UEFA will replace its current Financial Fair Play model with new “sustainability regulations” president Aleksander Ceferin has announced.
A new “squad cost rule” is being introduced that will limit a club’s spending on wages, transfers, and agent fees to 70% of a club’s revenue.
That figure will be reached after a three-year gradual change to give clubs time to get acclimated to new changes.
The soon-to-former Financial Fair Play model has been in effect since 2010.
“UEFA’s first financial regulations, introduced in 2010, served its primary purpose,” Ceferin said at the Executive Committee meeting in Nyon.
“They helped pull European football finances back from the brink and revolutionized how European football clubs are run.
“However, the evolution of the football industry, alongside the inevitable financial effects of the pandemic, has shown the need for wholesale reform and new financial sustainability regulations.”
UEFA added that acceptable losses will double from €30 million ($32.74m) over three years to €60m over the same period.
The new regulations will come into force in June 2022, with a gradual implementation over three years so clubs have time to adapt.
Clubs are expected to be allowed to spend 90% of their income in 2023-24, reducing to 80% in 2024-25 and 70% a year later.
New reinforced punishments, including points deductions, demotion to lower-ranking competitions, and potential exclusion from European football completely are expected to be introduced as part of the new regulations.
Currently, clubs can spend up to 5m euros more than they earn per three-year assessment period.
However, they can exceed this level to a limit of 30m euros, if it is entirely covered by a direct contribution/payment from the club owner(s) or a related party. According to Uefa, the idea of this was to “prevent the build-up of unsustainable debt”.
However, given the financial impact of Covid-19, which has seen European top-flight clubs lose £7bn, Uefa felt the rules needed to be changed.