Ffp New Rules

Ffp New Rules

It is called the Financial Viability Regulation and replaces the FFP, which came into effect in 2010 and had its limitations in relations with state clubs such as Manchester City and PSG. The new regulations, which are expected to come into force from June 2022, were brought forward after UEFA admitted new rules were needed as clubs suffer unprecedented losses due to the COVID-19 pandemic. UEFA`s new financial sustainability rules came into force in June 2022. They are based on three pillars: solvency, stability and cost control. In response to the COVID-19 pandemic, the new rules allow clubs to lose €60 million over three years, up from €30 million previously. However, the new rules also introduce a spending cap (the so-called “team expense ratio”) for salaries, transfers and agent fees to 70% of a club`s total revenue by 2025-2026. Clubs are also required to settle outstanding debts within certain deadlines. In addition, the new rules require that all transactions have fair value. Until now, this requirement has only applied to related party transactions. There are also new penalties for non-compliance. For example, failure to meet the squad cost requirement may result in a proportionate fine, and failure to comply with the solvency requirement on liabilities may result in clubs being excluded from future competitions. The football winnings rule allows clubs to lose up to €60 million over three years, while financially strong clubs – according to UEFA guidelines – are allowed to lose an additional €10 million per year.

Under FFP rules, former clubs were only allowed to record losses of up to €30 million over three years. Recognising the social and cultural importance of their clubs, the Dutch authorities invested more than €300 million in football between 2006 and 2011, mainly in the form of indirect grants and loans to clubs such as FC Utrecht, FC Groningen, FC Twente, Vitesse and ADO Den Haag[39], despite the fact that this aid is contrary to EU rules. The first was that teams booked players in JVM exchanges to cook the books. Here`s how it works. Let`s say you exchange a player (with or without money) for a player from a club. To comply with FFP rules, you can bypass the player`s value to make a significant FFP profit if only a small amount of money or no money has changed hands. This Forbes article explains how FC Barcelona and Juventus have used this system to their mutual advantage. This new FMV rule should eliminate this problem. Fifty percent of clubs are losing money and the trend is upwards. This downward spiral had to be stopped. They spent more than they earned in the past and did not pay their debts. We don`t want to kill or hurt clubs; On the contrary, we want to help them in the market.

The teams participating in our tournaments unanimously accepted our principles. Living within one`s own means is the basis of accounting, but it has not been the basis of football for years. Owners ask for rules because they can`t implement them themselves – many of them have had to shovel money into clubs and the more money you put into clubs, the harder it is to sell at a profit. [1] UEFA has agreed on predetermined financial and sporting sanctions if clubs do not comply with the rules. In the event of a breach of the squad cost rule, clubs could be forced to play with a smaller team and ban the use of certain players signed during the evaluation year. UEFA has also added the right to deduct points if clubs fail to play by the rules. UEFA also wants UEFA Champions League teams to be relegated to the UEFA Europa League if they are not met, but the rule has not yet been approved. At the end of each season, the Bundesliga rule stipulated that clubs had to apply for a licence from the German Football Association (DFB) in order to participate again the following year; Only when the DFB, which has access to all transfer documents and accounts, is satisfied that there is no risk of insolvency does it grant the licence. [ref. needed] The DFB has a system of fines and point deductions for clubs that don`t play by the rules, and those in the red can only buy a player after selling one for at least the same amount.

In addition, no one may own more than 49% of a Bundesliga club. UEFA, Europe`s largest football association, has made groundbreaking changes in the recent past and maintained the standard last week as the association decided to replace its controversial Financial Fair Play (FFP) rules with new rules. For several years, clubs in the other two major European leagues, France`s Ligue 1 and Germany`s Bundesliga, were subject to regulations that were no different from FFP rules. UEFA`s Executive Committee has adopted new rules on financial sustainability to replace Financial Fair Play from June this year. The rules are based on three pillars: the non-overdue rule, the football winnings rule and the team cost rule. The “no overpayment” rule means that club accounts are reviewed quarterly to ensure all invoices are paid on time. Only a club`s expenses related to transfers, benefits (including salaries), transfer amortization, financing costs and dividends are recognized in revenues from goals, television revenues, advertising, merchandising, disposals of tangible assets, finances, player sales and prizes. Money spent on infrastructure, training facilities or youth development is not taken into account.

