A watershed moment for Financial Fair Play?

A watershed moment for Financial Fair Play?

Financial Fair Play (FFP) is a term often used but rarely understood; perhaps unsurprising given that doctoral works have been more concise than UEFA’s 86 page dossier on the topic.

The advent of FFP was seen as an ambitious set of guidelines aimed at tackling the instabilities of the financial footballing world. It was supposed to be all encompassing, aimed at reigning in the powers of the rich footballing oligarchs as well as ensuring that the smaller teams remained sustainable for generations to come. Critics have seen it as another toothless attempt at reform, but the pragmatic have largely chosen to reserve judgement until sanctions are actually levied against clubs.

Such sanctions for Football League clubs could come as early as this year, with Championship clubs required to submit their accounts for assessment by December the 1st. From this point onwards the Football League will do a series of calculations to arrive at a loss-making figure for the period 2013-14.

The calculations made by the Football League exclude the following expenses:

-Depreciation of fixed assets (Stadia etc)

-Youth development costs

-Investment in community schemes

-Promotion related bonus payments

-Bad debts and sponsorship defaults

Clubs in the Championship are allowed to make a loss of £3m or below, but beyond this the picture becomes a little more complicated. Between losses of £3m and £8m the owner has the ability to inject equity into the club in order to cover the loss and thus escape infringing FFP. However, if the loss is greater than £8m or the owner neither has the willingness nor the capacity to cover the loss then this is where sanctions can be placed on a club.

Troubling times for Forest?

Nottingham Forest, with an annual loss in the region of £17m, are now braced for sanctions in the coming months. Over aggressive spending under Billy Davies backed by ambitious ownership has landed the club in hot water; with Sky Sports already reporting that a full transfer embargo will likely take effect from January 1st. Little has been said by either the club or the Football league on the topic but current manager Stuart Pearce did have the following to say in the Nottingham Post:

“We do think about that (the impact of FFP rules). At this moment in time the Football League are talking about the situation and I believe there is a vote on it in early November.”

“We will definitely know something then, with regards to that. I am kept informed by the chief executive about that.”

“But we are aware of all the stipulations that could come in to play and we will have to deal with it. If an embargo does come our way, we will have to deal with that.”

Such uncertainty largely comes from the fact that neither clubs nor the governing bodies are really all that sure on what the implications of failure actually are. Clubs are set to meet this coming month to vote on sanctions, with the notion of a one in and one out embargo already being mooted as a less severe solution to the issue. However, from the point of view of compliant clubs watering down the sanctions may not seem the most enticing prospect.

Clearly November is an important month for the validity of FFP. Legislation is so often tested by precedent, and the case of Nottingham Forest will be a hugely important one for FFP in this country.

The deterrent that many hope for will come in the shape of a tough punishment for the offending clubs, but can we really count on the governing bodies to deliver this kind of justice?