The new financial fair play rules will be adopted by the UEFA governing body on Thursday. They will bring a new framework to the share of salaries in the budget, while doubling the authorized deficit.
Financial Fair Play (FPF) will be renewed from UEFA on Thursday. The European confederation will switch to a new system after two dark years (2020, 2021) due to the Covid-19 crisis. The new budget rules were also designed to contain the rise in wage costs amid the crisis, twelve years after the system was introduced. Limiting the deficit of clubs helped clear the accounts, but it also revealed its limits: it is easily thwarted, while the pandemic has cost European football seven billion euros in two seasons, while its vigilance worsens the fate of weakened teams. State-owned clubs with almost unlimited funds, especially Manchester City and PSG.
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. The main change is philosophical: it is no longer a question of demanding the balance of the books, but of limiting spending on salaries, transfer fees and agency commissions, which has long been defined as football’s fundamental economic problem.
An advantage for PSG in the mbappé file
Concretely, UEFA will double the allowable gap in three years (to €60m), but their clubs will pay their wage bills 90% of their revenue in 2023-2024, then 80% in 2025-2026, and finally 70%. It will force limit with i. season, until current contracts expire. According to L’Equipe, this gradual decline could serve PSG, especially in their desire to extend Kylian Mbappé for another two seasons. The potential new salary of the French star could be more easily factored into the income percentage in 2023-24.
This mechanism is a weakened form of “salary cap” that is very difficult for UEFA to import: the 55 federations it oversees comply with 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.
Two more years of “flame”
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, demotion from one European competition to another, and penalty points during “mini-champions” that will replace the group stages from 2024.
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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. UEFA also went home as ECA: 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.