On Thursday, UEFA approved new licensing and sustainability rules that will replace existing financial fair play (FFP) rules, allowing European clubs to take on bigger losses than before and capping wage and transfer costs.
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As expected, European football’s governing body has decided to revise the FFP rules introduced in 2010 to reduce the growing debt of clubs across the continent.
FFP’s limits have been exposed with the rise of state superpowers such as Manchester City and Paris Saint-Germain, while the massive losses suffered by the coronavirus pandemic have left poorer clubs with little wiggle room.
“The biggest change will be the introduction of a team spending rule to better control costs related to player salaries and transfer costs,” UEFA President Aleksander Čeferin said after a meeting of the UEFA Executive Committee.
UEFA will now allow clubs to declare losses of 60 million euros ($65.5 million) over three years instead of 30 million euros previously, and the allowed figure will even reach 90 million euros for a club “in good financial condition”.
However, this easing of rules is combined with new restrictions on wage costs.
It has never been possible to impose a specific salary cap like in North American sport, as UEFA is made up of 55 member countries and has to deal with the European Union and national labor and competition laws.
However, under the new UEFA rules, by 2025/26 clubs will be forced to limit spending on player and staff salaries, transfers and agent fees to 70% of their total income.
The ceiling will drop as current contracts expire, 90% of the club’s revenue in 2023/24, then 80% next season and then 70%.
“Before the pandemic, the average was below 70%,” said Andrea Traverso, UEFA director of financial sustainability.
The health crisis then resulted in a two-season loss of around €7 billion, pushing that ratio up.
– Financial and sports penalties –
Čeferin said violations of the new rules “will result in predetermined financial sanctions and sporting measures”.
The amount of the fines will depend on how far the clubs have crossed the threshold, and then this money will be redistributed among the wise men – in line with the idea of u200bu200bthe “luxury tax” championed in the past by Čeferin.
Serious or repeated infractions will result in sports penalties, and Traverso said they could range from bans on certain players and restrictions on team size to points deductions for new League group stage champions, which will be introduced from 2024.
He added that discussions are underway about the possibility of transferring teams from one European competition to another, for example, from the Champions League to the Europa League.
The fate of the FFP in its current form was sealed when Manchester City successfully filed an appeal with the Court of Arbitration for Sport (CAS) in 2020 to lift a two-year ban from European competition.
The Abu Dhabi-owned city has been accused of deliberately inflating the value of earnings from Emirati sponsors Etisalat and Etihad Airways to comply with FFP rules.
State clubs like City and Qatar-backed PSG can still spend significantly more than their rivals despite the new 70% rule.
Meanwhile, traditional giants such as Barcelona and Juventus – the two main sponsors of the failed European Super League project – may see their ambitions further constrained by the need to reduce debt.
The new rules come at a time when elite football is dominated by a smaller and more limited group of clubs than ever before, but Traverso said improving the competitive balance requires more than just financial measures.
Now that UEFA has announced its new budget rules after months of consultation, it said the body will “open a new chapter and move on to other measures”.
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