After months of speculation, settlements have finally been reached between UEFA and nine clubs over breaches of European football's Financial Fair Play regulations. So, what does it all mean? Here are answers to the most pertinent questions.
Q: So UEFA have issued their Financial Fair Play settlements! Guess that’s done and dusted for Manchester City, Paris St. Germain and the others, right?
A: Not quite. The settlements could still be challenged by “affected clubs” who think City, PSG and others got off easy. They have 10 days to lodge an appeal.
Q: Affected clubs? Like who?
A: Well, Arsenal, for example. Arsene Wenger minced no words recently when he said clubs that violated Financial Fair Play ought to be kicked out of the Champions League.
Q: What does he care? Arsenal finished fourth, they’ll be in it next year...
A: Well, yes, but if City were excluded then there would be one fewer British club to divide the “market pool” portion of the Champions League TV money with. And that would be pretty huge. Still, we won’t know anything for the next 10 days or so, though I'd imagine both City and UEFA president Michel Platini are keeping their fingers crossed that nobody challenges.
Q: Platini? Why?
A: Because the whole point of the settlement process is to agree a sanction with the clubs so that it doesn’t go to the next two levels of judgment, the Adjudicatory Chamber (AC) or, ultimately, to the Court of Arbitration for Sport (CAS). Platini doesn't want that because he'd rather reach a (relatively) amicable solution rather than wading into the unknown with the AC or CAS, which are pretty independent bodies.
With no sentencing guidelines and no prior jurisprudence, there’s no telling what they might do. They could come up with something that is so lenient it’s toothless, in which case Platini and UEFA would lose credibility and upset those clubs who have complied. Or it could be something massively harsh -- like exclusion -- which could open the door for City or PSG or whomever to sue UEFA.
Q: Sue UEFA? I thought clubs weren't allowed to do that...
A: Technically, they're not. They're supposed to agree to sporting justice and, ultimately, CAS. And if they do take legal action against UEFA or FIFA, they risk being suspended from all competition. The rule exists to stop a club going to a friendly local court and getting some kind of an injunction against UEFA.
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But hey, we're in the real world. City and PSG aren’t just clubs -- they're businesses. And they could argue they have a right to redress. Plus, there’s a precedent from a few years ago, when Swiss club FC Sion sued UEFA and things got really messy. So basically everybody wants to avoid that.
Q: OK, so no lawsuit and the nine clubs take their punishment on the chin. Did they get off lightly?
A: It’s tough to say for certain, because while UEFA revealed the extent of the sanctions, we don't yet know the extent of the breach. We can only speculate. But judging from the settlements, UEFA came down especially hard on what you'd call “related party transactions” -- when an owner with multiple businesses gets one of his other businesses (or a business owned by a buddy or a relative or another branch of his government) to sponsor his club at an inflated price.
- Man City and PSG among clubs to reach FFP settlements
Q: And is that what City and PSG did?
A: Well, it would appear that UEFA felt they did just that. Remember that massive contract that PSG signed with the Qatar Tourism Authority for “up to $270 million” that was somehow magically back-dated? UEFA’s Club and Financial Control Body (CFCB) thought it was just that: way above market value. They got their eggheads to look at it and assessed “a fair value significantly below that submitted by the club.”
Q: And City?
A: From what we can tell, they were in a similar boat. City had booked revenue by selling assets from “within their group structure” and these won’t be counted towards future FFP calculations. Also, UEFA scrutinized a couple of commercial deals. They agreed they’d accept them but, in exchange, City can’t negotiate better financial terms. So that keg is kicked, so to speak.
Q: OK, what about the punishments?
A: Well, first and foremost, both clubs get whacked with an $82 millinon fine, though UEFA aren’t calling it that. They’re calling it “withheld prize money” that will be held back over three seasons starting from this one. However, two thirds of that is suspended.
Q: Which means?
A: Well, if PSG and City hit certain financial targets then they’ll get up to two-thirds of it -- or $54 million -- back. It’s a bit like an incentive. Like when you were a kid and your mom took your bike away because you were a brat, but then she told you that if you did your homework you could have it back the next day.
Q: Yeah, I remember that. So what do PSG need to do?
