More flexible but more focused: UEFA reformed its financial fair play on Thursday. This allows European clubs to run deficits by preventing them from spending all their income on wages and transfer fees.
As expected, the body’s executive committee changed budgetary rules introduced in 2010 to clean up lucrative European football, but often prioritize sporting ambition over financial austerity.
“The main innovation will be the introduction of control over the costs associated with the team,” which is being implemented gradually and is designed to limit the flight of wages, the president of the body, Alexander Ceferin, told the press.
UEFA is moving away from the strict accounting logic of the first era of financial fair play, doubling the allowed three-year deficit for each club (to €60m) and even pushing it up to €90m over the same period for a club. “in good financial condition”.
But at the same time, the organization introduced a very simplistic form of the “wage cap,” a rule that was expensive for North American sports franchises but could not be carried over identically to the 55 federations with separate legislation.
In particular, clubs will have to cap their players’ and coaches’ salaries, transfer fees and agency commissions to 70% of their income in the 2025/2026 season.
Sports penalties and sanctions
If the deadline is so far away, it is because the current contracts have an average maturity of almost three years, which requires gradual implementation: 90% of revenue in 2023/2024, then 80% of revenue in the 2024/2025 season. “Before the pandemic, the average ratio was below 70%” so most clubs managed to stay in the grip, said Andrea Traverso, UEFA’s director of financial sustainability.
He added that by cutting around €7bn of European football revenue over two seasons without adjusting wage costs, the health crisis has brought that percentage closer to 90%, even if it should mechanically drop with the return of full stadiums.
The guilty clubs will have to pay the penalties previously set according to the degree of overspending, which will then be distributed among the clubs in good faith.
In addition, for serious or repeated violations, UEFA provides sports sanctions: “a ban on the use of a specific player acquired on the market, a limitation on the number of players or the deduction of points” during “mini-championships” that will replace the group stages of European competitions from 2024, detailed by Andrea Traverso.
Relegation from one competition to another, such as from the Champions League to the Europa League, “is still being discussed,” he continued.
“New construction”: sports balance
While a handful of clubs have now monopolized the biggest trophies, Andrea Traverso has hammered out that improving the competitive balance “cannot be achieved through financial measures alone”.
The new rules are sure to play into the battle between historic clubs and the new Ogres with unlimited resources, especially since the gradual lowering of the salary cap will allow the latter to burn for two more seasons.
Even when the 70% rule is in place, previous disputes over PSG and Manchester City have shown the ability of these clubs to inflate their revenues by sponsoring companies close to the states that hold them, easily robbing them of any control.
Conversely, legendary clubs with financial losses, such as Barcelona or Juventus Turin, may find their ambition limited by a commitment to phase out their debt.
But now that UEFA has drawn up its new budgetary rules after months of consultation, “we are going to open a new chapter and move on to other measures,” Andrea Traverso promised as she announced a “very, very complex” project.