UEFA - Financial Fair Play

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Manchester City fear UEFA fine for big spending... and may have broken FFP rules

Manchester City are becoming increasingly nervous that they will be one of the first major European clubs to be found in breach of UEFA’s financial fair play rules.

European football’s governing body examined the finances of about 20 clubs who they feel need close examination with regards to FFP. That process - which also includes Chelsea and Paris Saint-Germain - is expected to continue on Wednesday.

Though City were confident when they released their latest annual figures at the end of January that they had done enough to squeeze the right side of UEFA’s guidelines, they have become less certain over recent weeks.


Shock: Manchester City could be hit with a large fine or transfer embargo if found to have breached UEFA's strict Financial Fair Play rules

Officials at the world’s richest football club are unsure about how UEFA view their attempts to add extra revenue streams to their vast business in the last 12 months and are awaiting news with some trepidation.

If City are found to be in breach, they are likely to be fined rather than banned from European competition.

UEFA have indicated all along that they are likely to look favourably on clubs who have made genuine efforts to reduce their losses when it comes to deciding on punishment. City certainly fall into this category, having cut their annual deficit from £98million to £52m over the course of the last two financial years.

Part of that has come through reining in their transfer spending, which has fallen since 2011, when they set a club record with the £38m signing of Sergio Aguero.

Nevertheless, if City were to fail the test it would represent a blow to their reputation and would be an enormous disappointment, given the extraordinary lengths they have gone to in a bid to comply.

City’s official stance yesterday was that they have received no indication from UEFA as regards what may happen.

Nevertheless, at the heart of the club’s anxiety is UEFA’s investigation into City’s unusual decision to sell £24.5m worth of player image rights to an external company. That has never been done before by a leading English club and the interest in the manoeuvre has been heightened by the fact City have declined to reveal the company’s identity.

The potential sanctions facing City...
This is a list of UEFA punishments that any club breaching FFP rules could be hit with:
a) warning
b) reprimand
c) fine
d) deduction of points (in Champions League or Europa League)
e) withholding of revenues from a UEFA competition
f) prohibition on registering new players in UEFA competitions
g) restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for the purposes of UEFA club competitions
h) disqualification from competitions in progress and/or exclusion from future competitions
i) withdrawal of a title or award

Marquee signing: City spent £38m brining Sergio Aguero to the Etihad in July 2011, but such expensive signings may mean City fall foul of FFP regulations

City are also aware that UEFA are examining the way in which the club raised £22.45m from selling their intellectual property rights to outside parties. It is thought this figure includes charging affiliate clubs New York City FC and Manchester Ladies FC for the use of City’s scouting and commercial services.

Finally, UEFA are known to be looking at the structure and market value of the 10-year, £350m deal City struck with Etihad in 2011 to sponsor their stadium, shirts and new training complex.

City are confident that everything they have done to reduce the losses created by the colossal spending of the last five-and-a-half years is above board and able to withstand the most rigorous examination. If they are found in breach of FFP, they may well appeal.

Once UEFA’s club financial control body have met this week they will write to clubs telling them they have passed or failed and offering those in breach a punishment or ‘settlement’.

The clubs will then have until April 30 to accept the sanction or appeal. UEFA would expect to deal with any appeals by May 5 but the matter could in theory drag on all summer if affected clubs appeal to the Court of Arbitration for Sport.

UEFA’s FFP guidelines say clubs must keep losses to an aggregate of £37.2m over the 2011-12 and 2012-13 seasons and although City’s figure stands at £149.5m, the regulations contain two significant loopholes for clubs looking to prove they are making concerted efforts to reduce their losses.


In trouble: Signings like Edinson Cavani could mean Paris St Germain contravene UEFA's rules

The first is that any club who reduce their deficit between the last two seasons are allowed to write off the wages of any player signed before 2010.

Any spending on youth development, infrastructure and community projects over the past two years’ accounts is also deductible for FFP purposes.

UEFA president Michel Platini, who has driven FFP from its inception, has spoken publicly about throwing clubs out of European competition if they fail the tests but the truth is that UEFA only intend to apply this to repeat offenders.

One further issue that City will also be aware of, though, is that other European clubs can appeal if they think their rivals’ finances have not been examined properly.

Teams like Manchester United and Arsenal, for example, are keen that UEFA implement the rules as stringently as they said they would when FFP was first launched five years ago.

http://www.dailymail.co.uk/sport/football/article-2605386/Manchester-City-fear-UEFA-fine-continued-big-spending-broken-Financial-Fair-Play-rules.html