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UEFA Financial Fair Play Regulations


Vital Villa member HeathfieldRoad1874 pointed out the new regulations coming into force in a forum thread: UEFA Financial Fair Play Regulations and said:

I apologise if I keep banging on about this, but it is probably the single most important event since the Premier League was started.

Following a discussion on another thread, I thought it might be useful to have somewhere to discuss it properly.

Basically, I've identified the important aspects from the 85 page document issued by UEFA.

Article 53 - Responsibilities of the Club Financial Control Panel

3 The Club Financial Control Panel will at all times bear in mind the overall objectives of these regulations, in particular to defeat any attempt to circumvent these objectives.

Article 58 - Notion of relevant income and expenses

4 Relevant income and expenses from related parties must be adjusted to reflect the fair value of any such transactions.

ANNEX X: Calculation of the break-even result

A. Summary of the calculation of the break-even result

1. The break-even result for a reporting period is calculated as relevant income
less relevant expenses (see Article 58).
2. Relevant income is equivalent to the sum of the following elements (detailed in
part B):
a) Revenue - Gate receipts
b) Revenue - Sponsorship and advertising
c) Revenue - Broadcasting rights
d) Revenue - Commercial activities
e) Revenue - Other operating income
f) Profit on disposal of player registrations (or income from disposal of player
registrations)
g) Excess proceeds on disposal of tangible fixed assets
h) Finance income
Relevant income is decreased if the elements a) to h)
in paragraph 2 include any items below
i) Non-monetary credits
j) Income transaction(s) with related party(ies) above fair value
k) Income from non-football operations not related to the club

To me, Annex X, Part A section 2 j) is the most telling - Income transaction(s) with related party(ies) above fair value.

If anyone wants to read it for themselves, and maybe spot anything I've missed then it available here via pdf download: Click Here




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The Journalist

Writer: HeathfieldRoad1874 Mail feedback, articles or suggestions

Date:Tuesday August 24 2010

Time: 10:31AM

Your Comments

Great, but what's it mean in simple terms
Jongekki
...... or is that the legal term for 'fiddling the books'??
AV-Damo
I think the reasons are good. But taking Man Citeh as the example, their expenditure far exceeds what there income will be for years, even if they won the Champions League, Premier League, FA Cup, Eurovision Song Contest and the world Welly Wanging Championship in the same season. I understand the point about not being able to sell a box worth £30K for £50m to 'adjust' the figures. But how does does that stop rigging of sponsorship, which doesn't have a set price? For example, Man Citeh's expenditure could be £200m over and above what they bring in. One of Sheik Mansoor's 19 (yes nineteen) sons (who doesn't have any legal tie in with the club) could simply be the front man for a sponsorship package of £200m for shirt rights and ground advertising. These deals do not have set prices like the boxes do, but generally go the the company prepared to offer the biggest investment. When the kind of money they have is involved, they will always be able to 'buy' a solution to the problem. So the new laws will probably affect the well run clubs (Villa, Spuds, Bluescouse etc) considerably more than those who benefit from a ridiculously wealthy owner such as Citeh and Chelski.
voiceoftheholte
On another point, Barcelona and Real Madrid are insolvent. They rely on the goodwill of the banks in Spain to provide funds and overdrafts. They can not survive on the income they generate. Do you think UEFA will simply not allow them into European Competitions from 2013 onwards?? They would be akin to turkeys voting for Christmas.
voiceoftheholte
Modern football seems designed to keep a select few clubs permanently successful. Villa, Forest, Spurs, Everton, Leeds, Liverpool.....even Arsenal (all big clubs) might never win the league title again. Why do so many fans continue to bother? Will take a phenomenal effort for Villa to even make the top four. The oligarch and the sheik have damaged English football badly. As voth alluded, Citeh and Chelskov will probably just move the goalposts, when these regulations are implemented.
VillaWillRiseAgain
Sponsorship would come under the related parties regulations. City's current sponsors are owned by a relative of the City board, and as such would be open to scrutiny, and probably taken out of the equation. Any sponsorship deal will have to show complete impartiality. Ignore City for now, they're going mad and I can't see what they will do. I assume they have some sort of plan. Barca and RM - I sincerely hope UEFA are as harsh on them as they will obviously be on English Clubs. Otherwise the whole game goes to the dogs.
heathfieldroad1874
Stourbridge Villan - have you actually read the article or any of the comments? What's the point!!!!!!!!!!!!!!!!!!!!!!!
heathfieldroad1874
The rules were requested, designed and voted in by football clubs. Think about it. Who ultimately benefits from them? The Clubs with large incomes. It stops anyone else joining the Club - it stops the next Man City.

I initially thought that the Hotels and theme parks would also be included, until I saw this

Relevant income is decreased if the elements a) to h) in paragraph 2 include any items below (detailed in part B):

