Financial Fair Play: Simple Guide To FFP As Platini Suggests UEFA Rules Will Be “Eased”

Just four years after they were introduced, UEFA’s much-touted Financial Fair Play rules are set to be relaxed, according to the European soccer governing body’s president Michel Platini.

The system had been championed by Platini as necessary to curb the mounting debt clubs were building up, particularly in an era where new owners were pouring in previously unseen amounts of money into European clubs. While it was a majority of the clubs who voted in FFP, there has been growing criticism from some that its central effect has been to preserve the status quo at the top of the game. While frustrated by some of those critiques, Platini admitted in an interview with French radio station RTL on Monday that the rules will be made less stringent.

“I think things will be eased,” he said. “It will be the executive committee which decides and the outcome will be known by the end of June. I think that the rules which were made have been very good. Financial Fair Play was voted for by the clubs.”

So exactly does FFP work? What are the punishments, and why might the rules now be about to change? Here’s a simple guide to Financial Fair Play.

The Rules
In a nutshell, clubs are only permitted to spend up to 5 million euros more than they earn per three-year assessment period, excluding money spent on infrastructure like stadiums and academies. However, there is a caveat. The restrictions were introduced gradually, meaning that if covered entirely by contributions from the club owners or a related party, clubs were allowed to make a loss of 45 million euros for seasons 2013-2014 and 2014-2015, down to 30 million euros for the next three seasons. That limit was then set to be lowered after reassessment, but Platini’s comments strongly suggest that we will now not get that far.

The Punishments
The level of punishments for clubs who breach those rules vary dramatically. Depending on numerous factors, clubs may face s simple warning, heavy fines, the withholding of their income from UEFA competitions, limits on the squad size they can register for the Europa League or Champions League and even exclusion or disqualification from competitions.

Thus far the strongest punishments have been handed out to the two clubs always likely to be most compromised by FFP -- Manchester City and Paris Saint-Germain. Both teams were bought by multi-billionaires from the Middle East in the past seven years and received huge injections of investment as the owners attempted to build squads capable of challenging Europe’s elite. Last year, City and PSG were each fined 60 million euros while being forced to reduce their Champions League squads to just 21 players down from the usual 25. On top of that they were told they could not exceed a net spending of 60 million euros in last summer’s transfer window.

This season another of Europe’s nouveau-riche clubs, Monaco, have been sanctioned for breaching FFP rules. Italian teams Inter Milan and Roma, who have also come under new ownership in recent years, have also been punished among the 14 clubs in total to fall foul of the regulations this season.

The Reasons For Change
As Platini hinted in his comments, the simple answer appears to be that enough big clubs have applied significant pressure to force UEFA into a rethink. Manchester City were particularly outraged at their punishment last year and both they and PSG were hampered in the transfer market last summer. It is widely believed that PSG were unable to sign Angel di Maria because of their spending restrictions, while a similar case appeared to transpire with City and their attempts to get Radamel Falcao. Both players ended up going a club with a far greater income, and therefore not nearly as threatened by FFP, Manchester United.

And that has always been the major criticism of FFP -- that it simply helps preserve the established order. There has never been such a stranglehold over the latter stages of the Champions League by a select few clubs as there has been in recent years. This season Real Madrid were in their fifth consecutive semifinal, Bayern Munich in their fifth in the last six years and Barcelona in their seventh in the last eight seasons. FFP has been seen by many as a means for clubs already at the top of the game, with massive revenue streams, to pull the ladder up and prevent competition.

More serious than just criticism from clubs, though, French publication Le Parisien has reported that it was several ongoing legal actions against FFP in European courts that has compelled UEFA into changes. The actions are led by Belgian lawyer Jean-Louis Dupont, who was one of the representatives of former player Jean-Marc Bosman in his landmark 1995 case. The so-called Bosman ruling forced a restructuring of the whole transfer system in soccer, which gave players free movement following the expiration of their contracts.

The Future
FFP won’t be disappearing completely, but the likes of Manchester City and Paris Saint-German can expect to have significantly more leeway. FFP expert and sports business lawyer Daniel Geey suggests that UEFA could move more in line with the English Premier League’s less strict rules.

"This would allow club owners to spend over what they earn but subject to stringent requirements to provide a guarantee for any such losses up to a certain level, combined with a robust business plan to set out how the club will still move towards break even, even with some short-term transfer fee and wage spending." he said. "It remains to be seen what the actual increased allowable losses will be. By way of comparison, the Premier League allows its clubs to make a £105 million loss (146 million euros) so long as £90 million (125 million euros) is through the secured-funding route."

Certainly UEFA are insistent that the founding principles of the rules will not be abandoned. And the need for clubs to at least show that they are moving in the right direction, preventing the kind of financial calamity that has struck the likes of Leeds United and Glasgow Rangers in recent years, will remain.

“Any potential changes will look to encourage more growth, more competition and market stimulation while strengthening the emphasis on controlling spending and safeguarding financial stability,” UEFA general secretary Gianni Infantino told the BBC.