DATE: 19th of August 2014
THE FINANCIAL FAIR
PLAY AND THE ‘AFFAIRE’ DI MARIA-PSG
-
WHAT IS THE UEFA FINANCIAL FAIR PLAY?
Everybody
has heard about the Financial Fair Play (hereinafter referred to as “FFP”) .
Now, we are going to explain how it works. This system was created in 2011 by
UEFA. And this was a duty imposed to all the teams that get the classification
to the UEFA Champions League or UEFA Europa League.
This
process is based on Club Licensing and Financial Fair Play Regulations, which verify
all the economic results of the registered teams. The FFP forces to the
football clubs to do not have losses and they should look for a balance
sheet (break-even requirement) between their income and expenditure.
Thereby laying a limit on loss. Besides the obligation that there are no
outstanding debts with other football clubs, players or the Tax Agency
(Revenue) of their countries. According to UEFA, "the clubs have to pay
their players or transfers as specified in the contracts they sign, and if it
is not they will be punished by the competent authority." Understanding
then, that the debts should be liquid, due and payable (enforceable
obligations).
The limit was
established in 5 million euros over the incomes. Being this one, an “acceptable
covered deviation”. However it exists the called “acceptable non covered deviation”,
it allows to football clubs to exceed this level up to the 5m€ amount if the
excess is covered by contributions from equity participants and/or related
parties. We can see this method at the table below:
|
LA DESVIACIÓN ACEPTABLE
|
||||||
|
Period (Season)
|
Years
|
FINANCIAL YEARS
|
ACCEPTABLE DEVIATION
|
|||
|
COVERED
|
NON COVERED
|
|||||
|
2013/2014
|
2
|
NO
|
2012
|
2013
|
45M€
|
5M€
|
|
2014/2015
|
3
|
2012
|
2013
|
2014
|
45M€
|
5M€
|
|
2015/2016
|
3
|
2013
|
2014
|
2015
|
30M€
|
5M€
|
|
2016/2017
|
3
|
2014
|
2015
|
2016
|
30M€
|
5M€
|
|
2017/2018
|
3
|
2015
|
2016
|
2017
|
30M€
|
5M€
|
|
2018/2019
|
3
|
2016
|
2017
|
2018
|
<30M€ (*not determined)
|
5M€
|
Nevertheless if the
equity participant or the related party invest in the football club through a
company that belongs to him or it is directly related to him the value of this
agreement/transaction (prior investigation by UEFA) will adjust to the fair market
value. For instance, when PSG and Qatar Tourism Authority agreed a sponsorship
agreement. This body belongs to Al Khelafi’s family (PSG’s owner). Agreement
Value: 200m€; Fair Market Value fixed by UEFA: 100m€.
To calculate the
“break-even requirement”, we should exclude on the expenditures all the
investment in the stadium, training fields and the developing of the youth
squads.
There are different
types of disciplinary measures to be
based on the failure. We con see from a warning, a reprimand, a fine and points
deduction as less harmful measures for the economy of the club. And on the
other hand, retention of income earned in UEFA competitions, prohibition of
registration of new players in UEFA competitions as well as the restriction of
players, the match disqualification (current or future), including the removal
of the title or award; all as more stringent disciplinary actions.
-
OBJECTIVES
The main idea of this
system was stopping the debts of the football clubs with players, others clubs
and tax agencies. Moreover UEFA pretends that they operate at the market with
common sense and with the necessary rationality to avoid economic difficulties.
Another short-term goal could be reducing inflation of the wages and do not
generate more debts. And the last objective could be the investment in youth
football, the strengthening of the youth squad, its infrastructure and its resources.
-
DI MARIA TO PSG:
A FAILED DEAL.
Last May UEFA banned PSG, among another football clubs
((Dnipro, Bursaspor, Rubin Kazan, Galatasaray, Crvena,
Anzhi, Zenit, Levski Sofia y Manchester City).
The PSG’s ban was due to break the ‘break-even requirement’. The
Parisians couldn’t convince to the Club Financial Control Body (CFCB) that its
agreement with the Qatar Tourism Authority was fair. The agreement was settled
in 100m€ and because of this they failed this rule.
The disciplinary measure, after an agreement between the parties, was
that the French football club couldn’t register more than 21 players (instead
25) in the next Champions League. Additionally they agreed to not increase the
expenditure in wages in the next 2 years (limit: 240m€). Also, do not have
losses for the next season over the 30m€ and any loss in the season 2015/16.
A ban of 60 million euros that will be reduce if they respect all the
UEFA Regulations, besides the above sanction, the next two years. Moreover they
couldn’t spend more than 60 million euros in signings this season (amount
reached with David Luiz).
Those are the reasons because of PSG couldn’t close the deal. They do
not want to let out any star and try to carry out the Di Maria’s deal.
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