UEFA Regulations of Financial Fair Play: Prudent Governance or Competition Anathema?

We heard this week that a football agent is challenging UEFA's Regulations of Financial Fair Play [FFP]. From the relevant press release, we identified the main arguments and we intend to fully analyse them in due course. 

In summary, the football agent is claiming that the UEFA FFP Regulations violate certain rights and have the effect of restricting the income of football agents. The basis of the complaint relates to the argument that such regulations are anti-competitive.

The arguments for both sides are extremely important and possibly very persuasive. Such arguments need to be construed properly and effectively. It is not only the advocacy that would influence the appropriate panel of judges, but also the correct interpretation of the relevant statutory instruments in force. More importantly still, the written pleadings would set the basis of this legal battle. 'Written advocacy' is sometimes as effective as oral advocacy.

In short, the complainant alleges that the FFP Regulations have as a main aim to reduce players' wages and also the transfer fees. This, he argues, is because FFP Regulations 'will lead to a reduction of the number of transfers, of the transfer amounts and of the number of players under contracts per club and will have a deflationary effect on the level of players' salaries.' Eventually, the complainant argues, this would cause a reduction in the agents' fees too. In conclusion, the complainant argues that such regulations violate certain EU freedoms, namely, the free movement of capital, the free movement of workers and the free movement of services.

UEFA on the other hand responded with a statement which read: 'The rules encourage clubs to live within their own means, which is a sound economic principle aiming to guarantee the long term sustainability and viability of European football.' UEFA also believes that the complaint will be rejected, as the European Commission made it clear, last year, that it supports UEFA's FFP regulations: 'UEFA believes that financial fair play is fully in line with EU law and it is confident that the European Commission will reject this complaint.' 

It is difficult to predict the outcome of this complaint, but certainty relates to the argument that this complaint will probably last for a considerable amount of time. Several legal arguments will be produced and, eventually, the European Commission will have to decide whether the FFP Regulations are purely sporting rules, without any community interest, or indeed violate the freedoms the complainant has identified in his written pleadings. In doing so, the European Commission will have to examine very closely, not just the arguments, but also the evidence, if any, that the parties may wish to submit. 

Given that the factual background indicates the lack of financial prudence for a number of different football clubs around Europe, it may be too remote to argue that such regulations have as an effect the reduction in the agents' income. A point in isolation could also be made and suggests that the number of complaints before UEFA and FIFA, regarding disguised agents' payments, is evidence that will persuade the Commission that the complainant's arguments do not have a valid factual and evidential basis. Given that many clubs suffer from financial irregularities, it is difficult to see how an increased agents' payment would make things better. On the contrary, one may argue that a restriction in spending, would probably create a 'healthy' financial environment in the long term, for the benefit of all stakeholders concerned.

It remains to be seen whether this is a matter of European Community interest, or a simple sporting matter. The European Commission has an important decision to make, which is likely to determine the financial future of football in the EU. 

Dr. Gregory Ioannidis

11 May 2013