Football

Do UEFA's financial fair play rules actually matter?

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Michel Platini has high hopes for European football (©GettyImages)
Michel Platini has high hopes for European football (©GettyImages).

Financial Fair Play (FFP) is UEFA President Michel Platini’s showpiece legislation to bring balance to European football. In its essence FFP legislation is an attempt to reign in reckless spending and abhorrent financial practices inherent in the European game. To date it seems that FFP regulations have worked with no major infractions to speak of. Enter Manchester City.
 
The Manchester clubs, owned by United Arab Emirates Deputy Prime Minister, and extremely wealthy, Sheikh Mansour bin Zayed bin Sultan Al Nahyan, posted a £58m loss for the 2013 year. Combined with the £98m loss the club reported in the previous year brings a total loss over two years to £156m.  This is well above the £45m threshold set by UEFA for the 2011/12 to 2012/13 monitoring period. So with City in the wrong, what happens next? This is where it gets interesting.
 
UEFA has eight different punishments for clubs that do not adhere to FFP rules. These punishments range from a simple warning to an outright expulsion or temporary prohibition from European competitions such as the Europa League and more lucrative Champions League. So which of the eight will be thrown at Manchester City for breaking the rules? Not so fast.
 
Financial Fair Play rules have an escape clause. After posting losses club ownership can choose to put equity into the club. Which means owners can pay down the clubs debt with their own personal wealth. However, to escape punishment from FFP rules, club losses within monitoring periods cannot exceed £5m after ownership has put equity into the club. What does this mean for Manchester City? So long as Sheikh Mansour puts £151m of his own wealth into the club Man City escape any punishment from UEFA.
 
So do the rules work? Are clubs facing enough negative incentives to discourage the unsustainable financial activity UEFA is actively working to eliminate?  In short the answer is: “It all depends on what happens to Manchester City”.  Club officials still seem to believe that they will be able to adhere to FFP rules. This either means that Sheikh Mansour has pledged to inject equity into the club or that we are still to witness some sort of financial magic. Either would signal that FFP rules are inconsequential to big spending clubs such as Manchester City, effectively rendering UEFA’s hard work to nothing.
 
On the other hand, club official may just be performing for the media knowing that the UEFA hammer is about to fall. Should this be the case, UEFA should seize the opportunity and set an example for other clubs. 

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Topics:
Manchester City
UEFA Champions League
Football
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