Uefa under pressure to reform Financial Fair Play Regulations as Manchester City's Champions League ban thrown out
Reforms of Financial Fair Play rules are expected from Uefa within weeks after its credibility was dealt a hammer blow by Manchester City's landmark victory at the sporting appeal courts.
The verdict overturning a two-year Champions League ban is a major embarrassment for the governing body after it failed at the same Swiss court over sanctions against Paris St Germain a year ago. In both cases, teams of top lawyers exposed technical flaws. The Court of Arbitration for Sport ruled on Monday that "most of the alleged breaches" against City "were either not established or time-barred".
In apparent recognition that its checks had failed, Uefa acknowledged "insufficient conclusive evidence" as the reason behind Cas reducing City's total punishment to a €10 million (£9m) fine, and also pointed blame at its own club finance investigators for not meeting a five-year statute of limitations.
An appeal at the Swiss Federal Court has been ruled out, with Aleksander Ceferin, the governing body president, instead set to prioritise "concrete" new FFP measures, which he first raised two weeks ago.
Experts warned, however, that Uefa faces an almighty fight to restore any sense of authority on FFP. "I think Uefa has now lost its clout as a means of controlling expenditure in football from a profitability point of view," Kieran Maguire, a lecturer in football finance at Liverpool University, told Telegraph Sport. "I think FFP will still survive in some form because the other rules are all to do with late payments and transfers, but the 'break even' model element is now effectively in tatters given PSG had their case thrown out on a technicality."
City hired a team of Britain's top lawyers and five major accountancy firms to crush findings from Uefa's Adjudicatory Chamber of the Club Financial Control Body (CFCB), which surprised the footballing world by hitting the club with a two-year ban and €30m (£25m) fine in February.
The punishment was said to be based on "serious breaches of the Uefa Club Licensing and Financial Fair Play Regulations by overstating its sponsorship revenue in its accounts and in the break-even information submitted to Uefa between 2012 and 2016". Given the case was quashed by Cas on Monday for being "time-barred", one option for future reform will be to loosen time limits and ease other restrictions on the (CFCB) in future investigations.
Josh Charalambous, a sports lawyer with RPC, said Uefa is just one of several governing bodies across sport considering how they can beef up financial regulations, including in Britain following the Saracens salary cap scandal and financial disasters in the English Football League. "There's a question about whether financial regulations across sports are working in their current forms because this is the latest in a series of cases where they've been either avoided or challenged successfully," Charalambous said. "This is not the first time where it appears things have not gone to plan for the CFCB when considering the enforcement of UEFA’s FFP rules."
Another school of thought is that FFP should be abandoned altogether. Fifa’s head of global development, Arsene Wenger, one of the most vocal advocates of FFP during its early years while managing Arsenal, said last year that he believed a relaxing in the rules is needed in order to permit further investment in the game, so long as stringent checks are put in place regarding its origins. Uefa launched FFP curbs for the first time in 2009, several years after former Uefa president Michel Platini privately expressed concern that billionaire owners such as Roman Abramovich would distort the market with their big spending while other clubs risked going bust trying to keep up.
There remains an outstanding investigation into City's financial dealings by the Premier League, but given the domestic tier allows a £105m loss over three years, compared to just €30m at Uefa, any punishment would have to be on the grounds of an alleged ethical breach. Investigations domestically are understood to also focus on reports in Denmark that the club had a secret agreement giving them first refusal on youth players from FC Nordsjaelland and the Right to Dream academy in Ghana, run by the Danish side's chairman, Tom Vernon.
The precedent has now been set for City to escape all serious charges, Maguire suggests. "This is a quarter of a billion pound victory for City, which renders that €10m fine an insignificance," he added. "It's now going to be very difficult for Uefa to pursue future cases given there is now a precedent. After PSG and City's victories, the big-spending clubs will now look to assemble the most expensive legal teams and then seize upon whatever technicality they can find."
Maguire believes the precedent set by Cas on Monday could even be felt in the EFL, which allows losses to be offset by loopholes such as stadium sales or loans. "Sheffield Wednesday and Derby County may be looking at that result and be thinking this could bode well for us," he adds.
