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Russell Berrisford

Russell Berrisford

Russell’s support of Derby County eventually led him to leave the country. He has lived in Canada since 2007 and currently writes about soccer for The Vancouver Sun.


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Understanding UEFA’s Financial Fair Play Rules

Written by on February 14, 2011 | 10 Comments »
Posted in General, Money Game

Commentating on a recent Premier League game Efan Ekoku offered the assertion that the new UEFA Financial Fair Play Rules were so complicated that they “couldn’t be explained.”

Now it could be argued that part of the job of being a pundit on television is to actually explain things to the viewers but what if Efan was right? Are the new rules so labyrinthine that no mortal (or certainly no non-accountant) could possibly comprehend them.

It is true that the initial document runs to many pages, but the language in there could in no way be described as overly technical, and the whole package can be summed up in the simple phrase “clubs need to ensure that they do not repeatedly spend more than their generated revenue”.

Now it has to be admitted that the actual accounting procedures of clubs will require close analysis as there are bound to be those that try to play the system, but the concept itself is actually remarkably easy to comprehend and, dare I say, explain.

It still seems to be the conventional wisdom however that the regulations will be too difficult to actually implement.

For instance, I’ve heard it asked that since sponsorship is one of the figures that counts towards income then what is to stop, for example, a Russian oil company sponsoring Chelsea for a stratospheric amount each season?

Well that kind of dodge has been provided for. The regulations are quite clear that any transactions of such a type must meet the “fair market value” which will be established by UEFA looking at similar deals and establishing what the going rate is, so trying to play the system in this way simply won’t fly.

Neither will trying to include non-football related income into the equation work and whilst it will certainly be a busy time for the UEFA accountants there is nothing in the new rules that defies logic or reason.

My own expectation is that there will undoubtedly be clubs that try to bend the rules, and there may even be a few legal cases to test their validity (or at least delay their implementation) but once a tipping point of clubs and owners come to the conclusion that these new rules not only increase their chances of competing with their rivals but also drive down their overall costs, the system will soon also be in place in the European leagues.

The undeniable truth is that if clubs have a desire to play in UEFA backed competitions in the coming years then they will need to take these regulations very seriously indeed.

It also wouldn’t be a bad idea for certain people in the media to spend a little time studying them as well, instead of giving the impression that they have no relevance to the fans at home and in the stands. After all we may all turn into bar room accountants in the coming years.


10 responses to “Understanding UEFA’s Financial Fair Play Rules”

  1. […] This post was mentioned on Twitter by Cindy Brown, bobbysoccerrep. bobbysoccerrep said: http://tiny.cc/bejge UEFA Financial Fair Play – so easy to understand that even…..Russell Berrisford lays it all out for you […]

  2. Gillian says:

    This is very clearly stated. Thanks for helping me understand the fair play rules. I’m a new soccer fan, so this kind of post helps me understand the financial ins and outs of the game.

  3. Russell Berrisford says:

    Gillian-thanks. Obviously any accountants will point out that there are many possible complications, but for the average fan the basic rules and penalties should be enough to know for now.

  4. Bryan says:

    Russell – Do you think UEFA would really kick any team out?
    Don’t think it will happen myself.

  5. Russell Berrisford says:

    Bryan- if all the other clubs comply then yes I can see them pressuring UEFA to throw out an individual club.

    If a number of clubs fail to meet the criteria then it will be much harder to enforce.

  6. Gus Keri says:

    Russell:

    My understanding that the EC sees soccer clubs as a business. Can they stop these besinesses from investing? If a super rich individual wants to pour his money into a club, as investment and not a loan, can they stop him?

    It seems to me that these changes were meant only to stop clubs from living on a borrowed money.

  7. Gus- I don’t think that UEFA would allow that. They recently issued a statement about Chelsea’s recent transfer spending saying;

    “The financial fair play rules do not prevent clubs from spending money on transfers, but require them to balance their books at the end of the season.”

    Which would seem to preclude a wealthy investor simply pouring money into a club.

    Incidentally, anybody who wants an incredibly detailed look at how Chelsea could actually still meet the Fair Play requirements should check out “The Swiss Ramble” blog which indicates that even they, despite appearances, are taking the new rules seriously.

  8. Gus Keri says:

    Russell:

    I understand that and this is why Chelsea is pouring a lot of money before the application of the new rules.

    But what I am trying to say is: We might witness a legal fight that the new rules contradict the EC treaty which looks at clubs as a business where you can’t limit spending or investment.

    I am just speculating.

  9. Gus- I think you are right on that. I wouldn’t be surprised if we do see a legal challenge.

    I’m guessing UEFA would argue that they are not stopping anybody doing business just setting criteria for their own competition.

    In the same way that they can ban clubs or countries for crowd trouble

  10. Jason says:

    To Gus, there are provisions for unlimited investments is such things as stadium renovations and youth development which will fall outside of the regulations. So in some situations, the rich owners will still hold an advantage.

    Russell, how do you feel about the regulations actually entrenching the current rich clubs? Take a club like Aston Villa who came in 20th in the recent Deloitte Money League rankings and 7th of EPL teams. How can they ever bridge the gap between their revenue of 110million and the likes of MUFC 350mm, Arsenal 274, Chelsea 256, Liverpool 225?

    Won’t these regulations lead to a cycle of the clubs that make the CL year on year increasing their dominance over non-CL teams? There is already a pretty big gap but I don’t think the UEFA FFP will help.

    Have you heard of any good ideas to increase revenue parity amongst clubs throughout Europe?

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