Soccer's governing bodies implement financial fair play regulations to ensure clubs are responsibly managing their funds and avoiding spending more than they generate.
Without these rules, which are similar to salary caps in other sports, clubs run the risk of overextending themselves, incurring punishment and even threatening their existence with potential relegation.
Here's a look at the financial fair play regulations.
When was financial fair play introduced?
UEFA, the governing body of European soccer, first developed the structure for financial fair play in 2009 after discovering more than half of the 655 clubs under its jurisdiction suffered financial losses over the previous year. UEFA first implemented the rules during the 2011-12 season.
What are UEFA's key financial fair play or 'financial sustainability' regulations?
- Clubs are required to break even during a reporting period, which is calculated as the difference between relevant income and relevant expenses. This ensures clubs are utilizing cost control and aren't losing more than they're able to make up in revenue.
- Expenses on infrastructure, training facilities or youth training are not included.
- Clubs must balance their books over the course of three years.
- Clubs are allowed to spend no more than 70% of their total revenue on wages, transfers and agents' fees during a reporting period.
- Club owners are allowed to use their own money to help offset costs and add monetary support. However, UEFA will launch an investigation if club owners put money into their club through a sponsorship deal with a company the owners are related to.
What are the Premier League's key financial fair play or 'profit and sustainability' regulations?
- Clubs need to ensure they aren't recording losses greater than £105m (or about $137 million) across their combined accounts of the previous three seasons.
- £90m (or about $117 million) must be covered by "secure funding," meaning a club can lose up to £15m (or about $19.5 million) of its own money every three years. Any loss above that figure but below £105m must be guaranteed by the club's owners. If it isn't, or the club exceeds the £105m limit, a club is in breach of the profit and sustainability rules.
- Clubs are required to pay transfer fees and taxes on time.
- Clubs must file reports annually and disclose any payments made to agents.
What are possible punishments for failing to adhere to the financial fair play regulations?
- Reprimand or warning
- Fine(s)
- Deduction in points
- Withholding of revenue from a UEFA competition
- Prohibition to register new players for UEFA competitions
- Restrictions on how many players a club can register for UEFA competitions
- Disqualification from a competition already in progress
- Exclusion from future competitions
Which clubs have been penalized for violating financial fair play regulations?
Eight clubs, including Paris Saint-Germain , Inter , AC Milan , Juventus and AS Roma , were fined in 2022 for failing to comply with UEFA's requirement to break even.
Manchester City of the Premier League is currently being charged with 115 alleged breaches of the league's profit and sustainability regulations. Manchester City strongly denies the allegations and has filed a lawsuit against the Premier League.
The 2023-24 Premier League season saw a number of teams violate the rules and be hit with point deductions, including Everton , which received a 10-point deduction. It was later reduced to six points following an appeal.
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