UEFA - new financial sustainability regulations
The UEFA Executive Committee today approved the new UEFA Club Licensing and Financial Sustainability Regulations at its meeting in Nyon.
The regulations are the first major reform of UEFA’s finance regulations since they were introduced in 2010. Given their name, it is no surprise that the key objective of the new regulations is to achieve financial sustainability. These will be achieved through three key pillars: solvency, stability, and cost control.
For solvency, the new no overdue payables (towards football clubs, employees, social/tax authorities, and UEFA) rule will ensure better protection of creditors. Controls will be performed every quarter and there will be less tolerance towards late payers.
The new football earnings requirements are an evolution of the existing break-even requirements and will bring greater stability to club finances. To ease the implementation for clubs, the calculation of football earnings is similar to the calculation of the break-even result. While the acceptable deviation has increased from €30 million over three years to €60 million over three years, requirements to ensure the fair value of transactions, to improve the clubs' balance sheet, and to reduce debts have been significantly strengthened.
The biggest innovation in the new regulations will be the introduction of a squad cost rule to bring better control in relation to player wages and transfer costs. The regulation limits spending on wages, transfers, and agent fees to 70% of club revenue. Assessments will be performed on a timely basis and breaches will result in pre-defined financial penalties and sporting measures.
The new regulations will come into force in June 2022. There will be gradual implementation over three years to allow clubs the necessary time to adapt.