A: They need to keep their “break-even deficit” losses to $41 million for financial year 2015 and they need to break even in 2016. Remember, these aren't accounting losses -- these are “break-even deficit losses” under FFP rules. So some expenses, like spending on infrastructure and youth development, aren’t included.
Q: Yikes! And City?
A: They need to keep their losses under $27.4 million in 2014 and $13.7 million in 2015. And, of course, they won't be able to pump up some of those commercial deals we talked about earlier, nor will they be able to move assets within their group to generate revenue. But that’s not all...
Q: Oh?
A: Yeah, Platini was big on not wanting to give rich owners the opportunity to simply pay their way out of it. Which is why he didn't want a luxury tax, like in the NBA. He wants sporting sanctions, too, stuff that will directly affect you on the pitch.
Q: Such as?
A: Well, for a start, City has agreed to freeze “employee benefit expenses” -- bonuses to you and me -- for the next two seasons, at least as far as the Champions League squad is concerned. There’s also a restriction on the number of new players City can register for their Champions League squad. That number will be determined by City’s net spend in the transfer window.
Spend a lot and you might get to register just one new signing. Spend a little and it might be more one. UEFA don’t actually specify, and I’m guessing it’s because it would put City at a significant disadvantage when it came to signing new players. Oh, and there’s more: City will only get to register 21 players in the Champions League instead of the usual 25.
Q: 21? Poor babies ... that’s still a lot, isn't it? Plus, like now, I assume youth players aren’t included in the total. I mean, what kind of punishment is that?
A: It’s actually pretty stiff because eight of those 21 will still have to be what UEFA call “locally trained” players. That means guys who spent at least three years between the ages of 15 and 21 with a club from that country (England in City’s case).
Ever wonder why Richard Wright and Dedryck Boyata -- two guys who hardly ever play -- are on City’s Champions League roster? Because they qualify as locally trained. So what this means is that City will either have to carry some dead wood and hope injuries remain at a minimum or buy more “locally trained” players, which can get expensive. Especially if other clubs know how badly they need them.
Q: Did PSG get a similar deal?
A: Exactly the same.
Q: And what about the other clubs?
A: Zenit are the other big club who got hit hard. Their fine is $16 million in withheld prize money, half of it suspended. And they have comparable squad restrictions in the Champions League, as well as the salary freeze. Same goes for Rubin Kazan and Anzhi Makhachkala, though their withheld prize money total is smaller, $8 million and $2.7 million respectively. And then there are four others -- Bursaspor, Galatasaray, Trabzonspor and Levski Sofia -- who get a $270,000 fine and a freeze in salaries.
Q: Is all this fair?
A: Depends on your definition. But I guess both UEFA and the clubs ultimately agreed it was best to settle on this rather than take it forward all the way to CAS or, possibly, the European Court of Justice or the Swiss Civil Court. That would have been messy and you would have no idea what the resolution would be and when it would occur.
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Ultimately, UEFA and the clubs in breach have the same goal: eliminating hefty losses and operating at or close to break-even. It’s just a question of how quickly they get there. This will likely speed up the process for PSG, City and Zenit, though it will hurt them somewhat on the pitch. I guess they'll just have to be more patient.
We’ll find out if the guys bankrolling these clubs -- very rich individuals like the Qataris, Sheikh Mansour and Gazprom -- are in it for the long haul or whether they’re so impatient and so hell-bent on winning straight-away that because they can’t simply throw endless cash at the problem, they walk away.
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Personally, I don’t think the latter scenario will come to pass. City have said and done all the right things, both in terms of building something tangible in the community and trying to grow their brand. Mansour isn’t going to walk away. I doubt the Qataris will from PSG, either; they’ve invested across the board and it would be silly to pull the plug now. As for Gazprom? I don’t know, but with Russia getting the 2018 World Cup and the company being major sponsors of UEFA, they seem pretty committed.
Q: Gazprom sponsor UEFA, too, and doesn't Platini's son work for the owners of PSG?
A: Indeed he does. He runs a sportswear company that is directly owned by Qatari Sports Investments, who also own PSG. And, sure, Gazprom are huge sponsors not just of UEFA, but also are commercial partners with a number of major clubs, including Chelsea and Schalke. Many thought UEFA’s CFCB would go easy on PSG and Zenit for that very reason. Instead, it looks like they throw the book at them. (Well, if not an entire book, then a big chunk of it.)