Top 6 Football Financial Regulations Influencing Elite Clubs in 2024

Football clubs in professional European leagues have faced increasing scrutiny and regulation over recent years, particularly concerning financial sustainability. These financial regulations are not just a challenge for club owners and investors; they influence every aspect of the game, from player transfers to sponsorship deals, as we have recently seen in the case of Associated Party Transactions involving Manchester City Football Club and the English Premier League.

Understanding the key regulatory context that can influence football clubs and potential investors is crucial for stakeholders in the football industry. At Invest in Soccer, we believe in conducting proper club profile analysis to prepare clubs for modern litigation and risk.

Below, we explore the top six financial regulations shaping football today, offering insights into how they affect club operations and long-term investment viability.

1. UEFA Financial Fair Play (FFP) Regulations or Financial Sustainability Rules (FSRs)

UEFA’s Financial Fair Play (FFP) regulations remain a cornerstone of football finance, although they are transitioning to the new Financial Sustainability Rules (FSR) from the 2025/26 season as UEFA looks to set a framework for participation in UEFA men's club competitions. These regulations are built on three pillars:

• Solvency

• Stability

• Cost control

Each pillar will be tracked throughout the season to ensure that clubs are financially sustainable and keep their costs under control. The rules are designed to prevent clubs from overspending relative to their income and should ensure that clubs live within their means. They also limit the extent to which owners can inject external capital.

To ban or not to ban; Manchester City and Paris Saint-Germain

In 2020, Manchester City was under threat of a two-year Champions League ban due to alleged FFP violations, although this was overturned. Similarly, Paris Saint-Germain’s massive transfer spending on Neymar and Kylian Mbappé continued to test UEFA’s FFP framework. Both cases highlight how FFP regulations have a significant impact on top European clubs.

2. La Liga Wage Restrictions

With Spanish clubs finding it difficult to compete both domestically—owing to the dominance of Real Madrid, Barcelona, and Atletico Madrid—and on a European stage (unless you play in the Bernabéu), there is immense pressure to balance income with wage expenditure. La Liga has therefore introduced strict wage restrictions that cap a club’s spending based on its revenue, forcing clubs to operate sustainably and manage their financial commitments carefully. The amount clubs can spend on wages is determined by a La Liga committee, with heavy penalties if these caps are exceeded.

A case in point; Barcelona’s Financial Struggles

Barcelona’s well-documented financial crisis in 2021, which led to the departure of Lionel Messi, was a direct consequence of La Liga’s wage restrictions. The club's spending was vastly disproportionate to its revenue, forcing them to adjust by reducing their wage bill.

3. Premier League Profitability and Sustainability Rules

The Premier League’s Profitability and Sustainability rules are designed to limit the financial losses a club can accrue over a three-year rolling period to ensure the ongoing financial sustainability of clubs, the league, and its competitions. The rolling period allows clubs to lose a maximum of £105 million, provided such losses are covered by club owners. There are, of course, some exceptions that can alter the PSR calculation, with clubs allowed to deduct any costs that relate to:

• The depreciation of tangible fixed assets or amortisation (we’ll cover this in another blog)/impairment of intangible assets.

• Women’s football expenditure.

• Youth development expenditure.

• Community development expenditure.

Everton’s High-Profile Breach of Sustainability Rules

In 2023, Everton FC faced scrutiny after it was revealed that the club had posted significant losses. This put the club under investigation, as they risked breaching the Premier League’s Profitability and Sustainability regulations. Despite protests from the club, an independent commission found that Everton breached the PSR threshold by £16.6m for the three-year period to 2022-23, resulting in a 10-point deduction, reduced to 6 points on appeal.

4. FIFA Transfer Regulations and Solidarity Payments

FIFA’s transfer system is designed to ensure transparency in player transactions and attempts to protect smaller clubs through solidarity payments. These payments ensure that clubs contributing to a player’s early development receive a share of transfer profits if the player moves on to bigger clubs.

Stockpiling Talent? Chelsea’s Transfer Strategy

Chelsea’s recent approach of offering long-term contracts to spread transfer costs over several years has raised eyebrows. This is an accounting trick called amortisation, which we will revisit in another blog. It’s perfectly within the rules, or was until a limit was placed on it by UEFA. While within FIFA regulations, it demonstrates how elite clubs are finding ways to comply with financial rules while maintaining flexibility in the transfer market.

5. Tax Regulations and Compliance

Football clubs must comply with national tax regulations, affecting everything from player wages to sponsorship revenue. Failure to adhere to these rules can result in heavy penalties, making tax compliance a critical financial consideration for clubs.

The Italian Job; Juventus Tax Fraud Investigation

Juventus faced a tax fraud investigation in 2022 concerning the under-reporting of wages and transfer fees. This incident illustrated the importance of financial transparency and adherence to national tax regulations, as non-compliance can lead to severe repercussions.

6. FIFA Transfer Compensation and Contract Disputes

FIFA regulations on contract disputes and compensation often involve substantial financial settlements. Clubs can seek damages when a player terminates their contract without just cause, as highlighted by EU court rulings in both the Jean-Marc Bosman and Lassana Diarra cases.

Moscow Mule; Lassana Diarra and Lokomotiv Moscow

In a landmark case, Lassana Diarra was ordered to pay €10 million to Lokomotiv Moscow after breaching his contract. This case went to the European Union’s Court of Justice, which upheld FIFA’s right to arbitrate such disputes, ensuring that clubs can claim compensation when a contract is breached.

Summary

As football continues to globalize, financial regulations need to keep pace. Lawmakers are often caught behind the times as clubs employ smart executives to find ways to optimise compliance.

This has led to a series of high-profile fallouts involving some of the sport's biggest stakeholders. From UEFA’s Financial Sustainability Regulations to Premier League Profit and Sustainability Rules, clubs must operate under strict financial frameworks to avoid penalties and ensure long-term viability. Whether you’re a fan, investor, or stakeholder, staying informed on these regulations is essential for understanding the modern football industry

Find solutions for your investment with Invest in Soccer.