UEFA Financial Fair Play and La Liga: Bad Moon Rising

With Mando's recent interview with Leander Schaerlaeckens of football finances, I decided to do a bit of research and read UEFA's Financial Fair Play rules. Here's a summary.

Based on the Bundesliga financial regulations, UEFA has enacted Licensing and Financial Fair Play Regulations that all clubs involved in European competitions must adhere to by the 2012-13 season.

Some of the key points are:

1) Teams who file for voluntary administration aka bankruptcy cannot play in Europe. We have already seen Mallorca was not allowed to play in Europe. Other teams such as Real Sociedad, Malaga, Levante, and close to filing Sporting Gijón would not be allowed to play in any European competitions, should they earn a place.

2) Teams will be required to break even. The latest figures released in May 2010, for the 2008-9 season indicated that only three teams were in the black in La Liga: Real Madrid, Barcelona and Numancia. Numancia has since been relegated. So much for financial prudence. Real Madrid and Barcelona earn 53% of La Liga revenues.

3) Teams will not be allowed to owe any past due payables towards football clubs IE transfer debt. This would detrimentally effect most La Liga teams. Just a quick example, Mallorca still owes 4 million dollars to Athletic Bilbao for the sale of Aritz Aduriz, who now plays his trade at Valencia.

4) Teams will not be allowed to owe any overdue payables towards employees and social/tax authorities. Recently, Valencia was unable to pay their players, in fact they paid them late. In this case, would Valencia be knocked out of Europe? According to the UEFA FFP regulations, the answer would be yes. Spanish La Liga debt in total amounted to $4.65 billion for the 2008-9 season.

5) Expenses that will NOT be included in the break even calculation, as they are encouraged for the good of the game, include: expenditures on youth development, expenditures on community development, and expenditures or costs related to facilities and infrastructure i.e., stadiums.

6) Loopholes: Single entity aka sugar daddies can invest in the club to the tune of $57M Euros in the first three years, and $38M in subsequent three years. in exchange for shares. The big boys (Real Madrid & Barcelona) will have an out to make the new laws work. In addition, their are no regulations to force clubs to reduce their debt. That said, it will be extremely for La Liga clubs to enact and adhere to these regulations, without losing a competitive edge.

If we look at the current European contenders only Barcelona and Real Madrid would qualify for Europe. Atlético Madrid, Valencia, and Villarreal all operate with huge loses. In fact salary and wages for Valencia, Sevilla, Real Betis, and Atlético Madrid are higher than revenues generated by the clubs. The only reason that these clubs manage to limit their losses is from the sale of players and real estate transactions. The bottom line is that the day to day business of football in La Liga, cannot cover costs.

There has got to be a grandfathering and adjustment period for La Liga, as well as exceptions and concessions, if not I do not see how any other teams,10- aside from the big two will be able to compete in Europe.

Sources: UEFA.com, Professor Jose Maria Gay on Spanish Football Finances, Cinco dias, Soccernet, Sport und Markt, Four Four Two