UK: My Top Ten Tips For Understanding Football League Financial Fair Play

Last Updated: 4 September 2013
Article by Daniel Geey

Number 1: FL FFP regulations only apply to clubs participating in the FL Championship. Clubs in the FL Leagues 1 and 2 have to adhere to separate regulations called the Salary Cap Management Protocol (SCMP) which ties cost to a percentage of turnover.

Number 2: The overall aim of the rules is to ensure Championship clubs balance their books and do not spend more than they earn so that they become self-sustainable. In the context of the Championship clubs, this is to be achieved through:

  • some losses being acceptable in the first years of implementation;
  • sanctions (fines and a transfer ban) being brought in from the 2014/15 season; and
  • clubs being incentivised to comply with the rules by receiving a share of the non-compliant club's fines.

Number 3: Football League Financial Fair Play (FLFFP) came into play for the 2012-13 Championship season. There are no sanctions for breaching the regulations in the 12/13 and 13/14 seasons. A club can be fined (if the club is in the Premier League at the time of the decision) or be subject to a transfer ban (if the club remains in the Championship at the time of the decision). The below table sets out the different permutations.

Clubs Promoted to the PL

Clubs Relegated From the PL

Clubs promoted to the PL must provide FFP information for their promotion season by December 1 (i.e. for the season they were in the FL Championship). If a PL club has breached the regulations, they will be fined according to the sanctions table set out below.

Clubs relegated from the PL will not be subject to sanctions in their first season in the Championship as long as they have complied with all relevant PL regulations. The club would however be fined if it achieved promotion in its first season in the Championship whilst not complying with the FFP regulations.

Clubs that Remain in the Championship

Clubs Relegated From the Championship

Clubs that fail to comply with the FFP regulations will be subject to a transfer embargo. The first embargo can be enforced by the FL from the beginning of January 2015.

Clubs relegated from the Championship will not receive any Fair Play Tax pay out but will be required to comply with the SCMP.

Number 4: The below table sets out the acceptable permitted losses Championship clubs can make

Reporting Period

Date of Accounts Submission

Reporting Period Equity Contributions

 

Reporting Period Acceptable Deviation

 

Total Acceptable Deviation

FL Sanction Available

2012-13

Dec.'12 for 2011-12 season

£8m

£4m

£12m

No

2013-14

Dec.'13 for the 2012/13 season

£6m

£4m

£10m

No

2014-15

Dec.'14 for the 2013/14

£5m

£3m

£8m

Yes

2015-16

Dec.'15 for the 2014/15

£3m

£3m

£6m

Yes

2016-17

Dec.'16 for the 2015/16

£3m

£2m

£5m

Yes

2017-18

Dec.'17 for the 2016/17

£3m or lower

£2m or lower

>£5m

Yes

Number 5: By way of practical example, for the 14/15 season, a club's Fair Play Result (for the purposes of this example before calculating any acceptable deviation) is minus £6m. A club for the 13/14 reporting period can make a £3m loss and not fall foul of the regulations. However, as the club has made a £6m loss, an owner would have to inject £3m of equity into the club. If the owner does not, the club, all other things being equal, will be in breach of the FFP regulations. Note that an owner, in that season, can only inject up to £5m into the club. Any more and the club would be in breach of the regulations because it made losses over the combined £8m total acceptable deviation limit.

Number 6: Come the 14/15 season, a club that is in breach of the regulations will face sanctions. Failure to stay within the defined limits (leading to a negative Fair Play Result) will lead to the imposition of sanctions. The sanctions will vary depending on whether the club is promoted to the PL, remained in the Championship or was relegated to League 1.

Number 7: A calculation table of fines has been published to enable clubs to understand the potential size of the penalty. Clubs promoted to the PL will have to pay a 'Fair Play Tax' on the excess by which they failed to fulfil the Fair Play requirement ranging from 1% on the first £100,000 to 100% on anything over £10m. Clubs who comply with the regulations will receive a share of any fines imposed on non-compliant clubs. Any proceeds will be distributed equally amongst those clubs that complied with the FFP regulations for the season in question. Clubs that remain in the Championship, who breach the FL FFP regulations will have a transfer embargo imposed. Clubs who are relegated out of the Championship will not be entitled to any Fair Play Tax payout but will not be sanctioned.

Percentage of the Excess

Excess

Calculation (rounded up)

1% of the Excess between

£1 & £100,000

£1,000

20% of the Excess between

£100,001 & £500,000

A maximum of £80,000

40% of the Excess between

£500,001 & £1m

A maximum of £200,000

60% of the Excess between

£1,000,001 & £5m

A maximum of £2.4m

80% of the Excess between

£5,000,001 & £10m

A maximum of £4m

100% of the Excess over

£10,000,001 +

No Maximum

Number 8: The following is an example  for a club that is promoted to the Premier League but is in breach of the FLFFP for the year they were in the FL. If a club's accounts (after available FLFFP reliefs have been discounted) show that it is exactly £10m over acceptable deviation parameters, the fine will be £6,681,000 (i.e. £1,000 + £80,000 + £200,000 + £2.4m + £4m). As explained all fine proceeds will be distributed equally amongst FFP compliant clubs. It is not however expressly set out whether a fine could be part of a clubs costs or a distribution of a fine for a compliant club could be used as revenues for future Fair Play Result calculations.

Number 9: The new rules require clubs by December 1 of each season to provide annual accounts to the FL, setting out details relating to the previous playing season. The FL will use the financial information received to determine whether a club has complied with the regulations. As will be shown below, it is possible for a club to make a loss and still pass the FL FFP regulations. The FL will establish a Financial Fair Play Panel to hear challenges brought by clubs in relation to the initial Fair Play Result.

Number 10:   There are also certain cost exclusions which can be removed from a club's cost base. This is in relation to "specific areas of club infrastructure or losses in certain extraordinary circumstances." Such categories of cost exclusion include investment in youth development, sale and depreciation of fixed assets (e.g. a club's stadium or training ground), investment in a club's community scheme, promotion related bonus payments, career ending injury costs, bad debts from other clubs and losses sustained from a defaulting major sponsor.

www.danielgeey.com
www.twitter.com/FootballLaw

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Daniel Geey
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.