UEFA Financial Fair Play

[sixpoints]

It's coming!!
But what effect and how strictly UEFA can/will enforce it will be seen. No doubt the only winners will be the usual lawyers and accountants.
UEFA Financial Fair Play (FFP) has been formulated by UEFA and agreed to by all Euro leagues to act not as a salary cap, but as a debt cap.
All professional clubs will need to keep within defined debt limits or face sanctions. Sanctions will vary between UEFA competing bans (no Champions League), enforced expenditure clamps, points deductions or enforced relegations.
UEFA came up with it in order to enforce more financial discipline amongst clubs, to decrease spiraling costs, to reduce instances of clubs folding under massive debts, to reduce the prevalence of cashed up zillionaires investing in clubs (and then just as easily bailing out leaving crippling debts), to encourage more youth development instead of the current inflated transfer lunacy.

It will work by having "genuine" income - gate receipts, TV revenue, advertising, merchandising, player transfer fee sales, tournament prize money compared to outgoings in all wages (all staff and players) and all transfer fees.
If your genuine income falls well outside your debts- then you will given
notice and told to work towards compliance or face sanctions. Note that 'sugar daddy' gifts by rich owners do not count as genuine income. UEFA deems that income unsustainable.

What's good - clubs can survive, less billionaires will get involved who do not
act for the good of the game, hopefully insane expenditure will decrease and no more Leeds, Glasgow Rangers, Portsmouth, Anzhi Makhackala, Malaga scenarios will occur. UEFA saw many more clubs across Europe being on the brink and wanted it to stop.

What's bad - obviously the big revenue clubs will dominate, and probably
increasingly so. If new rules come in that state "don't spend what you don't genuinely earn", then the big earners have no one to fear. When these rules
were announced a public letter of support was published by Man U,
Liverpool, Arsenal and Spurs - no surprises there!

The tricky part - What is genuine income? Man City states the Abu Dhabi government is a genuine sponsor. UEFA states sponsorship must be
commercially within a relevant context - eg is this purely a commercial
arrangement or is it a 'sugar daddy' deal? Does this sponsorship stack up
against other clubs and their going sponsorship rates, or is it just a gift from
a rich owner? This is where the lawyers get involved. If it is found to be a rich boys gift, then the money doesn't count off your debt and they will be
stuffed. Their response - make it look like a genuine sponsorship deal with numerous bodies- Abu Dhabi Tourism, Abu Dhabi Investments, Etihad
Airlines etc are all our genuine sponsors....the fact one bloke owns the lot and the amount they give you is outrageous, is where the situation get murky.

The big leagues (EPL etc) will have this enforced next season. I don't support a "big club" with mine being in the English Championship. In that league the rules start now and the clubs who had terms in the Premier League recently and ran up debts look to be in serious trouble. They took the punt of playing with the big boys, but got relegated and all income streams have plummeted. Bolton, Blackburn, Wigan, Wolves, QPR may face UEFA sanctions and be in serious strife.

Next it will be EPL, La Liga, Bunesliga, Serie A clubs. It's bound to have an effect, but until it really happens the jury is out on the extent of such effects.

[Jezza]

Well-summed up Sixpoints.

It will definitely be interesting to see how the FFP affects the top clubs around Europe. I think clubs like Man Utd, Liverpool, Barcelona, Bayern Munich and Real Madrid for example will all thrive from this since they always generate such a large revenue every season. It'll hurt clubs that have very rich owners but don't generate enough revenue because of several reasons such as average ticket sales etc. This idea it will help clubs with poor finances remains to be seen. I'm not entirely convinced that it will help them substantially.

I do wonder whether it'll dramatically affect European Football and in the long-term will this prove to be beneficial or is it an inevitable failure. Time will tell whether the FFP is a good or bad idea.