BY PROF DR IAN BLACKSHAW
UEFA, the Governing Body of European Football, has confirmed on 25 September, 2014 that they are investigating Liverpool Football Club for possible breaches of the Financial Fair Play (FFP) Regulations, along with six other leading European Clubs, namely, Monaco, Inter Milan, Roma, Besiktas, Sporting Lisbon and Krasnodar.
Under the FFP Regulations, which came into force in May 2014, clubs competing in Europe must limit their losses to £35.4m over two seasons.
UEFA are beginning to show their teeth so as to bring financial order to ‘the beautiful game’ in Europe, having fined Manchester City and Paris St-Germain £49m in May of this year for breaking the rules. Both clubs have also had a limit imposed on their spending and their squad size in respect of the Champions League competition.
In the case of Liverpool, they are reported to have incurred losses of £49.8m and £41m in the 2012-13 and 2011-12 seasons respectively.
The seven clubs currently under investigation by UEFA are required to submit to the Club Financial Control Body (CFCB), which was set up by UEFA in 2012 to oversee the application of the UEFA Club Licensing System and the FFP Regulations, “additional monitoring information” in October and November of this year before UEFA decides whether the FFP regulations have been breached, and, if so, the penalty to be imposed on the clubs concerned.
Money raised commercially, for example, through sponsorship deals, can be set against losses and also further reduced if investments have been made in youth development, infrastructure in community projects.
It has been reported that Liverpool are “relaxed” about the UEFA investigation into their financial losses, so it will be interesting to see what finally happens.
Last season, 2013-2014, 76 clubs were apparently at risk of breaking the FFP Regulations, but only 9 clubs were found guilty and punished.
UEFA have also announced that 5 clubs participating in the 2014-2015 UEFA club competitions have had their prize money temporarily withheld for making late payments to other clubs, employees and/or tax authorities. The clubs concerned are: Bursaspor (Turkey); Cluj and Astra Giurgiu (Romania); Budocnost Podgorica (Montenegro); and Ekranas (Lithuania).
The FFP Regulations are extremely complex and, as Michel Platini, the President of UEFA, has observed “the devil is in the detail!”
UEFA have worked closely with the clubs in introducing and implementing the FFP Regulations, which contain a ‘settlement’ option, which allows individual clubs ten days in which to negotiate the finding of the CFCB. Decisions can also be appealed to the Court of Arbitration for Sport.
For further information on the FFP Regulations and their application, see the article by Tom Serby in the June 2014 issue of GSLTR (Global Sports Law and Taxation Reports) at pages 6-10.
Prof Dr Ian Blackshaw is an International Sports Lawyer, Academic and Author and may be contacted by e-mail at ‘firstname.lastname@example.org’