The cure for debt worked. Europe is in profit

In 2011, European football clubs were becoming increasingly indebted under the pressure of the economic crisis. At the same time, wealthy sheikhs entered the scene at Manchester City and Paris St. Germain, where profitability was irrelevant in the face of expensive signings and high player wages. In response to these issues, the Union of European Football Associations (UEFA) introduced so-called Financial Fair Play. Under threat of sanctions, new rules were implemented to ensure fair competition—especially as not all countries paid attention to prudent financial management of their clubs.

By 2016, European football had undergone a major financial recovery thanks to Financial Fair Play. While in 2010 and 2011 clubs recorded a combined loss of €718 million, in the past two seasons they posted record profits of over €1.5 billion. This is according to a financial report published on UEFA’s website.

Former Slovak Football Association president František Laurinec, who was involved in the creation and implementation of Financial Fair Play as a member of UEFA’s Executive Committee, commented on the results: “Naturally, we’re satisfied with the results. These profits stay with the clubs and, in most cases, are reinvested into football,” he said in an interview with the Economic Daily.

The significantly improved financial indicators have been most evident in investments into infrastructure—such as the construction of training facilities, youth academies, and football stadiums. “Since the introduction of Financial Fair Play, 50 new arenas have been built, and several more are in the planning stage,” added Laurinec, one of the 20 members of the committee that oversees and directs European football.

From the start, Financial Fair Play faced many critics, some of whom argued that it violated European Union competition laws. “That’s why UEFA maintained continuous dialogue with the European Commission for Competition to ensure that the rules were legally sound,” explained sports analyst and football agent Jozef Tokos. The legitimacy of the rules has been repeatedly confirmed by the Court of Arbitration for Sport in Lausanne, which consistently ruled in UEFA’s favor in disputes brought by football clubs.

Interestingly, the number of clubs penalized for violating Financial Fair Play rules has been declining each year. In the first season sanctions were applied (2012/2013), they affected 23 clubs. Most recently, only four clubs were sanctioned. “There are fewer and fewer rule-breakers. The main purpose of the sanctions is to ensure fair competition in the Champions League and Europa League,” Laurinec said. The harshest penalty is exclusion from European competitions. Clubs such as Serbia’s Partizan Belgrade, Romania’s Rapid Bucharest, and Spain’s Malaga were among those banned. Due to repeated violations and lack of financial discipline, Turkish side Galatasaray Istanbul was barred from participating in European competitions for two consecutive seasons.

“The system is respected, and it’s enforced in coordination with EU representatives. UEFA ensures compliance. Besides exclusion, there are many other measures in place to encourage clubs to act responsibly,” said Tokos. One such measure is fines. Even wealthy clubs owned by Arab sheikhs—like Manchester City and Paris St. Germain—have been penalized. In the 2013/2014 season, both paid €60 million each for breaching the rules.