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Malaga, its Overdue Debts & UEFA Financial Fair Play

Introduction

The aim of this blog, is to clarify that Financial Fair Play (FFP)  not only applies to ensure that clubs break-even, but that the FFP regulations cover a wide range of licensing conditions which are overseen initially by national FA’s. Such requirements include ensuring clubs pay their debts in a timely manner.

All clubs wanting to play in UEFA competition must submit the required licensing documentation to the relevant national football association and for break-even purposes UEFA. UEFA, through its newly constituted Club Financial Control Body (CFCB) has the power to conduct club audits and ask further questions to ensure FFP compliance. If the Panel believes that the FFP rules have not been correctly followed, it has the disciplinary power to sanction clubs in breach. It should be noted that FFP is already in action and has allowed UEFA to sanction a number of clubs. One of those clubs is Malaga.

Malaga

Towards the end of last year, UEFA announced that it was to temporarily withhold prize money for clubs who had qualified for UEFA competition but who had ‘overdue payables’ due. It is important to stress that such sanctions are not about breaching the break-even criteria. The withholding of prize monies by UEFA was for breaching the overdue payables provisions of the UEFA licensing regime (i.e. outstanding debts not paid at a particular time to other clubs, employees and social/tax authorities). The overdue payables provisions are part of the wider club licensing and FFP rules that are currently in force.

Then at the end of December 2012, UEFA set out the following, in relation to a number of clubs including Malaga, in it’s press release“The decisions of the CFCB adjudicatory chamber are as follows;

Málaga CF (ESP): The club is excluded from participating in the next UEFA club competition for which it would otherwise qualify in the next four seasons (i.e. 2013/14, 2014/15, 2015/16, 2016/17). In addition, Málaga CF will be excluded from a subsequent UEFA club competition for which it would otherwise qualify (in the next four seasons) if it does not prove, by 31 March 2013, that it has no overdue payables towards football clubs or towards employees and/or social/tax authorities, in accordance with the UEFA Club Licensing and Financial Fair-Play Regulations. Málaga CF has also been fined €300,000. The prize money withheld on 11 September 2012 (as a conservatory measure) will be released.”

In response, a Malaga club statement said: “Málaga Club de Futbol wish to communicate their total disagreement with today’s Uefa decision. The measures taken against the club are absolutely disproportionate and unjustified given the club’s situation. We consider that the club is being punished unfairly and used as an example to others. Given the total and absolute indignation and consternation on the part of the club, Málaga CF wishes to state that it will work energetically and without rest to achieve justice, using all available necessary means. Málaga CF wish to add that they do not understand, and consider totally incomprehensible and abusive, that after having received this judgement they must now wait an unknown period of time to know the evidence upon which it was taken.”

UEFA’s CFCB has the power to sanction clubs for breaches of the FFP rules. Such sanctions include a reprimand, a fine, withholding of prize monies, points deductions, refusal to register players for UEFA competition, reducing a club’s permitted squad size, disqualification from competitions in progress and/or exclusion from future competitions. In Malaga’s case, UEFA has taken the ultimate sanction and banned them from future competition should they qualify for UEFA club competition in the next four seasons.

Conclusion

The next step is for Malaga to receive the full reasoning of the CFCB in order to consider their appeal options to the Court of Arbitration for Sport in Lausanne. When many believed that UEFA’s licensing regulations were toothless, UEFA is certainly showing that its regulations bite. UEFA has the power to sanction clubs and is sending out a strong message that certain overdue debts will not be tolerated. By comparison, when the break-even requirement comes into force (in 13-14), similar sanctions, could well be applied.

About

I am an associate in Field Fisher Waterhouse LLP’s Competition and EU Regulatory Law Group. First and foremost, I am a football fan. After completing my law degree with a dissertation on the Bosman ruling, I embarked on a Masters Degree in Competition Law and European Football Broadcasting Rights.

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