New potential FFP rules that could affect Manchester United and Manchester City transfer moves

The new Financial Fair Play (FFP) rules will enable UEFA to immediately alter the squads of clubs competing in the Champions League.

In a brand new development – aimed at expediting punishments for club’s violating FFP policy – will monitor squad spending, including transfer fees, ‘squad costs’ – not just salaries and transfer fees but agent fees – to calculate whether clubs have infringed on the spending limits outlined by UEFA, according to the Telegraph.

These ‘luxury tax’ proposals could see clubs involved in UEFA’s three European club competitions being forced to drop players from their squad to be eligible to compete.

The luxury tax works a similar way to the models used in Major League Baseball and other American sports leagues and UEFA executives expect it to come into play shortly. Still, there have yet to be any formal discussions on when this model will come into practice.

According to the Telegraph, the luxury tax will see the clubs that spend over the limit set by UEFA have to pay a premium not to face sanctions by European club football.

It is expected to operate on two levels, with a potential “hard cap” as an upper limit that owners would not be able to exceed under any circumstances.

Encouragingly, this move is set to benefit clubs operating lower down the football pyramid. The funds collected by clubs operating in the luxury tax will be redistributed throughout professional clubs, creating a fairer balance between the mega-rich clubs and those working on a tighter budget.

Manchester City have a history of competing with FFP laws, recently succeeding in a case against UEFA brought to the Court of Arbitration for Sport (CAS). Still, UEFA are determined to reinforce their model.

With football suffering from a loss of cash flow over the pandemic, the richest clubs were given less stringent criteria to follow from FFP – allowing City, Manchester United, Chelsea and active spenders Paris Saint-Germain to spend freely in the transfer market.

For example, PSG’s pursuit of Lionel Messi would be a transfer the French club would have to think far more strongly about when the new rules are in place. With the current rules, Messi’s wages would be included in the club’s financial records submitted in July 2022.

This would give the club ample time to find suitable precautions to ensure that they are not violating FFP rules. Though there is no suggestion that PSG have broken FFP rules in any of their business this summer, it would empower UEFA to address the situation immediately.

Professional football clubs in England are also set to change their FFP laws to follow UEFA’s new plan. As it stands, Premier League clubs are permitted to lose £105million over a three-year period.

These changes in regulations could potentially hit the Manchester clubs hard following the pandemic, as the Manchester Evening News reported that City recorded a pre-tax loss of £125.1m over 2019-20, with the outbreak of COVID-19 destroying the club’s financial model.

This will prove less of a problem for United, who suffered a pre-tax loss in 19-20 but secured a massive £509m turnover. It is believed that the advancements in FFP regulations will support all clubs in bouncing back from the cash loss as a result of the virus.

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