FFP

[kippaxvilla2]

If you believe the reports we will have to cut the wage bill to comply for Europe next season.

[Percy McCarthy]

Like I said, only a fine.

I take it back. Roma got a fine and a 1 year ban.

[Tuscans]

EXPLAINED: Chelsea and Villa's UEFA FFP breaches
Once more unto the breach, dear friends, once more
Stefan Borson
Apr 13, 2025


They were conspicuous by their absence.

First, Aston Villa did not mention the UEFA financial fair play regime at all in their recent accounts. Chelsea also dropped their historic stance that “it had complied with these regulations since their inception in 2012 and expects to do so for the foreseeable future.”

The reason is simple. Both clubs are substantially in breach of at least one of the elements of the current UEFA FFP sustainability regime – football earnings. Villa have certainly also breached the cost control ratio whereas compliance for Chelsea will depend on how much (if any) of their spectacular £152m player trading profit is adjusted down. That same issue could also materially increase the scale of any miss of both elements of the UEFA rules by either club.

Chelsea and Villa’s player trading profit may be materially adjusted by UEFA
It is possible that the key player trading profit in both Aston Villa’s and Chelsea’s accounts will be materially reduced due to UEFA’s stringent approach in Annex G.3.5.


Newcastle took the trouble to quantify and reconcile the impact of the UEFA rules in their accounts. Leicester did similar but the adjustment was less than £500k and related purely to amortisation.


Source: Newcastle United accounts
Newcastle reported player trading profit of £70m but were required to adjust the number by more than £30m. This is likely because the sale of Elliot Anderson, was effectively deemed to be a player exchange due to the surprising purchase by Newcastle of Odysseas Vlachodimos and the sale of Allan Saint-Maximin for $25m was a related party transaction (as per Newcastle’s accounts). Both sales would be reduced to their respective book value under UEFA rules ie close to zero for a youth player. It appears, therefore, that the vast majority of what was left relates to Yankuba Minteh’s £33m move to Brighton.

UEFA adjustments on player exchanges are also likely to apply to Chelsea and Villa in respect of the transfers of Ian Maatsen and Omari Kellyman and, in the current financial year for Chelsea, Conor Gallagher. Villa may well have a raft of adjusted profits for 23/24 as much of their reported £65m player trading profit could be subject to adjustment due to the player exchange rules.


What Chelsea and Villa did say
Chelsea obliquely stated “The Club aims to balance success on the field together with the financial imperatives of complying with UEFA and Premier League financial regulations” - a tacit admission that they are happy to breach if, on balance, it is advantageous for success on the pitch.


Chelsea indirectly acknowledged non-compliance with UEFA FFP with a convoluted statement which needs a translation. So, here is the statement and my translation:


Translation: We [Chelsea] have been negotiating a settlement with UEFA since before 30 June 2024 arguing mitigating factors to reduce the settlement or fine relating to a substantial breach of UEFA FFP.

This has been widely confirmed since the release of the accounts including in The Times.

At least Villa confirmed that they expected to be compliant with 2024/25 Premier League rules.


But the question for Villa is how they expect to comply? Right now, they are obviously some way short of the £105m cap even after all permitted adjustments. Indeed, Villa are one of the few clubs (Ipswich are still the kings of such disclosure) that detail the costs of a number of the permissible PSR adjustments like community development and women’s football.


Is it a repeat of 2024 - a couple of swaps and a big sale of a player they would prefer not to lose? The issue using swaps is that detailed above - would UEFA accept the profits even if the Premier League does.

Or are they planning to sell the Women’s team as reported in The Times following Chelsea’s sale. (NB: it is worth noting at this point, that at a Chelsea style revenue multiplier, Villa’s women’s team could be valued at £100m. It is a company that is so small that it doesn’t need to prepare audited accounts (and so doesn’t) and that Villa have invested just over £10m in the last 2 years. What a fantastic ROI that would be. On paper.)

Chelsea’s huge operating losses appear even worse to UEFA
Over the years, observers have learnt that Premier League PSR calculations are not what they seem. Clubs have regularly negotiated to exclude or get credit for various unusual matters in their accounts. We know, for example, of Covid allowances (Manchester United), hotel sales (Chelsea), debt write offs as part of acquisitions (Bournemouth) and certain interest payments (Everton). There are many other examples we have never publicly heard about.

In some ways, UEFA’s approach is simpler as they largely dismiss clubs’ “ingenious” schemes on multi-club cost manoeuvres, amortisation tricks, non-football asset sales, player swaps, related party sales and the up front recognition of multi-year commercial/media deals.

In some cases, it means that UEFA is working to a radically different set of numbers to the Premier League and to Companies House.

This is illustrated each year by the UEFA Landscape Report which effectively leaks UEFA’s view of the major clubs in respect of revenue, EBITDA, wages and some operating cost lines. In 2023, one version even disclosed the break down between first team costs and the overall wage bills. That version disappeared from circulation but not before keen watchers had noted its contents.

Tucked away in the 2024 report was UEFA’s view of Chelsea’s revenue and EBITDA. Revenue for 23/24 was around £17m lower than Chelsea reported, at £447m, and EBITDA reduced by a huge £42m. UEFA’s view of last year’s EBITDA was also disclosed as a loss of £26m when Chelsea had reported it to be a profit of £23m. In other words, a negative swing of almost £50m. There are no adjustments disclosed for Villa vs their published accounts.


The question is no longer if, but by how much
In short, both Chelsea and Villa have failed UEFA FFP. But by how much?

There are three parts of the UEFA FFP regime for 24/25 season. The regulations have three distinct pillars: the no overdue payables rule, the football earnings rule, and the squad cost rule. The three parts, pillars and tests are:

1: Solvency and no overdue payables

All monies owed to football clubs, employees, social/tax authorities, and UEFA due to be settled by 30 June, 30 September and 31 December during the licence season must be settled by a club by 15 July, 15 October, and 15 January respectively. In other words pay any bills by, at the most, 15 days after the due date. Premier League teams are unlikely to fall foul of this.

2: Stability and the football earnings rule

The stability requirements are an evolution of the existing break-even requirements - a scheme similar to PSR.

The acceptable adjusted loss permitted has increased from €30 million over three years to €60 million over three years. This acceptable deviation can be further increased above €60 million by up to €10 million for each reporting period in the monitoring period for clubs showing good financial health. 24/25 is the first tested year, so has a cap of a maximum of €80 million for 23/24 and 24/25. This test uses the audited financial numbers adjusted for UEFA’s rules (ie a version of those numbers that English clubs publish to Companies House).

3: Cost control and the squad cost rule

The cost control rule restricts spending on player and coach wages, transfers, and agent fees to 70% of club revenues. The gradual implementation means 80% in 2024/2025 (ie for the calendar year to 31 December 2024), and 70% in 2025/2026 (ie for the calendar year to 31 December 2025).

Unusually, this is tested on a calendar year so includes the summer transfer window meaning that precise evaluation of a club’s squad cost position is impossible but we can ascertain a direction of travel.

What happens to clubs who fail to comply with UEFA FFP?
Villa were fined €60,000 last year for the late submission of its results and Chelsea recently paid a €10m fine to UEFA in respect of the “financial irregularities” described in their accounts. But neither of these were comparable to this season’s breaches.

Breaches of the regulations are sanctioned by the Club Financial Control Body (CFCB) according to a catalogue of sanctions listed in the CFCB procedural rules. Historically, UEFA fines and sanctions were considered serious. For repeat offenders, including admitted breaches, these could reach tens of millions of euros even in settlement. Various teams were excluded from competition. In more recent times, UEFA appear to be taking a far more lenient approach laid bare most recently in the Barcelona case.

In that case, UEFA even ended up arguing at CAS that its own CFCB imposed sanction was “very lenient” given the €267m breach. This was UEFA’s own submission as recounted by CAS:


CAS agreed but was not empowered with revisiting the original penalty of just €500k stating that it considered the sanction to be “relatively mild” given the intentional and severe breach. Incredibly, Barcelona were actually originally offered a settlement of €80k which is about the same as some clubs have been fined for a UEFA critical fan banner.

Over the years, numerous clubs have entered into settlements with UEFA - some admitting breaches, others, like the 2014 MCFC and PSG agreements, expressly refusing to do so. A number of Europe’s major clubs like the Milan clubs, Roma, Juventus and PSG have failed multiple times.

For Chelsea and Villa, the football earnings requirements include the possibility of settlement agreements.

On the other hand, the squad cost rule sanctions will be progressive (and relatively minor) based on the scale of the breach and number of breaches committed over a period of four years.


You would assume that a settlement agreement for a breach of the football earnings rule would also incorporate a sanction for any squad cost breach.

The football earnings breaches are big but it’s been worth it
Villa and Chelsea will each be tens of millions of euros over the football earnings cap. Chelsea may be more than €100m over the cap. But Villa are in the Champions League Quarter Final, they will make around €100m from this season’s competition and are now looking well placed for a second consecutive qualification. Chelsea are also well placed to return to the Champions League next season and are likely to win the Europa Conference.

In that context, these knowing breaches will be a happy cost of doing business.

[edgysatsuma89]

Can someone sum that up for an incredibly lazy bastard?

[Sexual Ealing]

Can't be arsed.

[edgysatsuma89]

I agree.

[jon collett]

Can someone sum that up for an incredibly lazy bastard?

It’s basically like a substandard GCSE history essay. He says on the one hand on the other ad nauseum.

He knows some facts but not enough to substantiate a case and is reduced to guesswork.

[AV82EC]

Can someone sum that up for an incredibly lazy bastard?

It’s basically like a substandard GCSE history essay. He says on the one hand on the other ad nauseum.

He knows some facts but not enough to substantiate a case and is reduced to guesswork.

It seems he’s got quite a bit of info on Chelsea and kind of thrown us in to give a bit more colour. If the colour was beige.

[edgysatsuma89]

Can someone sum that up for an incredibly lazy bastard?

It’s basically like a substandard GCSE history essay. He says on the one hand on the other ad nauseum.

He knows some facts but not enough to substantiate a case and is reduced to guesswork.

It seems he’s got quite a bit of info on Chelsea and kind of thrown us in to give a bit more colour. If the colour was beige.

Ah, ok. Thanks, both.

[OCD]

Just run it through ChatGPT and ask for a summary. This is what it gave me -

Aston Villa and Chelsea have both failed to comply with UEFA’s Financial Fair Play (FFP) rules, particularly breaching the football earnings requirement, and potentially the squad cost rule. Despite previous assurances, neither club now claims full compliance. Their financial strategies—including heavy use of player swaps and inflated transfer profits—are likely to face UEFA scrutiny and adjustments that reduce reported profits. Unlike Newcastle, who disclosed FFP impacts transparently, Villa and Chelsea appear to be pursuing on-field success at the cost of regulatory breaches. While fines and sanctions are possible, UEFA has recently taken a more lenient approach. Ultimately, both clubs may consider the financial penalties a worthwhile trade-off for lucrative European competition results and future qualification prospects.