How far are clubs hit by FFP rules?

How many clubs are constrained by Financial Fair Play rules?

Although the 20 Premier League clubs posted a massive £1.6 bn loss over the 3-year monitoring period, this was reduced by £1.2 bn allowable deductions and £590m COVID impact (slightly offset by removing £63m loan write-off).  Incredibly, that switches the huge loss into a net £100m profit for the purposes of the FFP calculation.

No fewer than nine clubs were actually profitable in terms of FFP with a further 4 clubs restricting losses to less than £10m.  In particular, Tottenham £231m, Manchester City £141m and Liverpool £109m seemed to have a lot of room to manoeuvre.

Essentially, it looks like clubs making the largest FFP losses, even after taking advantage of all the allowable deductions, have needed owner funding to help stay within the maximum losses. This is the case for Chelsea, Everton and Leicester City, who are the only clubs able to utilise the full £105m allowable loss after their owners provided equity funding.  Looked at another way, most owners did not have to inject capital to meet FFP targets – so they didn’t.

At the end of the 2021/22 season, almost all of the Premier League clubs were fine in terms of FFP targets, though a few were uncomfortably close to the limit, namely Arsenal, Norwich City, Southampton and Leicester City.  This helps explain why Leicester were far less active in the transfer market last season, though Southampton and Arsenal both splashed the cash in 2022/23, albeit with very different outcomes.

Chelsea were £26m worse than target, though the club would no doubt argue that further adjustments should also be taken into consideration, especially the revenue they lost when sanctions were applied by the government because of Abramovich’s ownership.   The club accounts stated that Chelsea had complied with financial regulations and they’re probably right for 2021/22.

That said, the following season will reflect the enormous £600m recruitment since the club was sold, so this will be much more challenging, unless they can make some profitable player sales. Given the Blues’ track record here, it would not be a complete surprise if they somehow managed to pull this off.

However, Everton are a long way off compliance, with their adjusted loss of £173m being a sizeable £68m above the £105m target.

With a couple of notable exceptions, most Premier League clubs have managed to comply with FFP regulations, though this has required making use of significant allowable deductions for “healthy” expenditure and COVID impact.  That said, some clubs are quite close to the limit, so this is clearly a consideration for executives this summer, especially when looking at how much they can spend in the transfer market.

Leading clubs have the additional challenge of UEFA’s FFP regulations, which are stricter than the Premier League, as allowable losses are smaller (even though these have been increased in the new guidelines).