An extract from an article by ‘The Swiss Ramble’ which I find, best explains the fundamentals of how FFP is to function.
How will FFP work in practice?
‘The first point to note is that clubs do not actually have to break-even in the early years of FFP to meet the target, thanks to the concept of “acceptable deviations”, which is one way UEFA has attempted to facilitate the move towards a sustainable model.
The first season that UEFA will start monitoring clubs is 2013/14, but this will take into account losses made in the two preceding years, namely 2011/12 and 2012/13. Wealthy owners will be allowed to absorb aggregate losses of €45 million (Ł36 million), initially over those two years and then over a three-year monitoring period, as long as they are willing to cover the deficit by making equity contributions. The maximum permitted loss then falls to €30 million (Ł24 million) from 2015/16 and will be further reduced from 2018/19 (to an unspecified amount).
This approach was explained by Infantino, “You can have losses for one year, because perhaps you had one bad season and you did not qualify (for Europe). So we are looking at losses over a multi-year basis. So one year you can make a loss, but not over three years.” This makes sense, though some clubs might simply make operating losses every year and get within the break-even target by hefty player sales in one year.
UEFA’s willingness to give the clubs every chance to meet FFP is also seen by the decision to have only two years in the first monitoring period, as this means that the annual average loss can be higher than future monitoring periods.
It is important to note that these are the acceptable deviations only if the owner is willing and able to put money in. If not (as is the case for many clubs), then they are significantly lower at just €5 million (Ł4 million). For the likes of Abramovich and Mansour, this will obviously not be an issue, but their ability to cover large deficits will be much reduced, as noted by Infantino, “I wouldn’t say the era is dead, but I would say what is over is the sugar daddy who can put hundreds of millions into the clubs. This will no longer be possible.”
Note that the rules do not actually force a club to become profitable. All that UEFA are saying is that clubs will not be allowed to compete in their competitions (Champions League and Europa League) if they do not breakeven, but clubs making losses could continue to compete in their domestic league. The first sanctions for clubs not fulfilling the break-even requirement can be taken during the 2013/14 season and the first possible exclusions relating to break-even breaches would be for 2014/15 season.’
