Analysis: you can trace the origins of these regulations back to 1995 and the Bosman case, but they've evolved hugely since then
Manchester City and its alleged breaches of the Financial Fair Play (FFP) Regulations on over 100 occasions during a nine-year period has received widespread media attention. The decision of the European Court of Justice in 1995 in the Bosman case was instrumental in transferring the bargaining power from the clubs to the players as they were recognised as workers within the meaning of now Article 45 of the Treaty on the Functioning of the European Union. The decision also signalled the end of transfer fees for out of contract players.
In the 1991/1992 season, UEFA established the Champions League, in response to 'the increasing commercialisation and mediatisation' of football'. While some clubs benefitted from the increase in revenue gained from broadcasting rights, the ‘financial gaps’ between rich and poor became increasingly evident . The European Court of Justice held in the Bosman case that UEFA rules relating to fees for out of contract players and nationality restrictions were in breach of the then European Economic (EC) Treaty.
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From RTÉ Radio 1's Morning Ireland, Dr Seán Ó Conaill from UCC School of Law on how breaching the Premier League's financial rules on fair play could hit Manchester City hard
In the aftermath of Bosman, player salaries greatly increased. A study by the High Pay Centre in 2012 found that top players have seen their earnings increase by 1,508% between the creation of the Premier League in 1992 and 2010. During the same period, the average British citizen has had an increase of 186%.
In 2002, UEFA adopted the Club Licensing Regulations, and the first licences were granted in 2004. In order to compete in UEFA competitions, clubs had to adhere to 39 criteria based on five pillars: sporting, infrastructure, personnel and administrative, legal and financial. These regulations set out criteria that clubs had to meet to be eligible to play in UEFA club competitions. It was ‘aimed primarily to raise minimum standards in European football governance following a large number of cases of mismanagement’. The scope of the regulations evolved and expanded over the years, leading to the amalgamation of the Club Licencing Regulations and the Financial Fair Play Regulations.
In 2009, UEFA’s Executive Committee unanimously approved the Financial Fair Play Regulations. At the time, European football clubs were facing financial ruin as several leagues incurred operating losses. For example, Italian football had an operating loss of €22 million in 2001-2002 and this had reduced to €3.3 million in 2007-2008. In the 2007-2008 financial year, the average English Premier League team had pre-tax losses of €15.1 million and €21.1 million in 2006-2007. For lower division English teams, 35 of the 72 teams had undergone insolvency proceedings between 2000 and 2009.
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From RTÉ Radio 1's Today with Claire Byrne, football economist Kieran Maguire on what sanctions Manchester City might face for alleged financial breaches
As the allegations relating to Manchester City concern the period of 2009 to 2018, the 2018 edition of the FFP Regulations will apply. These provide that a club is precluded from spending more than it has earned to ensure its long-term viability. The FFP Regulations were introduced in June 2010 and implemented in the in 2011 through the Club Licensing and Financial Fair Play Regulations, Edition 2012. They were updated in 2015, 2018 and replaced in 2022.
Then, the Executive Committee of UEFA approved the reform and overhaul of the Club Licencing and Financial Fair Play Regulations and replaced them with the UEFA Club Licensing and Financial Sustainability Regulations, which came into force from June 2022. There were some minor amendments made with effect from January 25th 2023.
These regulations are based on three key pillars: solvency, stability and cost control. UEFA consulted several stakeholders from European football clubs and national associations to the European Union Institutions (the European Commission, the European Parliament) and the Council of Europe.
From TifoFootball, how financial fair play was justified
The FFP Regulations were devised in order to ensure that clubs were able to discharge their debts, remain solvent and were not relying on club owners to cover losses. Part II of the Regulations detail the licencing system, which provides that a club will receive a certificate once it is confirmed that it fulfils UEFA’s minimum criteria for admission to its club competitions. The licence requirements are checked once a year by the national licensor and the licence is granted for the next season.
While the licencing system applies to both men’s and women’s club football, the sustainability regulations apply only to UEFA men's club competitions. This involves a process of monitoring the adherence of clubs to the financial criteria established by UEFA. Part III of the Regulations explains the process which is referred to as UEFA Club Monitoring.
The Club Financial Control Body was established to enforce the regulations as part of UEFA’s disciplinary mechanisms. This structure remains under the Sustainability Regulations, with the previous two divisions, the Investigatory Chamber and the Adjudicatory Chamber replaced with the First Chamber and the Appeals Chamber. The chambers are independent of each other and have different chairpersons. Decisions of the Control Body may only be appealed to the Court of Arbitration for Sport.
From The Athletic Football, how does financial fair play actually work?
The FFP Regulations and their conformity with EU law has been raised in relation to the free movement of workers, services and capital and under EU competition law, namely restrictive agreements and abuse of a dominant position. While derogations from the free movement provisions are permitted, any restriction must be proportionate to the aims it seeks to achieve and must be objectively justified.
Traditionally, the prevailing view was the EU would not involve itself in sport if the question raised were of a purely sporting interest and as such has nothing to do with economic activity. However, it is difficult to distinguish elite football the sport from elite football the economic entity. Player agent Daniele Striani and Manchester City and Paris Saint-Germain fan groups challenged the FFP before the Brussels Court of First Instance, which referred the matter to the Court of Justice of the European Union (CJEU). Striani was represented by Jean-Louis Dupont, the lawyer who had represented Bosman twenty years earlier. In July 2015, the CJEU deemed the request to be manifestly inadmissible as it cited, among other things, insufficient information relating to the legal and factual context.
Given that the European Commission and European Parliament were part of the consultation process for the Sustainability Regulations, coupled with the CJEU decision in Striani, the regulations are arguably here to stay from an EU law point of view. However, Manchester City will have recourse to the CAS. Given the serious nature and number of infractions alleged to have occurred, the club will face an arduous task in defending its actions.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ
