Football financial fair play rules examined

By Michael McGlinchey

30 March 2015

ICAS members heard from experts on the implications of football financial regulation at a special event hosted by Chelsea FC

The challenging world of football finance was the subject for an ICAS members' event at Chelsea FC's Stamford Bridge ground in London.

The Finance of Football gathering followed last year's publication of the ICAS research paper Financial Fair Play – Implications for Football Club Financial Reporting , authored by sports finance academic and CA Stephen Morrow, of the University of Stirling.

The event examined the implications of compliance with rules set out by the European and domestic football governing bodies.

More than 100 ICAS members heard from Stephen; Trevor Birch CA, who is a business restructuring partner and co-head of the Sport Group at BDO LLP; Kirsty Beck, who is Statutory and Regulatory Accountant at Chelsea; and Daniel Geey, Lawyer at Fieldfisher Competition and EU Regulatory Law Group.

Much of the focus was on the Financial Fair Play (FFP) rules introduced by European governing body UEFA and Trevor Birch said this was the first significant financial intervention Premier League clubs had seen.

English Premier League Champions Manchester City and French Ligue 1 Champions PSG topped the list of nine clubs which originally faced sanctions over alleged non-compliance with the new rules. Central to FFP has been a three-year break-even rule, which is designed to foster longer-term planning and decision-making.

However, compliance issues have also emerged for clubs in rules set out for the Premier League and Football League, which are also aimed at ensuring clubs live within their means.

Trevor said a number of accounting issues have been particularly relevant in the management and scrutiny of football finances and these include: related party transactions, for example in writing off loans; fair value in sponsorship deals and offsetting of costs through club partnerships with foreign clubs.  

Ongoing debate

Stephen focused on the FFP rules, which he said were brought in amid the paradoxical situation of rising club revenues but increasing costs, for example in players' fees and wages, and potential losses and administration. 

He summarised arguments of opponents and supporters of FFP in the ongoing debate over its imposition.

Stephen said arguments levelled by critics have included claims of a negative impact on clubs' autonomy.

He said opponents have claimed that FFP protects the "status quo", for example, by establishing a ceiling on deficits and restricting equity contributions at aspiring clubs.

And, he said, critics have pointed to FFP targeting "perception rather than reality", where very few clubs have actually ever disappeared as a result of financial problems.

Those in favour of FFP have pointed to the interdependence of clubs, both in competition and in finance, with the need for a regulated marketplace.

Stephen said FFP's supporters highlight the nature of competition in areas including the player transfer market where clubs cannot be independent of their competitors' transfer activity. 

Further arguments have included the assertion that market forces alone are insufficient to control clubs and that while clubs may be economic in basis, they are social in nature and the interests of the wider pool of stakeholders and supporters, in particular, have been cited as a key reason for regulation.

Members also heard from Chelsea's Kirsty Beck on the processes of managing compliance with the rules and from David Geey, who detailed developments in the ongoing governing bodies' investigations and the regulatory debate.


  • Research

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