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Tuesday, March 28, 2023

UEFA Adopts New Financial Model to Limit European Clubs Spending

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European football’s governing body UEFA on Thursday approved new financial regulations to replace its existing Financial Fair Play (FFP) rules to limit European clubs spending on wages and transfers.

UEFA decided to overhaul the FFP rules that were introduced in 2010 to reduce spiralling debts among clubs across the continent.

UEFA president Aleksander Ceferin said on Thursday: “UEFA’s first financial regulations, introduced in 2010, served its primary purpose. They helped pull European football finances back from the brink and revolutionised how European football clubs are run.

Read Also: Manchester City’s Appeal Against European Ban set to Begin

UEFA Financial Fair Play (FFP) rules

“However, the evolution of the football industry, alongside the inevitable financial effects of the pandemic, has shown the need for wholesale reform and new financial sustainability regulations.

“UEFA has worked together with its stakeholders across European football to develop these new measures to help the clubs to address these new challenges.

“These regulations will help us protect the game and prepare it for any potential future shock while encouraging rational investments and building a more sustainable future for the game.”

Financial Fair Play’s limitations had been exposed by the emergence of state-held superpowers like Manchester City and Paris Saint-Germain.

“The biggest innovation will be the introduction of a squad cost rule to bring better cost control concerning player wages and transfer costs,” UEFA president Aleksander Ceferin said at a press conference in Nyon, Switzerland following a meeting of the body’s executive committee.

UEFA will now allow clubs to report losses of 60 million euros ($65.5m) over three years rather than 30 million euros previously, and the permitted figure will even reach 90 million euros for a club “in good
financial health”.

However, that relaxation of the rules is combined with the new ceilings on wage spending.

There was never any possibility of bringing in a specific salary cap like those used in North American sports because UEFA has 55 member
countries with well over 1,000 clubs and must contend with European Union and national labour and competition laws.

Yet under UEFA’s new regulations clubs will be forced to limit spending on player and staff wages, transfers and agents fees to 70 percent of total revenues by the 2025/26 season.

The ceiling will drop as current contracts expire: 90 percent of club income in 2023/24, followed by 80 percent the season after and then to 70 percent.

“Breaches will result in predefined financial penalties and sporting measures,” said Ceferin.

Clubs who break the rules could be hit with transfer bans, loan restrictions, demotions from one European competition to another and points deductions in the Champions League.

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