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UEFA’s requirement for football clubs to balance their books. The rules also specify that clubs keep up-to-date with their taxes, their transfer fees and pay player wages on time.
La Liga spending caps are constraining Barcelona’s ability to offer Lionel Messi a new contract. Not unreasonably, La Liga requires clubs to spend no more than 70 per cent of their income on wages.
Barcelona have the highest wages in Spain and the second highest in the world after Manchester United. One way forward would be to try and boost revenues.
Ed Thompson has come up with a new analysis of the financial fair play (now ‘profitability and sustainability’) rules in the Championship as his original one contained a mistake, not surprising given the complexity of the rules and the uncertainty of their application.
Consider this hypothetical scenario. It has been known for some time that Brighton and Hove Albion have been close to breaching the rules, although how close is difficult to assess on the available data.
The Championship would normally cast a shadow over Christmas celebrations by announcing which clubs had fallen foul of its financial fair play rules (now called profitability and sustainability rules). However, the Championship has now switched to a three year rule to bring it in line with the Premier League so there will be no bad news over the festive season.
Sunderland’s chief executive has admitted that there will be little money to spend in the January transfer window because of losses and financial fair play rules. However, the club are not running up the relegation white flag as they propose to hold on to their key players (who might then have to go in a summer fire sale).
Securing promotion is particularly important for Brighton and Hove Albion this season otherwise they may fall foul of financial fair play rules. Championship clubs are allowed to lose £39m over three seasons, but the Seagulls made a £25.9m loss in 2015-16. The allowance is much more generous for Premier League Clubs or even for yo-yo clubs, plus revenues in the top flight are so much higher.
Sunderland need to extrictate themselves from a series of difficult financial dilemmas if they are to escape relegation. if they were relegated, their financial position could become unsustainable.
Leicester City are fighting against the imposition of a fine of around £10m for breaches of financial fair play (FFP) regulations.
The situation is complicated but they are facing action based on reported losses of £20.8m for the 2013-14 season, plus further £11m from a controversial sponsorship deal. It has echoes of FFP sanctions imposed on Paris Saint-Germain by Uefa two years ago.
Bournemouth made a £38.3m loss in the Championship last season. The loss was mainly due to players’ wages. The salary bill of £30.4m was more than double the club’s turnover.
Wages went up by more than 76 per cent in one year, including performance bonuses for winning promotion. The ratio of salaries to turnover was 237 per cent. I cannot recall such a high ratio among top flight clubs.
As Leicester City tighten their grip on the title, they are coming under greater critical scrutiny with commentators pointing out that fairy tales have their light and dark sides. The Times suggested this morning that they are not a nice team.
Newcastle United are the latest club to report increased profits, the after tax margin up from £18.7m to £32.4m in the year ending June 2015.
However, their position is more perilous than it appears. £80m has been spent on new players in the two transfer windows this season, not to any apparent great effect. Moreover, the wage bill has gone up and there are no relegation clauses in players’ contracts should the club go down.