Football, Capital Gains and Financial Fair Play: The Beginning of a New Era?

June 27, 2023

Introduced in 2011, Financial Fair Play (FFP) has represented a real revolution for European football.

Financial Fair Play is a set of regulations designed by UEFA to prevent football clubs from spending more than they earn, aiming to keep the game of football sustainable and fair.

FFP has helped stabilize the finances of various teams, but not everyone has played by the rules.

Player Exchanges: A New Trend in Circumventing Rules

Recently, some clubs have adopted an ingenious but questionable strategy to bypass FFP rules, namely exchanging players with inflated valuations.

For example, Juventus and Barcelona swapped midfielders Pjanic and Arthur for a total of 132 million euros, a considerable figure that, according to many, does not reflect their real market value at that time.

These tactics can help clubs balance the books, immediately recording a profit from the sale and spreading the cost of the purchase over several years.

Capital Gains in Football: How Do They Work?

Capital gains, in simple terms, are the value you earn by selling a player for more than you bought him for.

This profit can be used to balance a club’s books, a particularly useful advantage in an era where finances can be heavily influenced by player wages and operating costs.

UEFA’s Response

UEFA so far has been slow in responding to these sophisticated financial tactics, but by the end of June everything could change.

In particular, UEFA’s club control body, chaired by Vice President Gabriele Gravina, has proposed amendments to the FFP discipline to prevent abuses and ensure a level playing field.

If the prices of swapped players do not correspond to their real market value, they will no longer be allowed to be included in the budget.

A Future of Fair Play in Football: What Does Tomorrow Hold for Us?

In the future, it’s important to point out that UEFA is working on multiple fronts, for example, committing to take into account the specificities of various national European markets.

The organization has created an ad hoc working group to analyze the impact of taxes and social expenses in different jurisdictions, with the goal of developing effective and fair cost control mechanisms.

The evolution of Financial Fair Play could mark a new era for football, one where financial transparency and fair play are as important as on-field performance.