UEFA is working on a complete overhaul of its budgetary and Financial Fair Play (FFP) rules which will disappear any possible restraints on spending amid the financial crisis caused by COVID-19.
The Football Observatory at the International Centre for Sports Studies in Neuchatel Raffaele Poli said, “What they’re saying is, put in all the money you want,” adding, “it now seems clear this relaxation will not be temporary. UEFA is working on a complete overhaul of its budgetary rules.”
Assessments of the 2020 and 2021 fiscal years would be examined together rather than separately. Clubs are also expected to be able to register losses over the 30 million euro limit.
Essentially, with strapped clubs desperate, UEFA sensed it no longer necessary to prevent investment.
The major change in store for the nouveaux riches of the European game is not a cap on wage spending, but instead the likely lifting of any sporting punishment — bans from the Champions League or from signing players — for going over the limit.
According to the new UEFA rules it is set to introduce a “luxury tax”, for every euro a club goes over the limit, it will have to pay into a pot and that money will be redistributed to other clubs.
Slovenian lawyer and football administrator Aleksander Ceferin have warned that the proposed new rules are not likely to improve “competitive balance” adding that It would not stop the biggest trophies from being shared only among a very select few elite clubs.
According to Poli, limiting wage spending to a percentage of revenues will simply “entrench the existing hierarchy” as it will still only be the very richest teams that can attract the best players.
Indeed, the luxury tax is likely to overturn the balance even more in favor of those backed by oil or gas-rich states, or oligarchs, for whom there will no longer be any questions about possible breaches of FFP rules.
New Rules and PSG, City
The football giants Paris Saint Germain and Manchester City are going to advantage of the new rules the most as the restraints of enormous spending will disappear.
The decade-old story of PSG, City, and Financial Fair Play began when in 2010 Qatar Sports Investments purchased PSG, while Abu Dhabi’s Sheikh Mansour bought City in 2008 and in 2010 UEFA introduced FFP in response to a debt crisis that was submerging clubs across the continent.
FFP meant clubs could not lose more than 30 million euros ($35.2m) over a three-year period if they wanted to play in a European competition.
Rivals of PSG and City have consistently asked how the duo can be respecting the rules when they spend as much as they do, most notably when the French side splurged the two biggest transfer fees in history to sign Neymar and Kylian Mbappe in 2017.
PSG was not punished then, while City was handed a two-year Champions League ban by UEFA in February 2020 for FFP breaches when they were found to have overstated revenue from sponsorship between 2012 and 2016.
Yet the Court of Arbitration for Sport overturned that ban. Most alleged breaches, the court said, “were either not established or time-barred”.
That ruling showed the limits of FFP and UEFA responded to the economic crisis caused by the coronavirus pandemic with total projected losses of over eight billion euros by relaxing the rules.