Paris Saint-Germain’s signing of Lionel Messi has re-ignited a debate over the effectiveness of UEFA’s Financial Fair Play (FFP) rules, which were designed to prevent clubs from spending excessively. They made sure of this by making it an obligation for teams to break even and keep wages and transfer fees in line with revenues, however, many footballing experts have questioned the implementation of this when UEFA, on multiple occasions, has failed to hold clubs accountable for crossing FFP limits.
THE BREAK-EVEN RULE
The Break-Even rule, initiated in 2012, enforced conditions to be met by clubs before they could shop in the transfer market. The bottom line was- clubs cannot spend more than what they generate excluding any costs on stadium infrastructure and training facilities. This is measured over 3 years and any club failing to keep costs below their revenue would face appropriate punishments across a spectrum of light warnings to exclusions and disqualifications from competitions.
CLUBS BREAKING REGULATIONS
In 2010, it had been reported that almost 20 clubs had broken the FFP Break-Even rule, including billionaire-owned clubs Manchester City and Paris St-German (PSG), who have dominated the headlines for a long period of time for excessive and unfair spending.
Since 2008, Manchester City have spent over a billion Euros on players alone: excluding their annual salaries. They were punished with a £60 million fine and a few years later were found in court for breaking the same rule again, for which they won the case and were free from any punishment.
Some European clubs have been spending so much that it statistically makes no sense. Are some clubs really profiting in excess of £100 million a season to be spending the way they are? Is there complete transparency in clubs’ financial statuses and data reports?
The truth is- yes. Despite the senseless spending of a few clubs, it is all being done whilst adhering to the rules and regulations set by UEFA. The rule limits clubs to only spend what they earn and no club that has spent excessively has a negative net spend. The excess funds have come from the personal savings of club owners as the rule does not consider money input from an external source. From this perspective, owners can invest unlimited amounts of money as long as it is not from the club’s savings and so the money spent by the club will never exceed the money earned by the club.
THE MESSI MOVE
Messi’s move to PSG was the talk of the transfer window this summer and it might have made the record to be the best transfer window in the history of football for an individual club, but their spending on salaries will fly in the upcoming seasons. Despite some great business with multiple free signings; Wijnaldum, Ramos, Messi, Donnarumma, and Ashraf Hakimi for €60 million, costs will increase significantly with 5 new world-class players. Messi alone will take an annual salary of €63 million, excluding performance-based bonuses, which would usually break FFP rules, but due to the French league’s television rights deal collapsing, there is no obligation for clubs to break even.
Since the start of the global pandemic, UEFA softened all FFP rules to help clubs cope with financial shock, including temporarily scrapping the Break-Even rule. This allowed teams like Manchester City, PSG, Manchester United, and Chelsea to spend in excess of their revenue without receiving any punishment.
Football expenditure has increased so much that the effectiveness of the Break-Even rule is under reconsideration. The rule may be suspended due to its flawed application and especially after UEFA being defeated on multiple occasions in court against clubs that are spending unfair amounts and hiding behind loopholes.
UEFA’s director of financial stability, Andrea Traverso, described these FFP rules as ‘purposeless’ and said ‘new changes are being analysed for improved fair play rules’.