The Football Teams That Have Fallen Foul Of Financial Fair Play Rules

Financial Fair Play rules were agreed by UEFA in September of 2009 by the governing body of football in Europe’s Financial Control Panel. Despite that, they didn’t actually come into play until before the start of the 2011-2012 season, with the idea being that sanctions could be taken against clubs that exceeded spending limits over a number of seasons.

The general idea behind FFP was that it would stop professional football clubs from spending more money than they earned in the pursuit of success on the football pitch. In the past, some football clubs had gotten into serious financial trouble by not looking after the finances, which is something that UEFA wanted to avoid. Here’s a look at the clubs that fell foul of FFP.

A Brief Explanation Of Financial Fair Play

Before we take a closer look at the clubs that have fallen foul of Financial Fair Play over the years since its introduction, it’s important to explain exactly what it is and how it works. The UEFA one sentence summary of FFP is that ‘Financial fair play is about improving the overall financial health of European club football’. That is, in essence, the crux of the matter.

Whilst it can be neatly summarised in such a fashion, the reality is that FFP is decidedly more complex than that. For example, it was introduced partly in order to help stop clubs from getting into financial trouble, but former UEFA President Michael Platini also said that it was in order to stop clubs from ‘financial doping‘ thanks to a buyout from rich owners.

In truth, both things are important. It is felt by many within football that clubs getting rich owners who spend huge sums of money buying the best players is ruining the game, whilst the number of clubs carrying large debts is unsustainable. As a result, FFP was seen as a necessary thing to introduce in order to stop both of these things from happening.

The general guideline from UEFA is that clubs are allowed to spend up to €5 million more than they earn within every assessment period. Each assessment period lasts for three months. That amount can then stretch to €30 million if a club’s owner is able to cover the losses. Investment in women’s football, training facilities and stadiums is not included in the break even requirements.

Any football-related expenditure on the men’s team, which includes the likes of wages and transfer fees must be able to be balanced out by match day revenues, TV money and money raised from a club’s commercial activities. The transfer and salary commitments must be met by all clubs and in all circumstances.

Problems With FFP

Just as there are numerous people within football that believe that Financial Fair Play is a crucial component to the future of the game, so too are there others that have major problems with FFP. They believe that it was really introduced simply to maintain the status quo of the clubs at the top of the game and stop nouveau riche clubs joining the elite.

UEFA are confident that their FFP rules are legal and operate within the laws of the European Union. They’ve said, “UEFA has been in permanent dialogue with the European Commission about financial fair play and has received continued support for this initiative”. Clubs that feel that they’ve been badly treated by FFP can appeal to the Court Of Arbitration For Sport.

It’s Not Just UEFA

Something else worth pointing out is that it’s not just UEFA that have put Financial Fair Play rules in place. Following on from the governing body for football in Europe’s lead, the English Football League introduced its own FFP regulations in 2012 that required clubs to ensure that they were within an acceptable spending limit in order to avoid sanctions.

Similarly, the Premier League introduced Financial Fair Play to its own competition, asking all clubs to sign up to the rules associated with it. Whilst not all clubs approved of it or felt that it was appropriate, the reality is that it had a massive impact on how top-flight clubs operated. Within a decade clubs had become profitable instead of losing money.

Clubs That Have Had FFP Troubles

There is a natural instinct when it comes to thinking about Financial Fair Play to assume that it is only the richest clubs at the top of the game that can fall foul of it. However, the reality is that all clubs have to stick within the principles of FFP and are therefore just as liable as the richest ones of not obeying it if they’re not run carefully.

Here’s a look at the various clubs that have had issues with UEFA over Financial Fair Play in the past, or their own league’s FFP rules that have been introduced since Europe’s governing body initially introduced it. The list is not exhaustive.

Paris Saint-Germain

Paris Saint-Germain LogoThere are certain clubs in football that have a bad reputation because of the fact that they’ve been bought by counties in an alleged attempt to do what is called ‘sports washing’. Paris Saint-Germain are just such a club, having been bought by Qatar Sports Investment in 2011. After buying the club, the Qatar government sanctioned more than €1 billion spending on players.

