The UEFA Financial Sustainability Regulations: Evolution Or Revolution?

“What’s in a name?”, Shakespeare’s Juliet asked.^[1] Followers of UEFA’s Financial Fair Play (FFP) initiative might reasonably tell her that the name matters quite a lot.  From the introduction of the FFP regulatory regime, a very reasonable observation was made that the ‘break-even’ elements of the rules––which, loosely, required clubs to spend no more than they earned, subject to a permitted degree of deviation––did not appear to be about fairness at all. The pioneering sports economist Stefan Szymanski suggested that “it is not unreasonable to ask whether FFP is really fair, and indeed whether it is really about fairness at all.  Closer inspection of the stated objectives suggests that it is more about efficiency than fairness.”^[2] Indeed, the stated objectives of FFP were, among other things, to “improve the economic and financial capability of the clubs, increasing their transparency and credibility”, and “introduce more discipline and rationality in club football finances”.^[3]  FFP was not intended to address competitive balance in the game, despite the “widely held misconception”^[4] that it was intended to bring about sporting parity.

Whilst the ‘Fair Play’ description may have been a misnomer, UEFA, through its annual Benchmarking Reports,^[5] has highlighted the overall success of FFP as a regulatory initiative in addressing its objectives to promote ‘discipline and rationality’. It has encouraged football clubs to operate on the basis of their own revenues, with aggregate bottom line profitability significantly improving between the period in which FFP was introduced and the point at which the COVID-19 pandemic drastically impaired clubs’ revenue generating capabilities.^[6]

However, after a decade in force, and despite its reported positive impact on the European elite club financial landscape, UEFA is abandoning FFP and replacing it with a new regulatory regime:  The more prosaically entitled ‘Financial Sustainability Regulations’, which form a part of the UEFA Club Licensing and Financial Sustainability Regulations, Edition 2022 (Regulations).  References to ‘Articles’ and ‘Annexes’ in this piece are to Articles and Annexes in the Regulations.

This article explores:

• Introducing the Financial Sustainability Regulations
• Solvency requirements
• Stability requirements
• Cost Control
• Enforcement
• What Does the Introduction of the FSRs Mean for Clubs?
• Potential Change In Amortisation calculations & Final remarks