New UEFA Club Licensing and Financial Sustainability Regulations take full effect from 1 June 2022, replacing the existing Financial Fair Play Regime for clubs who compete in European competitions.
On the one hand, the new regulations tighten the controls on clubs' spending in some areas, reinforce the idea that club losses are to be limited (albeit acceptable losses over each three year monitoring period are increasing to €70million subject to certain conditions compared to €30million under the previous UEFA regime) and for the first time at European level effectively introduce a specific cap on the amounts clubs can spend on wages. On the other hand, there are those that will say that the changes do not go far enough and instead they simply reinforce a system of inequality that is geared in favour of the clubs with deeper pockets.
Simon Leaf, Partner and Head of Sport at Mishcon de Reya, said: "This marks the most significant reform to the financial regulation of European football in a generation. UEFA is the grandfather of Financial Fair Play and we expect both the Premier League and the EFL to also amend their rules to ensure that the domestic football finance regulations remain in sync with the European regime. Those UK clubs competing in European competition will be acutely aware of the changes that have now come into force and we are likely to see a greater pressure on transfer fees and wages for those clubs that regularly compete in European competition as a result. Alongside the other changes to the domestic football regulatory landscape that are on the horizon following the recent Crouch report, we are entering a period of great uncertainty for clubs across the country, as they wait to see just how the relevant regulators will adapt to the new rules."
Tom Murray, Managing Associate in the Sports group at Mishcon de Reya, added: "This is the first of many upcoming reforms to the financial regulation of football. UEFA's Financial Fair Play regime may be dead but the reign of Financial Sustainability is about to begin, bringing with it a host of legal challenges and potential judicial reviews as clubs grapple one another to gain competitive advantage."