals expenditure. The club’s spending on transfers and employee benefits (including wages) will be counted as expenditure, whereas income from gate receipts, TV revenue, advertising, merchandising, sales of players, and prize money is regarded as revenue. Any money spent on infrastructure, training facilities or youth development will not be included in the assessment.

In accordance with article 68 of FFP Regulations and article 3 of the Procedural rules governing the UEFA Club Financial Control Body, the CFCB is competent to inter alia determine whether clubs fulfil the break-even requirement and impose disciplinary measures in the event of non-fulfilment of the requirement. A first assessment is undertaken by the investigatory chamber, which leads the monitoring process, the investigation proceedings, and collects evidence. At the end of the investigation, the CFCB chief investigator, Jean-Luc Dehaene, after having consulted with the other members of the investigatory chamber, may decide to: (a) Dismiss the case; (b) Conclude, with the consent of the club in question, a settlement agreement; (c) Apply, with the consent of the club in question, a disciplinary measure limited to a warning, a reprimand or a fine up to a maximum amount of EUR 100,000; or (d) Refer the case to the adjudicatory chamber.[2] It should be noted that this is the phase the 76 clubs find themselves in right now.

Should the investigatory chamber decide to refer the case to the adjudicatory chamber, then the adjudicatory chamber can decide to: (a) Dismiss the case; (b) Accept or reject the club’s admission to the UEFA club competition in question; (c) Impose disciplinary measures; or (d) Uphold, reject, or modify a decision of the CFCB chief investigator[3]. A final decision by the adjudicatory chamber will be made before the end of the current season at the latest.

Concerning more specifically the disciplinary measures, Article 29 of the Procedural rules provides a long list of potential measures including fines, deduction of points, withdrawal of a title or award and disqualification from competitions in progress and/or exclusion from future competitions. Undoubtedly, for teams like Manchester City and Paris Saint-Germain whose greatest ambition is to be successful in Europe’s most prestigious tournaments, a disqualification from European competitions would be the most severe disciplinary sanction possible.

Furthermore, the Procedural rules governing the UEFA Club Financial Control Body give the sanctioned party the possibility to appeal against the decision. The appeal should be launched in accordance with article 34 of the Procedural rules, which states that final decisions of the CFCB may only be appealed before the Court of Arbitration for Sport (CAS) in accordance with the relevant provisions of the UEFA Statutes.

Whether the CAS will have to pronounce itself on a specific case regarding FFP in the upcoming months will largely depend on the scope of the decisions adopted by the investigatory chamber later this week and then by the adjudicatory chamber in the upcoming month. The effectiveness, credibility and, more broadly, the future of the FFP Regulations are at stake. This is either the beginning of the end for FFP or the end of the beginning. 

A story to be continued…

[1] UEFA Club Licensing and Financial Fair Play Regulations. Edition 2012, Articles 58-63

[2] UEFA Procedural rules governing the UEFA Club Financial Control Body. Edition 2014, Articles 12-14

[3] Ibid, Article 27

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