The Financial Fair Play system in place across football in Europe today was set up by UEFA (European football’s governing body) and its president Michel Platini in 2009, although it did not come into force until the start of the 2011-2012 season. Since its introduction, it has altered the way football clubs operate within the industry, with the idea that the sport is a fairer, more equal one.
In recent years, the sector has experienced a deficit due to the high losses of clubs because of their lack of financial viability. However, today, the sports industry generates 414,000 jobs, 30 % more than the average of all other sectors in the country.
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Financial Fair Play is a regulation that aims to ensure that no football team spends more than it receives. Its function is to regulate, monitor and improve the economic and financial capacity of football clubs.
Basically, its task is to take the total income of each club and subtract costs and debt. The remaining figure is the amount a club can spend on salaries and other investments.
UEFA applies Financial Fair Play to clubs participating in the Champions League, Europa League and Conference League. In this way, each institution has to prove that it does not owe any debts to its employees. This measure is intended to achieve the following:
Financial Fair Play (FFP) therefore seeks to end the economic imbalances of clubs and improve their financial health.
If it is not complied with, clubs can receive sanctions in the form of financial fines, depending on the type of infringement: minor, serious or very serious. In addition, more serious measures may be applied, such as relegation of the club, disqualification from the current competition, exclusion from future competitions or a ban on recruitment, among others.
In Spain, in addition to UEFA, the Liga de Fútbol Profesional (LFP) has established its own rules regarding the regulation of spending in order to avoid the insolvency of clubs, and thus try to ensure that a club spends according to what it earns. This regulation also advocates that monetary infringements should be financially sanctioned, and those of a legal or sporting nature should also be legally corrected. So, we see that it tends to be stricter than UEFA itself.
For 2023, a new system has been implemented to replace the previous one, with more defined requirements and stricter sanctions. Previously, the premise had been "do not spend more than you earn", but after controversies surrounding the fimancial practices of PSG and Manchester City and the economic inequality that has arisen with the rest of the clubs, the current objective of Fair Play is to monitor and ensure that there are no irregularities in a club's income.
Clubs must comply with strict economic-financial control rules, firstly those determined by UEFA (since 2010) and then, at national level, those established by the Professional Football League (since 2014) in order to avoid situations of financial imbalance and excessive indebtedness.
To enforce Financial Fair Play, the Club Financial Control Body (CFCB) was created to manage warnings, fines and bans. For this reason, clubs need to have trained professionals to manage their entities.
In conclusion, Financial Fair Play seeks to alleviate the economic imbalances arising from the different clubs and to improve their financial health through its actions.