and would not be accepted by the panel."
To prevent manipulation of the rules, UEFA will examine an investor's connection to a club, while transactions between club and sponsor will be compared with the wider market.
Even the rules themselves have some built-in wiggle-room -- at least at first. Though clubs are meant to ensure they break even, they will be allowed an "acceptable deviation" of 45 million euros in the first few years. That will fall to 30 million euros over three years before a UEFA committee decides on further reductions.
In another hint that UEFA will be flexible, Infantino suggests any guaranteed money from sponsors should outweigh concerns about market value. "From a pragmatic point of view it's still better to have a sponsorship contract with a committed amount even if it's too high," he told Reuters days before the City deal. "At least it's a contract, it's black and white, you will receive the money, and the financial situation is safer than it is today where you just have a loan by an owner or a promise."
TV, STADIUMS AND COMMUNITY
At the moment, television rights are the biggest source of income for most top clubs. That's especially true in Spain where Europe's two richest clubs, Real Madrid and Barcelona, are able to sell their broadcasting rights individually, in contrast to England's Premier League and most other European leagues, where rights are sold collectively and revenues shared out. Both Barcelona and Real Madrid make around 150 million euros a year from television -- well above the 60 million pounds English Premier League champions Manchester United earned last season.
Financial Fair Play is meant to push clubs to look at other ways to expand their revenue streams. The new rules will not count any spending on infrastructure improvements, for instance. That should encourage owners to copy clubs like Germany's Bayern Munich, which moved to its state-of-the-art, 69,000-seat Allianz Arena in 2005, and is now the fourth richest club in Europe with revenues of 323 million euros in 2010.
Bayern Munich earn 67 million euros a year in matchday revenues. Compare that with Italy's AC Milan and Inter Milan, which share the 85,000 seat San Siro stadium -- constructed in 1925 and in desperate need of renovation -- and bring in revenue of about half that.
In fact, Europe's top clubs could do worse than follow the example of their German rivals, most of whom make money. The German soccer federation requires its clubs to have a community-based ownership structure -- fans control 50 percent of shares plus one -- to avoid the financial instability and overspending the sometimes comes with rich owners.
"We did not need to do anything to prepare for these rules because we already meet the criteria by 150 percent," said Hans-Joachim Watzke, chief executive of current Bundesliga champions Borussia Dortmund. "We have been having positive results and reducing our debt for years and do not have any outside money flowing in."
Clubs might also do more to develop their brands globally. Chelsea Chief Executive Ron Gourlay told Reuters the club wanted to make more money overseas, because increasing revenue at home would be tough.
"The opportunity we have is very much through our sponsors. That's where we expand the brand in America and the marketplace in Asia. We need to be in the marketplace as much as possible," he said in Asia in June.
HOW MUCH?!
Of course, the biggest single way for clubs to balance their books would be to cut player wages, which account for around two-thirds of clubs' total spending across Europe's biggest five leagues.
Barcelona has the biggest wage bill of all European clubs, spending 235 million euros in the 2009/10 season, according to a report by the University of Barcelona entitled "Spanish Football in the Throes of Crisis". Thanks to its lucrative broadcasting deal, though, the share of its income that went on player wages was relatively low at 59 percent.
In contrast, clubs supported by benefactors sometimes end up paying more for players than total club turnover. Manchester City spent 107 percent of revenue on wages last season, Inter Milan 104 percent.
To encourage clubs to slow wage growth and start training more local talent instead of buying in expensive players, any spending on youth will also be exempt from the new rules.
Talk of a breakaway league, that would be formed by big clubs disgruntled with the way soccer is run, cropped up again last month. But Arsenal's Chief Executive Ivan Gazidis dismisses this. "I think there are major teams that wouldn't be a part of that. There is so much sentiment in favour of these regulations, so I don't see a credible threat there."
Gazidis, who sits on the European Club Association (ECA) board, helped fine-tune the FFP proposals and acknowledges that any system which effectively restricts soccer's free market will have flaws.
"It is not a perfect system -- in fact it may be the worst possible system, except for all the others," said Gazidis, who spent 14 years working for U.S. Major League Soccer before joining Arsenal in 2009.
UEFA's Infantino is equally dismissive of a rival league, chuckling at the suggestion. "Break away to what?" he asked. "They have already the best competition. It's called the Champions League."
As the new rules bite, though, tensions between Europe's governing body and the game's biggest clubs could rise. Much will depend the rule-makers retaining credibility. "I think UEFA will lose face for generations if they don't enforce these rules," said Ernst & Young's Patey.
Infantino said the issue is simple: at some point reality has to kick in.
"Football is somewhat irrational. Those who are involved in football in their ordinary businesses are very sound businessman. In football sometimes they seem to go mad. We need to bring a bit of rationality back."
To prevent manipulation of the rules, UEFA will examine an investor's connection to a club, while transactions between club and sponsor will be compared with the wider market.
