The Football League and Financial Fair Play: Crucial Issues to Resolve

Football League Clubs – have your say: Financial Fair Play is almost upon you

By Daniel Geey, Solicitor in the Sports Group at Field Fisher Waterhouse LLP

It has been reported recently that the Football League (FL) is to adopt its own set of Financial Fair Play (FFP) regulations. This follows on from UEFA’s regulations which have effectively come into force this season. Various workshops were run over the summer for FL clubs to discuss what UEFA had done and to address a number of questions the FL clubs needed to consider when adopting its own set of the FFP rules[1].

An intention to bring the regulations into force was voted and agreed upon during the FL’s annual summer 2011 AGM. This was followed up in December 2011 with the following press release:

“Owners and executives of Championship clubs re-affirmed their commitment to the principles of Financial Fair Play as a means for encouraging financial sustainability at club level. After further discussions about the practical implementation of Financial Fair Play, clubs agreed that the proposals should be finalised and taken forward to the next meeting of Championship clubs at Derby in February for final ratification. If approved, the new rules would take effect from the start of the 2012/13 season.”

A few interesting issues take shape as a result of the FL’s FFP announcement, and below are a number of talking points to consider.

  1. It appears that only the 24 Championship clubs are being consulted on the regulations because they will be the ones initially affected. Many have pointed to the fact that a quarter of the Championship changes each season. Presumably the consultation should therefore be just wider than the 24 Championship clubs. It will be unsatisfactory for many that non-Championship (FL and relegated Premier League (PL) clubs) will lack a voice in relation to regulations that may significantly affect them in the future. It raises the question of whether the PL needs to have a say in the FL regulations.
  2. One of the biggest problems for the FL to resolve is the relegation/promotion conundrum i.e. PL clubs relegated the Championship and the clubs promoted to the Championship. Their accounts will be required for FL compliance. But it would be a very brave regulator to sanction clubs for breaching the FFP regulations for accounting periods when they were outside of the Championship.
  3. There may also be major transitional issues if the regulations are to be introduced in time for 2012/13 season. Clubs participating in UEFA competition had a much longer period to financially acclimatise.
  4. With the Select Committee Report into Football Governance and the Government response recommending a Domestic Club Licensing system which would presumably cover subjects such as financial sustainability, this may more adequately provide the platform for a more joined up approach to regulation in contrast to the separate UEFA, PL and FL rules.

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