While the Union of European Football Associations (UEFA) Champions League has become the most sought after trophy for the world’s best football clubs, much of the off-field narrative has become dominated by Financial Fair Play (FFP). UEFA implemented FFP in response to certain clubs spending well-beyond their revenues and adversely impacting both their own financial sustainability and the wider competitive balance. This is what many pundits call "financial doping".
Despite "questionable" accounting, City sure plays pretty football in person (vs. Club Brugge 2021).
The main aim of FFP is to ensure that clubs don't suffer huge financial losses. This means that a club's income should match its expenses during a specific three-year period. Some minor losses are allowed within certain limits during this time. These limits have ranged from €5 million to €45 million, but the 2018 rules capped it at €30 million. If a club exceeds this limit, they can still avoid penalties by injecting their own money (equity) to cover the deficits.
If a club breaks the FFP rules, in theory they can face fines, limitations on the number of players they can have in UEFA competitions, or even suspension from those competitions. For top clubs, a suspension from the Champions League is a particularly serious consequence.
However, what is the reality when these rules, designed to ensure fiscal stability and fair competition, are bent, or even broken? And how does the Court of Arbitration for Sport (CAS), the premier international body for resolving sports disputes, respond to such violations?
This is exactly what I explore in Financial Fair Play and the Court of Arbitration for Sport, focusing on four major FFP. While there's a wealth of literature on the economic effects of FFP in European football, there exists a notable gap in its handling at the CAS. The article aims to bridge that gap.
These CAS cases have revealed substantial loopholes in FFP regulations, allowing some of the most notorious offenders to sidestep damaging sanctions. Particularly notable are clubs controlled by state-related entities, like Paris Saint-Germain and Manchester City, who have ingeniously transformed into powerhouses using disguised equity infusions to evade FFP.
I also shed light on how the CAS's leniency in dealing with FFP violations follows a trajectory set by anti-doping jurisprudence, where rule-breakers (cough, Russia) all too frequently win through strategically exploiting process. This trend has led to a shift in the cost-benefit analysis of rule-breaking, thereby weakening the effectiveness of the FFP regulations. This leads into a broader discussion on how CAS rulings have influenced the landscape of FFP in European club football, drawing parallels to the impacts of CAS jurisprudence in Olympic sports, and touching on the need for policy reform.
If you’re interested in reading more, the article is available free and open access at the link!
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