[51] The legislation currently provides for eight different sanctions against clubs that break the rules, in order of seriousness: reprimands/warnings, fines, deduction of points, withholding of income from a UEFA competition, prohibition of registering new players in UEFA competitions, restrictions on the number of players a club can register for UEFA competitions, Disqualification from an ongoing competition and exclusion from future competitions. UEFA`s new rules are based on “three pillars”: solvency, stability and cost control. The old rules stipulated that only related party transactions had to have fair value. However, the new rules stipulate that all transactions must have fair value. As a result, less weight and time will be spent determining related-party transactions – all of which must be at fair value. Despite the delay, ECA president Karl-Heinz Rummenigge, who represents Bayern Munich, called the new rules a “great success” and pointed out that 93 clubs from 53 countries present at the ECA General Assembly in Manchester had accepted the proposals. He said: “After only two years of existence, the European Club Association, together with UEFA, has succeeded in taking steps that will shape the future of European club football as a more responsible and ultimately sustainable business.” [3] Under the current FFP rules, which will be replaced, clubs can only spend €5 million more than they earn over a three-year period. Clubs should be allowed to spend 90% of their revenue in 2023/24 and 80% in 2024/25 before the rules come into full force in 2025/26. In recent months, UEFA has published details of its new Financial Stability and Club Licensing Rules (FSCLR), which replace the Financial Fair Play rules killed by the pandemic. We will examine the content and possible impact of the new rules, but a brief assessment of the purpose and effectiveness of the now-defunct FFP rules is in order.

Sanctions are progressive, so if a club continues to break the rules, the penalties will become more and more severe. First and second offenses are likely to result in fines, subsequent and more serious violations will result in sporting sanctions. UEFA also said it would closely monitor commercial contracts signed by clubs to ensure they are genuine contracts with third parties that pay their fair value. UEFA will assess fair value and use external agencies to determine whether transactions are carried out at real market prices. Liverpool found themselves in a similar position after being bought by Americans Tom Hicks and George Gillett in February 2007. Although the club was exposed to less debt than Manchester United, on 31 July 2010 it suffered negative equity of £5.896 million, while its holding company, KOP Football Limited – the entity that carried the debt – had negative equity of £111.88 million. leaving the club on the verge of bankruptcy and had to be put up for sale. Hicks and Gillett placed an unrealistic value on the club in the hope of making a huge profit, which earned them heavy criticism in the House of Commons as “active players who drain the club with their greed”.

[47] Finally, Liverpool was acquired by a new US consortium, but as leveraged buyouts are permitted under normal stock exchange rules, they are not covered by FFP rules. [48] The new rules, presented at the UEFA Executive Committee meeting in Nyon, Switzerland, on Thursday, are called the Club Financial Viability and Licensing Regulations (FSCLR). The stability part seems to be linked to the new balance sheet and deleveraging rules. Despite the demand for stability, the rules actually allow clubs to suffer more losses than under FFP. Under the FFP, one solvent club was allowed to lose €30 million over three years, and this share has now been increased to €60 million over three years under the FSCLR. A “financially healthy” club can lose another ten million over the same period. It is difficult to predict how these periods will unfold in such early days. They should help to iron out some of the problems associated with FFPs on the competitiveness side. However, one should never underestimate the creativity of teams to bend the rules when it is to their advantage.

You can also expect deep pockets to try to invest as much money as possible before they are fully in effect to “restart” the pump for several years, as some clubs did when they knew FFP was coming. One area of concern for English clubs is the practice of third-party ownership. [42] Under this model, high-net-worth companies or individuals buy a percentage of a young gambler in the hope that if their value increases in the future, they will make a profit based on their percentage.

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