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UEFA ANNOUNCES ‘NEW ERA’

UEFA on Thursday approved new licensing and “durability” rules to replace existing Financial Fair Play (FFP) rules, which could allow European clubs to incur greater losses than before, while limiting spending on wages and transfers.

As expected, European football’s governing body has decided to revise the FFP rules introduced in 2010 to reduce rising club debt across the continent.

FFP’s limitations had been exposed by the rise of state superpowers such as Manchester City and Paris Saint-Germain, while huge losses from the coronavirus pandemic left poorer clubs with little wiggle room.

“The biggest innovation is the introduction of a team cost rule to better control the costs of player wages and transfer costs,” UEFA president Aleksander Ceferin announced after a meeting of the agency’s executive committee.

UEFA will now allow clubs to report losses of €60 million in three years’ time instead of €30 million previously, and the allowable figure will go as high as €90 million for a club “in good financial health”.

However, this relaxation of the rules is accompanied by the new ceilings for wage spending.

There was never an opportunity to introduce a specific salary cap, like in North American sports, because UEFA has 55 member states and has to deal with the labor and competition laws of the European Union and member states.

But under UEFA’s new regulations, clubs will be forced to limit spending on player and staff salaries, transfers and brokerage fees to 70 percent of total revenue by 2025/26.

The ceiling will drop as current contracts expire: 90 percent of club income in 2023/24, followed by 80 percent the following season and then 70 percent.

“Before the pandemic, the average ratio was less than 70 percent,” said Andrea Traverso, UEFA director of financial sustainability.

Then the health crisis led to losses over two seasons of about seven billion euros, increasing that ratio.

– Financial and sporting fines –

Ceferin said violations of the new rules “will result in predetermined financial penalties and sporting measures”.

The size of the fines will depend on how much clubs have crossed the threshold, with that money then being redistributed to the well-mannered – in line with the idea of ​​a “luxury tax” that Ceferin has advocated in the past.

Serious or repeated violations will lead to sporting penalties, which Traverso says could range from bans on the use of certain players and limits on team sizes, to points deductions in the new Champions League group stage to be introduced from 2024.

He added that there are ongoing discussions about the possibility of teams being relegated from one European competition to another, for example from the Champions League to the Europa League.

FFP’s fate in its current guise was sealed when Manchester City successfully appealed in 2020 to the Court of Arbitration for Sport (CAS) to overturn a two-year ban on European competition.

Abu Dhabi-owned City has been accused of deliberately inflating the value of the revenues of Emirati sponsors Etisalat and Etihad Airways to comply with FFP regulations.

State clubs like City and Qatar-backed PSG may still be in a position to spend much more than their rivals, despite the new 70 per cent rule.

Meanwhile, traditional giants like Barcelona and Juventus – two of the main backers of the failed European Super League project – still saw their ambitions limited by the need to deleverage.

The new rules come at a time when top football is dominated by a smaller and more select group of clubs than ever, but Traverso said improving the balance of competition required more than just financial measures.

Now that UEFA has announced its new fiscal rules after months of deliberations, he said the agency would “open a new chapter and take different measures”.