Will clubs take matters into their own hands over UEFA’s FFP enforcement?

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The public interest in the financial dealings of Europe’s football clubs is steadily increasing as UEFA continues to monitor spending to track compliance with its financial fair play (FFP) rules. However, many are doubting UEFA’s appetite to impose meaningful sanctions where clubs fail to satisfy FFP. In particular, there is concern that rather than exercising its powers to ban clubs from participating in European competition UEFA will instead enter into ‘settlement agreements’ with clubs that can show that their figures are moving in the right direction. Last week, Karl-Heinz Rummenigge, chairman of the European Club Association and chief executive officer of Bayern Munich, emphasised the importance of UEFA enforcing FFP to the letter and singled out Paris Saint-Germain as a side that is unlikely to be compliant with FFP. Manchester City’s annual report is also likely to be of interest to both UEFA and City’s Premier League rivals. Should UEFA adopt a lenient approach, those decisions are likely to prove very unpopular with clubs pushing for European qualification, and those clubs may well have the legal means to go with the strong incentives to challenge such decisions.

FFP introduces a ‘break-even’ requirement, requiring clubs’ ‘football-related’ income to exceed its ‘football-related’ expenditure. It also allows a transitional period, which permits clubs to make a loss of around £37m over the 2011-12 and 2012-13 seasons. UEFA has indicated that failure to meet this threshold will lead to expulsion from the Champions League or Europa League, should the relevant club qualify for either competition in the relevant year. Both PSG and Manchester City will be heavily reliant on income from multi-million-pound sponsorship and image rights agreements in order to have a chance of complying with the rules, and will need to persuade UEFA that the income from such transactions is indeed football-related…

Click on the link below to read the rest of the Taylor Wessing briefing.