In August of 2012 the Qatar Tourism Authority agreed a deal with PSG to promote Qatar for €1.075 billion over five seasons. Interestingly, the contract was signed in October of 2013 but included two payments made retroactively for 2011-2012 and 2012-2013, worth €100 million and €200 million respectively. This wiped the club’s losses for that period.

The problems for PSG arose when UEFA decided to investigate, believing that the commercial deal was falsely over-inflated. The governing body chose to value the deal at half of the amount paid, feeling that the QTA paid over market value in order to help PSG avoid breaching the possible limits of the Financial Fair Play rules.

The revised valuation resulted in PSG’s losses for the 2013-2014 season being €107 million, which was well over the €45 million amount allowed. Somewhat ridiculously, the punishment eventually issued to Paris Saint-Germain included a €60 million fine, as though money was a problem for the club, with some sporting and other financial measures also imposed.

Despite having come under the steely gaze of UEFA’s Club Financial Control Body, PSG did little to curb their outrageous spending plans. In August of 2017 the club activated Neymar’s €222 million release clause to sign him from Barcelona, then later in the same month signed Kylian Mbappé from AS Monaco on a loan with an option to buy for €180 million.

The response from UEFA was to open another FFP investigation into the French club. Remarkably, Europe’s governing body initially chose to clear PSG of any wrong doing. What they did do, however, was to once again devalue the deals made between the club and the Qatar National Bank, reducing them from €100 million to €58 million.

Paris Saint-Germain were forced to sell €50 million worth of players, then in September of 2018 UEFA decided to re-open its investigation into the club for the period of 2015-2017. PSG appealed to the Court Of Arbitration For Sport, which eventually upheld the appeal and UEFA’s original decision to drop an FFP investigation ended up being the final one.

Manchester City

Manchester City LogoIn terms of headline grabbing decisions surrounding Financial Fair Play, few have had the impact that Manchester City’s dealing with Europe’s governing body for football have had. The origins of the story date back to their submission to UEFA over FFP in 2014, when City were accused of not making their bank statements available.

The submissions made by Manchester City for the 2012 and 2013 financial years came under question thanks to a £118.75 million sponsorship from companies in Abu Dhabi, the state in which the club’s owners were based. Accounting methods over transfer fees as well as the formation of two new companies were rejected by UEFA.

The result was that around £60 million in losses were added to City’s accounts, ending with the club having losses of about €180 million in 2012 and 2013, which was well above the maximum amount allowed. The club paid a £49 million fine in 2014 and accepted restrictions put in place on the size of its squad for European competition in order to settle the dispute.

That wasn’t the end of the story, however. In December of 2016 and then again November of 2018, a series of investigations were published by newspapers including Der Spiegel. The leaks in 2018 included accusations that both Manchester City and Paris Saint-Germain had been cheating the Financial Fair Play rules regularly. This included the doctoring of reports by City.

The accusations within the leaks were that the Manchester club had created something it labelled ‘Project Longbow’, which was an attempt to find ‘creative solutions’ to financial issues. One such solution was to have an external company pay a player’s image rights, only for that company to then be reimbursed by the owner of the club.

In the wake of Sheikh Mansour and the Abu Dhabi Group’s takeover of Manchester City in 2008 they had spent in excess of £1.4 billion on players, resulting in them winning four Premier League titles, an FA Cup and five League Cups, though the club initially struggled to establish itself on the European stage.

The result of the leaks and a subsequent investigation was a decision from UEFA to ban Manchester City from the Champions League for two seasons, as well as issuing the club with a €30 million fine. Whilst the club never explicitly denied the actual information in the Football Leaks documents, they did claim that the leaks were illegal and therefore they couldn’t be punished for them.

UEFA obviously disagreed, feeling that the club had misled them as well as broken the FFP rules. City decided to immediately appeal to the Court Of Arbitration For Sport, describing the process as ‘flawed and consistently leaked’. Bizarrely, given UEFA is the governing body, they also said, “Simply put, this is a case initiated by UEFA, prosecuted by UEFA and judged by UEFA”.

