Financial Fair Play: Still All Bark and no Bite?
“If they sign Mbappé, you could rip up Financial Fair Play. Since it was brought in you could argue it’s gone the other way. It’s obscene now.”
So said Brendan Rodgers, manager of Scottish football club Celtic, last year after his team were drawn in the same group as Paris Saint-Germain in the UEFA Champions League. The Champions League is Europe’s most prestigious club competition, and Paris Saint-Germain had just made the record-shattering double signing of Kylian Mbappé from Monaco and Neymar from Barcelona. The arrangement for the first was a season-long loan with an option to buy for a reported sum of 180 million euros. Neymar’s signing, on the other hand, was an outright transfer for a fee of 222 million euros. The latter deal caused consternation when it was finally agreed (September 2017), with numerous football associations and clubs immediately raising the issue of a potential breach of UEFA’s Financial Fair Play (FFP) Regulations. Javier Tebas, president of the Spanish La Liga, accused PSG of “peeing in the swimming pool.”
UEFA is the administrative body for football in Europe. It is responsible for organising and running a number of European competitions, including the UEFA Champions League. The FFP Regulations were adopted by the UEFA Executive Committee in 2010, in accordance with the UEFA Statutes. In 2013, the ‘break-even’ rules were implemented, limiting the spending of football clubs by reference to their annual revenue. In particular, clubs can only spend a maximum of 30 million euros more than they earn in football-related revenue over a three-year period.
The Club Financial Control Body (CFCB) is the UEFA body responsible for monitoring compliance with the break-even rules. In September 2017, shortly after Neymar’s move to PSG, the CFCB announced that it had opened an investigation to focus on “the compliance of the club with the break-even requirement, particularly in light of its recent transfer activity.” The CFCB Investigatory Chamber is now carrying out that investigation, in accordance with the ‘Procedural rules governing the UEFA Club Financial Control Body’, following which it will issue a decision. Having completed an investigation, the Investigatory Chamber has a number of options available to it, including the ability to enter into settlement agreements with the club in question. In more serious cases, however, the Investigatory Chamber will refer the matter to the UEFA Adjudicatory Chamber, which has the power to impose harsher disciplinary measures. Those measures include large fines, withdrawal of titles won, and disqualification from UEFA competitions. Final decisions of the Adjudicatory Chamber may be appealed to the Court of Arbitration for Sports (CAS), which is headquartered in Lausanne, Switzerland.
Although fines might be regarded as something of an empty threat to clubs willing to spend hundreds of millions of euros signing players, the possibility of losing titles or being disqualified from major competitions would be taken very seriously indeed. So, what is likely to happen to PSG if the club is found to be in breach of the break-even rules? They are now out of the 2017-2018 UEFA Champions League, having lost to Real Madrid in the round of 16, so being stripped of that title is out of the question. However, they could of course be excluded from future competitions. That was one of the disciplinary measures imposed on Greek club Panathinaikos FC by the CFCB Adjudicatory Chamber in February 2018. In particular, Panathinaikos has been excluded from participating in the UEFA club competitions it would otherwise qualify for in the next three seasons, unless the club is able to prove by a certain date that it has paid the amounts that were identified as overdue. That decision did not, however, relate to an infringement of the break-even rules.
It is important to note, finally, that PSG has form when it comes to breaching FFP provisions. In 2014, it was penalised by UEFA alongside Manchester City for spending in excess of the break-even limits. The CFCB Investigatory Chamber entered into settlement agreements with both clubs, imposing sanctions including a fine, a restriction on transfer spending, and a reduction in the clubs’ squad size for the Champions League. Presumably this would be an aggravating factor were the Investigatory Chamber to conclude this time around that there had been another breach. In any event, and with the credibility of FFP in the balance, UEFA would be under serious pressure to impose more draconian measures. If PSG’s record signing is found to have crossed the line, then perhaps it will come to be seen as the high-water mark for excessive debt and spending in football. There is a long way to go, however, and PSG would no doubt pursue the matter all the way to CAS were they to be heavily penalised.
Oliver Glasgow QC & Tom Cornell