Our Knowledge

04.Jul.2018

Financial Fair Play: a follow up

What a difference a few months makes. In April the press was full of the possibility that Paris Saint Germain (PSG) might be found guilty of breaching the financial fair play allegations and face the possibility that they might be excluded from participation in the Champions League. Fast forward a few months and the PSG case has been put to bed with the Club Financial Control Body (CFCB) indicating that PSG are in line with their Financial Fair Play regulations for the period in question after significant fair value adjustments of several club sponsorship contracts. Of course the FFP is a rolling obligation and so future scrutiny of the windows in which Neymar and Mbappe transferred to the club may still throw up issues in future. 

However, the current drama rests with another recent decision of the CFCB, specifically its June decision in respect of AC Milan which found them to be in breach of the FPP rules in particular the break-even requirement. The club has therefore been excluded from participating in the next UEFA club competition for which it would otherwise qualify in the next two seasons (i.e. one competition in 2018/19 or 2019/20) subject to qualification.  AC Milan has indicated they will appeal to the Court of Arbitration for Sport so there is a possibility that the punishment will be overturned. AC Milan had finished sixth in Serie A and would have been competing in the Europa League this year and focussing on returning to the Champion League places.

AC Milan is not the only club (although it is no doubt the most prestigious club) to face a sanction excluding it from European competition this year. Late last year, the CFCB published a decision excluding Panathinaikos FC from participating in the next European club competition on the basis that it had breached the overdue payables requirement of the FFP rules it would otherwise qualify for in the next three years (i.e. 2018/19, 2019/20 and 2020/21) unless the club could demonstrate by 1 March 2018, that it had paid the overdue amounts or had concluded an agreement with its creditors with regard to those amounts. The CFCB also imposed a fine of 200,000 euros (100,000 of which was suspended). In late March, the CFCB concluded that Panathinaikso FC had not been able to demonstrate that it had paid the overdue amounts or that it had been able to reach an agreement with its creditors. The decision on exclusion was therefore confirmed and the suspended €100,000 payment was required to be made immediately.

In our earlier piece, we said it was time for agents and players to get more serious on these issues with clubs given the impact that these issues can have on players careers and earnings (through no fault of the players). While players might accept not playing in European competition because they have failed to qualify as a team, to have qualified and for the club than to be banned because of a breach of FFP rules is another thing altogether (particularly given that compliance is largely something within the gift of the club). Nothing we have seen in these new cases, dissuades us from the view that compliance with FFP and the impact on players is likely to be the new battleground of negotiation on transfers between clubs and players.

Article by Annemaree McDonough