UEFA released a statement saying, “he Adjudicatory Chamber, having considered all the evidence, has found that Manchester City committed serious breaches of the Uefa Financial Fair Play Regulations by overstating its sponsorship revenue in its accounts and in the break-even information submitted to Uefa between 2012 and 2016. The Adjudicatory Chamber has also found that in breach of the regulations the club failed to cooperate in the investigation of this case by the CFCB”.

Fulham, Nottingham Forest & Bolton Wanderers

fulham, bolton & nottingham forest logos

Whilst these are obviously three different clubs that are entirely separate from each other, they’ve been grouped together here because they all broke the FFP Rules at the same time as other. Bournemouth could also be on the list, but they didn’t receive the same punishment from the Football League as the other three.

The maximum loss allowed according to the Football League’s FFP rules during the 2014-2015 campaign was £ 6 million. Both Nottingham Forest and Fulham exceeded that amount, whilst Bolton Wanderers were unable to submit a return because of off-field problems that the club was enduring at the time.

The sanction issued to all three clubs was a transfer embargo. It meant that they were unable to sign players. The Championship issued a statement saying that that was the case, specifying the ‘rules agreed with league clubs in April 2012’. Fulham and Forest were also told that they’d be able to have the sanction lifted if they obeyed the rules over the rest of the season.

Interestingly, the clubs were punished because of their perceived successes. Millwall had also exceeded the ‘maximum permitted deviation‘, but as they were relegated out of the Championship into League One it was felt that they had not ‘gained any significant advantage’ and were therefore not punished under the FFP ruling.

Leeds United

Leeds United LogoLeeds United were looking for new owners when they found themselves in financial trouble. Leeds United were one of the clubs that most football supporters felt would understand the need to introduce FFP legislation, given that the running of the club under Peter Ridsdale saw it plummet to the third-tier of English football and be on the brink of collapse.

The club was issued with two separate winding up orders at various points in the 2013-2014 season, eventually leading to it being given a transfer ban. The ban was only lifted when it did indeed get a new owner in the form of Italian Massimo Cellino, who then demanded that it returned to a ‘healthy’ financial state in order to challenge for promotion.

Blackburn

Blackburn Rovers LogoIn 2013 the Managing Director of Blackburn Rovers, Derek Shaw, admitted that he expected the club to receive a fine or a transfer embargo for failing to adhere to the Financial Fair Play rules. The company that owned Blackburn, Venky’s London Limited, announced losses of £27 million for 2012 as it tried to change its fortunes.

The club had been fighting relegation and managed to turn that around to get to the point where it could attempt to get promoted, but not without spending outside of its means. In the end they were given a transfer embargo at the same time as Leeds United and Nottingham Forest, which put paid to the club’s hopes of promotion.

Queens Park Rangers

QPR LogoQueens Park Rangers decided to venture into lands where few other clubs dared to tread when they went to an arbitration panel over the suggestion that Financial Fair Play rules are unlawful. They had been found guilty of breaking spending limits as they gained promotion to the Premier League in 2014, with their wages making up 195% of their turnover.

The club had intended to appeal the decision, but in the end decided ‘in the best interest of football’ to take a settlement instead. It was decided that the club would have to pay in the region of £42 million, which would be spread over ten years. They were also given a transfer embargo in January of 2019. The EFL was said to be ‘conscious of the financial burden on QPR’.

Birmingham City

Birmingham City LogoTowards the end of the 2018-2019 Championship season, Birmingham City found themselves unexpectedly fighting against a relegation battle. They had looked all but secure in the middle of the second-tier of English football, but plummeted from thirteenth to eighteenth when the English Football League issued the club with a ten point deduction.

It meant that they sat just five points above the drop zone with eight games still left to play. The deduction was the result of losses by the Blues of around £49 million between 2015 and 2018. The good news for the Midlands club was that the points deduction headed their way instead of a transfer ban or financial penalty, with the club surviving at the end of the season.