NYON, Switzerland – UEFA approved new licensing rules on Thursday (April 7) to replace its current Financial Fair Play (FFP) guidelines, allowing European clubs to increase losses while limiting spending on labor and transfers.
As expected, European soccer’s governing body decided to go beyond the FFP standards, which were introduced in 2010 in order to reduce spiraling debt across golf clubs throughout the continent.
The advent of state-owned titans like Manchester City and Paris Saint-Germain had exposed FFP’s flaws.
“The most significant novelty will be the adoption of a squad cost rule to improve cost control in regard to player wages and transfer prices,” UEFA president Aleksander Ceferin said after a meeting of the body’s governing committee in Nyon, Switzerland.
UEFA will now allow clubs to declare losses of 60 million euros (US$65.5 million) over three years, rather than the previous limit of 30 million euros, and the allowed figure will even reach 90 million euros for a club in “excellent financial condition.”
This relaxation of the principles, however, is combined with the introduction of new wage spending ceilings.
There was never any risk of bringing in a specific wage cap like those used in North American sports because UEFA has 55 member countries with well over 1,000 clubs and must comply with European Union and national labor and competition laws.
However, under UEFA’s new rules, clubs will be required to spend no more than 70% of their total income on player and employee pay, transfers, and broker fees by the 2025/26 season.
As current contracts expire, the cap will be reduced to 90% of membership profits in 2023/24, then to 80% the following season, and finally to 70% the following season.
“Breach of the agreement will result in predetermined financial fines and sporting actions,” Ceferin stated.
Clubs that violate the rules may face transfer bans, mortgage limitations, relegation from one European competition to another, and points deductions in the Champions League.