k) Income from non-football operations not related to the club
heathfieldroad1874
OMG it's swear filtration gone mad!!! The word blocked out was s.w.a.n.k.y!
fifthcolumnblue
fifthcollumnblue you always say not to believe any media talk about city as they always tell lies and they all hate city. Yet you still post links from pepers etc, what makes them true? but when they say yaya toure is on 200k a week is not? ps: i dont have a clue what all the nonsense talk is about above, just saw the link to the daily mail so i though id make the point, but correct me if im wrong in my mesaage/
P.Avfc
papers*
P.Avfc
With the ammount of crap that has been printed about my club (not including your good self) this summer I'm most certainly ready to be defensive. We will be fine, it is not like Sheikh Mansour is going to wake up one day and scream OMG! We've spent too much and now we can't play in Europoe, DOH!. I think the real issue here is why Uefa have implemented these rules in the first place, as it would seem to me that they are designed soleley to reinforce the status quo of the biggest clubs with the largest revenue streams from ticket sales, TV rights and Champion's league success staying exactly where they are - at the top. There is already a glass ceiling on other clubs breaking the Top 4 cartel, I'm sure the villans must have noticed this having been there or thereabouts numerous times but always falling at the last hurdle because you don't have the £40-odd million per season that the sky 4 recieve from the CL. The likes of Tottenham and Everton have been one-offs. These laws entrench the monopoly and will be far worse for football than some "little upstart club" like City attempting to do 10 years worth of spending in 2 years and thus upsetting the cosy little applecart.
fifthcolumnblue
The 'European Super League' is coming. Platini, UEFA, or the new regulations, won't stop it. La liga, and the EPL are little better than the SPL in terms of being competitive. The top teams in England, Spain and Italy will probably go it alone within a decade. The Bundesliga is a genuinely well run and properly regulated league, so don't anticipate any German clubs. (Plus they couldn't compete in a ESL).
VillaWillRiseAgain
fifthcolumnblue - you can defend all you like, but there is no denying that you are now officially the most hated club in the land. You bristled at the use of the word 'soulless', but there isn't a more apt word to describe Man City at the moment.
YatesyVillain
There is absolutely no way EUFA will implement anything that upsets the big boys. This is a token gesture with more loopholes than a fishing net. Any good accountant will walk all over it. If EUFA / FIFA were serious about addressing the problem they would follow the only good thing about american sport (no not the cheerleaders) and introduce salary caps and a draft system which would control the madness in the game and give all teams a chance to compete including those lesser clubs like bolton, wigan and small heath (couldn't resist )
AVbornandbred
All that will happen is the Billionaire sheikhs will provide money for the club in other ways ie big sponsorship deals, paying a fortune as the shirt sponsor etc. Hope I'm wrong but they'll get round it
Sagsy80
k) Income from non-football operations not related to the club Doesnt that leave it open to donations from wealthy owners?!
goodb_2
so it isnt just me suck of seeing no loyalty from players. lets face it we are in BIG TROUBLE this season, i fear a close relegation battle on the cards. The FA is like the rst they protect the big boys, cos they make em the most money simple, THATS WHY U NEVER GET A PEN AT OLD TRAFFORD STAMFORD BRIDGE, etc. it SADDENS me clubs like us ie Everton, Spurs will never probably win the leahe again. our history was great the futur is not i hope im VERY wrong but im disiluusined with football nowadays
ClivetheVillan
HeathfieldRD - I confess I hadn't read the regs when I posted, but I deal with UK and EU law and company finances (no I'm not an accountant) on a daily basis and have yet to find a requirement that is bullet proof. however a challenge is a challenge so i have no read the offending document. Leaving aside that all of the FTSE100 annually twist IFRS regs to suit the story that they want to tell (Goodwill is a great catchall) and still have their accounts indepentantly audited to the satisfaction of the LSE. The EUFA regs allow for financing and do not set an acceptable level of debt or leveraging so L'pool, Real, ManUtd etc would theoretically be ok and if Citeh are sticky they simply convert the owner contribution into low interest loans from the Abu Dabi state. If a club is found to breach teh breakeven (or any other clause) teh regs state that the licence won't be witheld but that teh club will be subject to sanctions determined by the FA which might include fines, cautions or requests for more info, and whilst the FA retain the right to withold a licence can you really see it happening? The sanction will simply be a fine which would be really scary to Sheikh.. If teh FA did decide to sanction the club they have to raise the issue with the Club Financial control Panel which "may" pass it on to the Organs for Admin of Justice but the "may" term gives them the right not to if it will cause too much grief, as they can "consider other factors" (Citeh's very expensive lawyers would probably be a very relevant factor). If all of the above doesn't end up with a loophole then the fact that any big club banned from European competition now would simply sue for restraint of trade and get the penalty swapped for a fine means in a nutshell if you've got the cash you can pretty much do what the hell you like!
AVbornandbred
I agree that it is teams like City that have caused UEFA to take a hard stance. But City will be in trouble even if they stop spending on transfers, simply because they're committed themselves to paying massive wages (beyond their turnover, never mind profit) for 4 or 5 years which takes them well past the start date of the rules. Buying players outright now with a view to making lots of profit on them in the future is only a genius masterstroke as suggested by Martin Samuel, firstly if City are to become a selling club, and secondly if anyone wants to buy their players and pay the grossly inflated wages. Virtually all clubs will decline especially seeing as they don’t really have a glut of talent that bigger clubs would be interested in, and this will drive the value of their players down. The development at Eastlands is also a good story told by hopeful City fans, but largely irrelevant even if they are allowed to include the income. The area is a total cesspit and it simply won't attract people when the centre of Manchester is a mile away. Trust me, the Beckham’s and Brad Pitt won't be staying there when they're in town, just maybe Liam Gallagher as a show of loyalty. So any extra income will be limited to turnover from the local Neanderthals in the leisure complex. City also have to pay all gate receipts above 30,000 to Manchester City Council, and the council have and will continue to reject any attempts to buy the ground which is a useful income for them, and so increasing the ground capacity isn’t a viable option. The council will also refuse planning permission for the building of another stadium in close proximity to Eastlands should City decide they want to use the land they own to build a new stadium. Ultimately City got to turn a £100 million company making a £93 million loss, into at least a £400 million company with massive profits within the space of 2 years, and as Abramovich has proven (in his 7th year without profit), throwing a billion pounds at something doesn't make is a successful and profitable business. Section 2J above is included to stop teams being paid £300 million for a pre-season friendly or annually for a bogus sponsorship deal to allow the owner to inject money. Only values deemed to be at a fair market rate will be allowed on the books, meaning City won't be able to claim for a sponsorship deal that earns them more than the big teams in the league.
MarkF
 

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