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Financial Fair-Play in Football becomes more specific

Published  2 MIN READ

Next season, the economic control of football club’s members of UEFA will be reinforced. UEFA has decided to take 5 new measures to ensure a better respect of fair financial principles by all the club’s engaged in European competitions. The first provisions have been enforced 7 years ago. According to UEFA, they have been successfully implemented and keep bearing fruits. For example, the total net losses of all major European clubs have been reduced from 1.7 bln EUR to 269m EUR. However, it was not sufficient to guarantee the fair-play from all club’s. The UEFA supervisor will now have 5 new weapons to punish the worst students of the class-room.

  1. Control of transfers balance: purchase balance compared to sale balance must be < -100m EUR. If not, the club could be forced to sell one or more players at next mercato.
  2. Sales of players better regulated and controlled: when 2 club’s have common shareholder, or one is the shareholder of the other, the transfers between them will be closely scrutinized and controlled to respect a principle at arm’s length and to avoid arrangements to rebalance finance between parent company and daughter or between two daughters.
  3. Publication of annual reports: all clubs must publish their financial results once a year and be more transparent. By the way, new IFRS rules will be applied by all football clubs. This new adapted standard elaborated with PwC was supposed to be released by end of May 2018. This could bring more financial comparability between clubs.
  4. Transparency on player’s agents: UEFA wants to limit fees paid to agents. These commissions must be published to guarantee to anyone to check what has been paid to an agent when he transfers a player to anther club. It was far from clear and transparent so far.
  5. Indebtedness controlled: the deficit must be below a certain predefined threshold and EBITDA / Net Debt must be below 7 times to prevent bankruptcy and risks of hiding and pushing forward problems.

As we can see, all these provisions will help reaching a higher financial transparency. It will also enable better and more comparable financial figures. Sport results are key and must remain the ultimate objective of each club but not at any price. We can imagine that some large teams will face serious problem next year to respect this new financial discipline or they will be simply ejected of the European competitions.

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