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Stirling study questions if UEFA is on the ball with financial fair play regulations

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Stephen Morrow
Stephen Morrow

European football's governing body has introduced new regulations designed to force football clubs to live within their means.

However, a study for the Institute of Chartered Accountants of Scotland (ICAS) by University of Stirling sports finance academic Stephen Morrow asks if UEFA's Financial Fair Play (FFP) regulations are a match for the challenges clubs face in balancing the books.

English Premier League champions Manchester City and French Ligue 1 champions Paris Saint Germain are among nine clubs which have faced sanctions over alleged non-compliance with the new rules and central to these is a three-year break-even rule which is designed to foster longer-term planning and decision-making.

Penalties for breaching the rules can involve fines, squad reductions for tournaments, a wage cap and ultimately disqualification from competitions or removal of titles.

Financial Fair Play - Implications for Football Club Financial Reporting explores the potential impact of the FFP rules on clubs, fans and football club accounting professionals.

Morrow - a member of the Institute of Chartered Accountants of Scotland and Senior Lecturer in Sports Finance at Scotland’s University for Sporting Excellence, makes a series of recommendations to ensure FFP strikes the right balance in establishing robust financial rules that are in the best interests of the clubs and fans.

This ICAS paper is published following a UEFA report which revealed auditors at approximately one in seven European football clubs expressed uncertainty about the financial future of those clubs.

Morrow undertook interviews with: finance directors of clubs in England and Scotland who were most likely to be affected by the new rules; representatives of clubs' auditors; football finance experts; and representatives of governing bodies and leagues.

He found there was acceptance of the need for financial regulation of football to ensure clubs break-even and manage their businesses in a sustainable manner - avoiding the pitfalls that have led to heartbreak for so many football fans who have seen their clubs hit hard times.

Despite overall support for FFP, the paper identifies weaknesses in football club financial reporting and his findings highlight a number of concerns about the regulations:

  1. The willingness and capacity for UEFA to enforce the rules in the face of powerful and wealthy clubs, although the recent actions by UEFA may demonstrate its readiness to do so.
  2. The irony and logic of using financial penalties for clubs who break rules which are supposed to improve club financial management.
  3. The potential for 'double jeopardy', where a club which has been fined once might find it harder to break-even again in the future and thus risk further sanctions
  4. The lack of recognition for the importance of cash, which is fundamental to the business of football.

Morrow acknowledges the FFP regulations are a work in progress by UEFA and makes a series of recommendations: that clubs should disclose their break-even calculation and reconcile this to their reported profit or loss in their financial statements and that UEFA should give greater consideration to including cash control measures in the regulations.  He also recommends that FFP sanctions should not be financial in nature and that UEFA reviews the regulations to ensure clubs in breach do not fall foul of 'double jeopardy'.

Stephen Morrow said: “The introduction of UEFA’s FFP regulations provides an opportunity not only to improve the financial management of football clubs but also, indirectly, to focus attention on how best to enhance financial communication in an industry with such distinct and engaged stakeholders.”

Michelle Crickett, Director of Research at ICAS said: “The FFP regulations are to be welcomed, but we would encourage UEFA to be mindful of the fact that the detailed rules and guidance included in the regulations could encourage clubs to seek loopholes in the rules and thus not comply with the intended spirit of the regulations. Also there is a need to recognise that break-even under the FFP regulations is not the same as financial viability.”

Notes for editors
Background information

To view the report, visit:

Editors, please note that Stephen Morrow should be referred to as ‘ICAS Chartered Accountant and Senior Lecturer in Sports Finance at the University of Stirling…’ at first introduction on broadcast media. For more information contact: ICAS Digital Editor Michael McGlinchey  or by phone + 44 (0) 7799 583 409/ +44 (0) 131 347 0126

About ICAS
ICAS is a leading professional body for Chartered Accountants (CAs), with more than 20,000 members worldwide. ICAS is an educator, regulator and thought leader. ICAS members have all achieved the internationally recognised and respected CA qualification (Chartered Accountant). Almost two thirds of our working membership work in business with the others working in accountancy practices.

University of Stirling
First Minister Alex Salmond designated the University of Stirling as Scotland’s University for Sporting Excellence in 2008. Our mission is to deliver the best for Scottish sport through the powerful and inspirational combination of sport and education. Our sport-centred campus brings together the people shaping Scottish sport, creating a critical mass of sporting expertise and excellence.

The research project which culminated in this publication was funded by a grant from The Scottish Accountancy Trust for Education & Research (SATER), a registered Scottish charity.

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