UEFA reforms financial fair play by trying to limit salaries

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After months of debate, UEFA needs to adopt at noon an overhaul of financial fair play (FPF), a system introduced in 2010 to reduce the indebtedness of European clubs that are constantly lured by financial single superiority to quench their thirst for trophies.

In twelve years, this limiting of club deficit helped clear the accounts, but it also exposed its limits: the pandemic has cost European football nearly 7 billion euros in two seasons, while its diligence worsened the fate of weakened teams. Manchester City and PSG are ahead, while they are easily thwarted by state-owned clubs with almost unlimited funds.

In order not to precipitate a wave of bankruptcies, UEFA has therefore relaxed its assessment of deficits since spring 2020, and subsequently announced a major overhaul of the financial rules imposed on clubs.

Weakened salary cap

The main change is philosophical: it is no longer a matter of demanding balances of accounts, but of limiting spending allocated to salaries, transfer fees and surrogacy commissions, long defined as football’s fundamental economic problem.

“This is a signal to investors: ‘You can inject new money, but you shouldn’t burn everything in hiring and salaries’,” summarizes Raffaele Poli, head of the CIES Football Observatory in Neuchâtel.

According to him, “even the big clubs fall victim to this wage inflation and feed it” and will be able to slam the new rules “in the face of excessive claims” from players and their managers.

Concretely, UEFA will double the allowable gap (to 60m euros) in three years, but its clubs will pay their wages 90% of their income in 2023-2024, then 80% in 2025-2026 and finally 70%. will force it to limit. season, until current contracts expire.

It is no longer a matter of balancing accounts, but of limiting expenditure allocated to salaries, transfer fees and agency commissions.

This mechanism is a weakened form of the “salary cap” – a key rule for American hockey, football or basketball franchises, very difficult for UEFA to import: the 55 federations it controls follow various social and accounting rules and there is no centralized negotiation. . If they don’t, offenders will face predetermined fines based on the extent of the border.

Old victories and new riches

“Investors gain predictability: If they choose to spend beyond the salary cap, they can measure their budget,” says Raffaele Poli. Launched last year by UEFA President Aleksander Ceferin, this “luxury tax” will be redistributed among more virtuous clubs, even if the expected increase may seem modest for each of these beneficiaries.

In addition, the UEFA project provides recruitment bans, credit limits, demotions from one European competition to another, and penalty points during “mini leagues”, which will replace the group stages from 2024.

The articulation of these measures with financial sanctions remains to be clarified, however, a key issue as sports sanctions remain the main threat to European football’s new riches. Both UEFA and ECA have their fingertips: financial fair play shouldn’t affect the concentration of trophies much.

Still, the new rules could weigh on the battle between historic leaders and giants with unlimited resources, especially as the gradual lowering of the salary cap would allow the latter, including PSG, to burn for two more seasons.

On the other hand, legendary clubs that were in the red financially like FC Barcelona or Juventus Turin could see their ambitions curtailed by the need to gradually reduce their debt.