UEFA President Michel Platini was interviewed on RMC radio and he announced a possible change in the Financial Fair Play rules.
The matter is in the hands of the UEFA Executive Committee that will convene on the 29th and 30th of June in Prague and it looks like regulations might be relaxed which is a good thing for the competitiveness of the UEFA competitions but a bad news for the Arsenal.
The original aim of the FFP was to reduce club’s overall deficit as not so long ago, debts were spiralling out of control and owners were reluctant to inject cash time and time again. Clearly this part has been a success with debt reduced overall from €1.7Bn in 2011 to €400M in 2014.
At the same time, the FFP rules have prevented new entrants like Qatari owned Manchester City and PSG or Russian owned AS Monaco to spend and invest in buying top quality players. This has led to criticism that old money and teams like Juventus, Barcelona, Manchester United, Bayern Munich or Real Madrid had a competitive advantage over those new entrants as they already had steady income. Their financial power allowing them to buy pricey players and still balance the books.
Teams who did not manage to stay within the regulations ended up with sanctions ranging from fines to exclusion from the UEFA competitions.
Last season, Manchester City and PSG were issued with restrictions on spending and also with squad number restrictions in the Champions League. AS Monaco were also hit by the UEFA ruling and decided to totally change their business plan. They went from buying superstars to quickly build a competitive team fighting to win the Champions League to building up a young squad on the cheap, reselling them for a higher value. Hence their summer departures of James Rodriguez to Real Madrid and Falcao to Manchester United.
As Arsenal have an excellent business model, they are under no threat for the Financial Fair Play and the fact that many new entrants were unable to purchase new players due to FFP ruling was certainly validating the club strategy.
With the potential relaxing of the rules, the new entrants spending power will be restored and therefore there will be more competition for new signings as £50M to £100M will not be in problem for the Qatari-owned sides.
There is also another point that is likely to be discussed in term of regulation and that is the fiscal harmonisation between European countries.
It is well known that some countries have a clear competitive advantage in term of taxes as revealed by a UCPF survey from November 2014. There is a possibility that the FFP might find a balance to make it more equal for the countries with higher taxes.
Let’s take an example of a player that earns €600,000 per year. Taxes paid by the clubs amount to € 14,900 in Spain, €16,000 in Germany, €38,000 in Italy, €94,500 in England and €246,000 in France.
It will be interesting to see how far UEFA will go in relaxing the FFP regulations and it could have an effect on the transfer market as early as this summer.