UEFA’s Executive Committee met yesterday afternoon in Nyon and ratified a series of new financial regulations which will soon replace the current Financial Fair Play bylaws in June.
Dubbed the “Financial Stability Regulations”, the new set of directives are an evolution of the existing breakeven requirements with Financial Fair Play but with the aim of bringing greater stability to clubs by limiting their potential spending power.
Outlining the need for new financial regulations, UEFA President Aleksander Čeferin cited football’s evolution in addition to the recent COVID-19 pandemic as the primary factors.
He explained, “UEFA’s first financial regulations, introduced in 2010, served its primary purpose. They helped pull European football finances back from the brink and revolutionised how European football clubs are run.”
“However, the evolution of the football industry, alongside the inevitable financial effects of the pandemic, has shown the need for wholesale reform and new financial sustainability regulations.”
“UEFA has worked together with its stakeholders across European football to develop these new measures to help the clubs to address these new challenges. These regulations will help us protect the game and prepare it for any potential future shocks while encouraging rational investments and building a more sustainable future for the game.”
To ease the implementation of this new requirements for clubs, the new calculation of football earnings is similar to the calculation of the breakeven result.
While the acceptable deviation has increased from €30 million over three years to €60 million over three years, requirements to ensure the fair value of transactions, to improve the clubs’ balance sheet, and to reduce debts have been significantly strengthened.
The biggest innovation in the new regulations will be the introduction of a squad cost rule to bring better control in relation to player wages and transfer costs.
The regulation limits spending on wages, transfers, and agent fees to 70% of club revenue. Assessments will be performed on a timely basis and breaches will result in predefined financial penalties and sporting measures.