Most of the owners were in support of the idea with the expection of Manchester City, Fulham, Everton and West Bromwich Albion opposing the break-even rule claiming it will prevent clubs from operating at a loss and place the English Premier League on the pole position as the best footballing League in the world and also making it competitive.
Many football followers are ignorant of what this UEFA Financial fair play role is all about. So soccer4life takes a closer look at the unfamiliar concept.
The UEFA Financial Fair Play Regulations, first agreed in principle in September 2009 by the Financial Control Panel of football’s governing body in Europe (Union of European Football Associations – UEFA), were brought in to prevent professional football clubs spending more than they earn in the pursuit of success and in so doing getting into financial problems which might threaten their long term survival.
Introduced amid concern at the heavy spending of a number of professional clubs across Europe, it was hoped that the regulations would eventually lead to a more ‘level playing field’ by preventing clubs with very wealthy owners who make substantial cash gifts to their club from gaining an unfair advantage over other clubs who are run on a more sustainable business model, and in so doing encourage lower levels of spending. The FFP Regulations provide for sanctions to be taken against clubs who do not spend within a set budgetary framework over several seasons.
The concept has also been supported by the entire football family, with its principal objectives being:
• to introduce more discipline and rationality in club football finances;
• to decrease pressure on salaries and transfer fees and limit inflationary effect;
• to encourage clubs to compete with(in) their revenues;
• to encourage long-term investments in the youth sector and infrastructure;
• to protect the long-term viability of European club football;
• to ensure clubs settle their liabilities on a timely basis.
These approved objectives reflect the view that UEFA has a duty to consider the systemic environment of European club football in which individual clubs compete, and in particular the wider inflationary impact of clubs' spending on salaries and transfer fees.
In recent seasons, many clubs have reported repeated, and worsening, financial losses. The wider economic situation has created difficult market conditions for clubs in Europe, and this can have a negative impact on revenue generation and creates additional challenges for clubs in respect of the availability of financing and day-to-day operations. Many clubs have experienced liquidity shortfalls, leading for instance to delayed payments to other clubs, employees and social/tax authorities.
Therefore, as requested by the football family, and in consultation with the football family, UEFA is introducing sensible and achievable measures to realise these goals. They include an obligation for clubs, over a period of time, to balance their books or break even. Under the concept, clubs cannot repeatedly spend more than their generated revenues, and clubs will be obliged to meet all their transfer and employee payment commitments at all times. Higher-risk clubs that fail certain indicators will also be required to provide budgets detailing their strategic plans.
The financial fair play measures involve a multi-year assessment, enabling a longer-term view to be formed and within the wider context of European club football. They reach beyond the existing UEFA club licensing system criteria that are primarily designed to enable an assessment of a club's financial situation in the short term, and is primarily administered by the governing bodies in each UEFA national association.
On announcing the new legislation, UEFA President Michel Platini said,
Platini went on to say that the measures were backed by the majority of football club owners, and that an independent panel would be set up to judge whether clubs had broken the rules.Fifty per cent of clubs are losing money and this is an increasing trend. We needed to stop this downward spiral. They have spent more than they have earned in the past and haven't paid their debts. We don't want to kill or hurt the clubs; on the contrary, we want to help them in the market. The teams who play in our tournaments have unanimously agreed to our principles…living within your means is the basis of accounting but it hasn't been the basis of football for years now. The owners are asking for rules because they can't implement them themselves - many of them have had it with shovelling money into clubs and the more money you put into clubs, the harder it is to sell at a profit.
The 2011–12 football season is the first during which the regulations apply; The ultimate penalty is disqualification from European competitions. Other possible penalties originally included fines, the withholding of prize money, and transfer bans. As of early 2012, however, UEFA has had to shelve plans to ban player transfers following legal advice, and it remains to be seen if other threatened sanctions will be taken in practice.
On 20 March 2012 it was announced that UEFA and the European Commission had signed a joint agreement intended to prevent clubs using the EU legal system to challenge the validity of FFP, for example by claiming that it conflicted with anti-competition legislation. This was an important step because for clubs in countries which are part of the EU, the European Court is the highest authority (above even a nation’s own supreme court) and the ultimate channel by which FFP might be challenged legally.
The European Union - who acknowledged the unique "specificity of sport" in the Treaty of Lisbon - policy on sport stated "good governance in sport is a condition for the autonomy and self-regulation of sport organisations". The vice-president of the EC and the Commissioner for Competition Joaquin Almunia confirmed that the existing FFP rules were both valid and in accordance with European legislation, saying; "I fully support the objectives of UEFA's FFP rules as I believe it is essential for football clubs to have a solid financial foundation."
UEFA president Michel Platini said: "Our statement confirms that UEFA's Financial Fair Play regulations are fully consistent with EU State aid policy. The rules will protect the interests of individual clubs and players as well as football in Europe as a whole"
UEFA general secretary Gianni Infantino said: "Let us be clear, this is not a new law … if anyone was thinking of filing some sort of complaint saying FFP somehow restricts European competition law they would have to file it to the Commission. This is a big milestone in the enforcement of the break-even principle.
Though the UEFA Financial fair play has its good part, it hasn't gone free of fears and criticism. Many wonder if this rule will still help maintain football as a competitive and lucrative money market.
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