UEFA reforms financial fair play in an attempt to cap wages

After months of discussions, UEFA is set to adopt a revision of its financial fair play (FPF) at noon, a system introduced in 2010 to contain the debts of European clubs constantly tempted by financial superiority, to quench their thirst for trophies. Over twelve years, this cap on club deficits has helped clean up the bills, but it has also shown its limits: its rigidity is exacerbating the fate of weakened teams, and the pandemic has cost European football an estimated €7bn over two seasons.

Therefore, in order not to provoke a wave of bankruptcies, UEFA softened the deficit estimate from the spring of 2020, and then announced a major revision of the financial rules imposed on clubs. The main change is philosophical: it is no longer about book balance requirements, but about limiting the spending allocated to wages, transfer fees and agent commissions, which have long been considered the main economic problem in football.

Relaxed salary cap

“This is a signal to investors: you can pour in new money, but you shouldn’t burn everything on recruitment and salaries”summarizes with AFP Raffaele Poli, head of the CIES football observatory in Neuchâtel. For him, “Even the big clubs are victims of this wage inflation, fueling it”and be able to brandish new rules”in the face of excessive demands” players and their agents. Specifically, UEFA will double the allowed deficit within three years (to €60m), but will force clubs to cap their payroll to 90% of their income in 2023-24, then 80% and finally 70% in 2025-26. season until the current contracts expire.

The mechanism is a loosened form of the “wage cap,” a key rule for US hockey, football or basketball franchises that is very difficult for UEFA to import: the 55 federations it oversees comply with various social and accounting rules, and there is no centralized negotiation. . If they fail to do so, the perpetrators will incur predetermined penalties depending on the extent to which the limit is exceeded.

Old glory and new rich

“Investors get predictability: they can cost their budget dearly if they decide to spend more than the salary cap”deciphered by Raffaele Poli. This “luxury tax”, touted last year by UEFA president Aleksander Čeferin, will then be redistributed to the more virtuous clubs, even if the expected increase looks modest to each of those beneficiaries. In addition, the UEFA project provides for recruitment bans, loan restrictions, demotions from one European competition to another and penalty points during “mini-championships”, which will replace the group stages from 2024.

However, the link between these measures and financial sanctions remains to be clarified, which is a key issue as sports sanctions remain a major threat to the new rich in European football. Both UEFA and ECA are convinced of this: financial fair play is unlikely to affect the concentration of trophies. However, the new rules could make the battle between historical leaders and ogres with unlimited resources more difficult, especially as a gradual lowering of the salary cap would allow the latter, PSG included, to burn out for another two seasons. Conversely, legendary but financially unprofitable clubs such as Barcelona or Juventus Turin may find their ambition limited by a commitment to phase out their debt.