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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.
Three Championship clubs have been placed under transfer embargoes until June under the Football League’s financial fair play rules: Blackburn Rovers, Leeds United and Nottingham Forest. They will then have the opportunity to have the embargoes lifted if they can show that they have stayed within the rules.
The Football League is now examining the accounts submitted by Championship clubs to see if they exceeded the allowable loss limit of £8m (some expenditure is excluded such as youth development). The League is expected to announce its findings in the next few weeks to ensure that any appeals can be held before the transfer window opens on January 1st.
Manchester City have claimed that they have achieved ‘financial sustainability’ after reporting much reduced losses of £23m for 2013-14. That figure includes the £16m financial fair play penalty deducted from Champions League payments due to the club. If it had not been this deduction, the club would have been close to break even. They expect to break even next year. In 2011-12 and 2012-13 they made losses of £148.5m.
We have argued for some time that financial fair play (FFP) rules at the European and domestic level are open to legal challenge. In an order of November 17th the Spanish Commercial Court has struck a blow at the rules of La Liga on FFP.
La Liga had penalised Getafe by preventing them from playing Pedro León. They argued that by doing so it would have exceeded the total amount of money it could pay to players under the Spanish FFP rules. The Court was asked for an interim measure to allow him to play.
Ipswich Town boss Mick McCarthy has complained that teams like his could be ‘priced out of promotion’ by the recent dilution of the Football League’s Financial Fair Play (FFP) rules. The current Ipswich squad was assembled at a total cost of £10,000 in transfer fees.
The Football League has substantially diluted its financial fair play regulations. According to some estimates, clubs will now be able to make losses of £15m-£17m a year, compared with a previously agreed figure of £5m, plus £3m in the form of equity.
Bournemouth are enjoying unprecedented success. They are in the quarter finals of the league cup for the first time and two points off the top of the Championship.
But how firm are the financial foundations of their success? The club is owned by Russian Maxim Victorovich Demin. He has a petrochemical company registered in Germany and a mansion in nearby Sandbanks.
He bought halft he club for a reported £850,000 in 2011 and the other half in 2013. The club almost went out of existence in 2008 with debts of about £4m and a 17-point penalty.
Nottingham Forest look likely to be hit with sanctions under the Football League’s Financial Fair Play rules. They may have exceeded their maximum permitted losses of £8m for the 2013-14 season.
Accounts for the period have yet to be published, but they reported a £14m loss in 2012-13. Billy Davies, their former manager, spent £7m on players last term.
Uefa have been urged by Manchester City not to penalise wealthy benefactors under their financial fair play (FFP) rules. The meeting with Uefa president Michel Platini was also attended by Paris Saint Germain who, along with City, have received the heaviest penalties so far under the FFP rules.
Jean Louis-Dupont was the Belgian lawyer who won the Bosman case which transformed football. More recently, he has been taking on Uefa’s financial fair play (FFP) rules.
The argument he is putting forward, which we think has some credence, is that by limiting investment FFP is violating European competition law and that the exemptions Uefa may call upon do not apply. A range of plaintiffs have joined the action including football agents and the Manchester City supporters club.