UEFA will rid of the Financial Fair Play (FFP) system after new rules were approved by Europe's governing body.
The changes came about on Thursday at UEFA’s Executive Committee meeting in Nyon, Switzerland and will be known as the Financial Sustainability and Club Licensing Regulations (FSCLR). FFP was introduced in 2010 and was a way of curbing excessive spending that saw clubs operate beyond their means.
They have been heavily criticised over the past decade but the new rules centre around "three pillars" which are solvency, stability and cost control. The latter is what the FSCLR calls the “squad cost rule”. It means a club's outlay on transfers, wages and agent fees cannot exceed 70 per cent of its revenue.
The solvency aspect is a way of UEFA tightening its club licensing regime. It means clubs cannot have overdue payables to the likes of tax authorities, other clubs or employees and they will be regulated by quarterly checks and automatic penalties.
UEFA claimed that clubs that break the new rules will be subject to “pre-defined financial penalties and sporting measures”. Director of financial sustainability and research Andrea Traverso said sporting sanctions mean clubs could have points deducted or squad limits imposed, all of which have been approved.
There is also the possible threat of a club being relegated within UEFA competitions, meaning a team could go from the Champions League to the Europa League, but this still needs to be approved.
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The stability aspect centres around how much clubs can afford to lose. There has been an increase on acceptable losses, which now stands at €60 million over three seasons having previously been half that. Clubs that are deemed to be in “good financial health” are allowed to lose an additional €10 million.
UEFA president Aleksander Ceferin insists FFP was a success but the new changes come about as a result of the pandemic and an evolution in football's finances. He said: “UEFA’s first financial regulations introduced in 2010 were a brilliant success.
"They helped pull European football finances back from the brink and revolutionised how European football clubs are run. But the COVID pandemic and the evolution of the football industry have shown the need for wholesale reform and new financial sustainability regulations.
“UEFA worked with stakeholders to develop these new measures to help European football address these new challenges, to protect football, to prepare it for future shocks, to allow rational investments and to build a more sustainable future for the game.”
