How FFP works, the Premier League’s rules and clubs at risk of punishment

Since it was formed in 2010, Financial Fair Play (FFP) has shaped how football clubs operate. No longer are they permitted to spend as freely as they please, as governing bodies such as UEFA and the Premier League seek to prevent clubs from going under through financial mismanagement.

But how does it really all work? How are clubs getting into trouble and what are the potential sanctions available to be handed out to those who break the rules? These are just some of the questions Football FanCast will look to answer as FFP scandals threaten to dominate conversation once again.

Everton were hit with an initial ten-point deduction earlier in the season, which was later reduced to six. And, they’ve now been hit with a further two-point penalty to make matters worse.

Top-flight rivals Nottingham Forest were given a four-point deduction in March, plunging the Reds into the Premier League relegation zone below Luton Town.

Manchester City and Chelsea are just some of the other clubs sweating over their own potential misdemeanors as the authorities come down hard on those operating outside of their means.

What FFP is and how it started

FFP came into effect from UEFA in the early 2010s, seeking to ensure that clubs participating in their competitions were operating in a fair way – in other words, not spending more than they were making. This sought to enable the safeguarding of the game’s integrity whilst also protecting clubs from falling into financial ruin.

The general idea was that clubs had to break even over a three-year period. Depending on where the money comes from, UEFA does allow some extra spending (clubs can accrue losses of as high as €30m – £25.7m), but there are strict limitations in place in order to stop teams from spending millions upon millions without consequence.

That said, UEFA are big on investing in the future. Spending on things like infrastructure and youth development is not factored in to any accumulated losses. However, extravagant spending on players will be something the authorities have a keen eye on.

The Premier League’s FFP rules

The Premier League installed its own FFP guidelines, known as Profit and Sustainability Rules (PSR), back in 2015/16. They follow the same premise as UEFA’s guidelines, but the parameters differ quite wildly.

For instance, clubs can make losses of £105m over a three-year period. Clubs also have to declare their financial results each year to show that they are, or will be able to, balance the books.

However, if it is deemed that any club has broken the rules, they are referred to an independent commission, which will decide their fate.

Previous FFP punishments

The variety of sanctions available depends on the governing body in charge. In the past, UEFA has issued warnings, fines and limited squad sizes of teams playing in European competitions, as well as expelling them altogether.

Most recently, financial irregularities at Juventus saw the Bianconeri thrown out of the Europa Conference League, along with the receipt of fines totalling north of £20m.

Serie A rivals Milan entered trouble ahead of the 2019/20 campaign after they were banned from the Europa League following an FFP breach, which saw them fail to break even over successive three-year periods.

They had previously successfully appealed to the Court of Arbitration for Sport (CAS) against a similar decision the year before, with the San Siro giants let off on the basis of their punishment not being proportionate.

In the Premier League, last summer saw Chelsea and Manchester United among the clubs sanctioned by UEFAwith both teams facing hefty fines.

United were punished for a “minor” FFP breach in July, with UEFA handing the Red Devils a €300k (£257k) fine owing to what appears to be a miscalculation of losses between 2019 and 2022, a period significantly impacted by the pandemic.

Later that month, Chelsea were hit with an eye-watering €10m (£8.6m) fine due to “submitting incomplete financial information” between 2012 and 2019 – meaning it was not at all related, perhaps somewhat ominously, to their extravagant spending since the arrival of Todd Boehly at Stamford Bridge.

Premier League clubs at risk of PSR breaches

Everton were the first club to be officially sanctioned by the league’s financial PSR rules, resulting in a ten-point deduction back in November, having been referred to an independent commission in March 2023. It has since emerged that the Toffees, along with Nottingham Forest, were at risk of a further breach, which may result in their own subsequent punishment.

In February, the Toffees’ penalty was reduced to six pointshanding Sean Dyche’s men a partial reprieve in their fight against relegation. While their initial deduction had Everton down in 17th and just a point above the drop zone, their partly successful appeal against the PSR ruling placed them in 15th at the time, five clear of danger. This was just as well given the Merseysiders were also winless in nine Premier League games.

This January, the Premier League confirmed that both Everton and Forest had been in a separate breach of the regulations for the period which ended last season. A decision was due to be made on their respective cases by 12th April – with Forest learning their fate in mid-March.

Nottingham Forest were given a four-point penalty after being referred to an independent commission over possible PSR breaches. It was concluded that over the three-year period ending in 2022/23, the club’s losses exceeded that of the amount allowed.

According to The Athletic, Forest could have been fined for this breach, though it was decided that, subject to appeal, the club would be docked four points. Unlike Everton, the decision drops Forest into the relegation zone with just nine games remaining. In terms of their potential appeal, their case has to be heard by 15th April.

And, the Toffees have now been dealt their latest punishment, as it was announced today, 8th April, that Everton have been deducted two points for a second breach of Premier League financial rules. The commission concluded that the fact Everton have already been punished this season merits a two-point reduction in punishment, opposed to the five points the Premier League suggested.

Chelsea and Manchester City are also being investigated by the Premier League. As far as the Blues are concerned, they have not been formally charged, though the Premier League’s chief executive, Richard Masters, confirmed they were “looking into” the club’s accounts back in August after the Stamford Bridge outfit reported themselves soon after their takeover, while Masters recently told a parliamentary committee that this investigation was still ongoing.

Manchester City, meanwhile, threatens to become the highest-profile case of the lot, with the Premier League charging the champions with over 100 breaches of its financial regulations. Masters claimed that a date has been set regarding the casebut stopped short of providing further details.

It is thought that given the nature of the accusations – the charges were the culmination of a four-year investigation in which City were labelled uncooperative – it is expected the matter will drag on before a punishment is handed out. When this first broke in February 2023, the BBC reported that this is “uncharted territory” in terms of what could befall the Citizens should they be found guilty.