Still, lawyers believe there are grey areas.
"If a company says 'We're genuinely trying to build a global brand, this is a global club and we think this is what this deal is worth,' it becomes quite difficult for UEFA," said Daniel Hall, a partner at global law firm Eversheds. "It's something that is very much open to subjective opinion and that is where there may be legal disputes." Even the rules themselves have some built-in wiggle-room -- at least at first. Though clubs are meant to ensure they break even, they will be allowed an "acceptable deviation" of 45 million euros in the first few years. That will fall to 30 million euros over three years before a UEFA committee decides on further reductions.
In another hint that UEFA will be flexible, Infantino suggests any guaranteed money from sponsors should outweigh concerns about market value. "From a pragmatic point of view it's still better to have a sponsorship contract with a committed amount even if it's too high," he told Reuters days before the City deal. "At least it's a contract, it's black and white, you will receive the money, and the financial situation is safer than it is today where you just have a loan by an owner or a promise."
TV, STADIUMS AND COMMUNITY
At the moment, television rights are the biggest source of income for most top clubs. That's especially true in Spain where Europe's two richest clubs, Real Madrid and Barcelona, are able to sell their broadcasting rights individually, in contrast to England's Premier League and most other European leagues, where rights are sold collectively and revenues shared out. Both Barcelona and Real Madrid make around 150 million euros a year from television -- well above the 60 million pounds English Premier League champions Manchester United earned last season.
Financial Fair Play is meant to push clubs to look at other ways to expand their revenue streams. The new rules will not count any spending on infrastructure improvements, for instance. That should encourage owners to copy clubs like Germany's Bayern Munich, which moved to its state-of-the-art, 69,000-seat Allianz Arena in 2005, and is now the fourth richest club in Europe with revenues of 323 million euros in 2010.
Bayern Munich earn 67 million euros a year in matchday revenues. Compare that with Italy's AC Milan and Inter Milan, which share the 85,000 seat San Siro stadium -- constructed in 1925 and in desperate need of renovation -- and bring in revenue of about half that.
In fact, Europe's top clubs could do worse than follow the example of their German rivals, most of whom make money. The German soccer federation requires its clubs to have a community-based ownership structure -- fans control 50 percent of shares plus one -- to avoid the financial instability and overspending the sometimes comes with rich owners.
"We did not need to do anything to prepare for these rules because we already meet the criteria by 150 percent," said Hans-Joachim Watzke, chief executive of current Bundesliga champions Borussia Dortmund. "We have been having positive results and reducing our debt for years and do not have any outside money flowing in."
Clubs might also do more to develop their brands globally. Chelsea Chief Executive Ron Gourlay told Reuters the club wanted to make more money overseas, because increasing revenue at home would be tough.
"The opportunity we have is very much through our sponsors. That's where we expand the brand in America and the marketplace in Asia. We need to be in the marketplace as much as possible," he said in Asia in June.
HOW MUCH?!
Of course, the biggest single way for clubs to balance their books would be to cut player wages, which account for around two-thirds of clubs' total spending across Europe's biggest five leagues.
Barcelona has the biggest wage bill of all European clubs, spending 235 million euros in the 2009/10 season, according to a report by the University of Barcelona entitled "Spanish Football in the Throes of Crisis". Thanks to its lucrative broadcasting deal, though, the share of its income that went on player wages was relatively low at 59 percent.
In contrast, clubs supported by benefactors sometimes end up paying more for players than total club turnover. Manchester City spent 107 percent of revenue on wages last season, Inter Milan 104 percent.
To encourage clubs to slow wage growth and start training more local talent instead of buying in expensive players, any spending on youth will also be exempt from the new rules.
Talk of a breakaway league, that would be formed by big clubs disgruntled with the way soccer is run, cropped up again last month. But Arsenal's Chief Executive Ivan Gazidis dismisses this. "I think there are major teams that wouldn't be a part of that. There is so much sentiment in favour of these regulations, so I don't see a credible threat there."
Gazidis, who sits on the European Club Association (ECA) board, helped fine-tune the FFP proposals and acknowledges that any system which effectively restricts soccer's free market will have flaws.
"It is not a perfect system -- in fact it may be the worst possible system, except for all the others," said Gazidis, who spent 14 years working for U.S. Major League Soccer before joining Arsenal in 2009.
UEFA's Infantino is equally dismissive of a rival league, chuckling at the suggestion. "Break away to what?" he asked. "They have already the best competition. It's called the Champions League."
As the new rules bite, though, tensions between Europe's governing body and the game's biggest clubs could rise. Much will depend the rule-makers retaining credibility. "I think UEFA will lose face for generations if they don't enforce these rules," said Ernst & Young's Patey.
Infantino said the issue is simple: at some point reality has to kick in.
"Football is somewhat irrational. Those who are involved in football in their ordinary businesses are very sound businessman. In football sometimes they seem to go mad. We need to bring a bit of rationality back."
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