Different football leagues in the world have their own rules regarding accounting, governance and club finances.
One such rule is the Financial Fair Play (FFP) that is currently being used by the likes of UEFA and the English Premier League.
Both the UEFA's and Premier League's FFP rules require football clubs to balance their books and not to make excess losses or overspend.
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UEFA’s FFP, which was passed in 2009, only affects clubs taking part in UEFA-related competitions such as the Champions League, Europa League and the Europa Conference League.
“The most widely known FFP policies are probably UEFA’s. These pertain to the licensing system for teams who wish to take part in European club competitions.
“The Premier League has a number of financial rules in place, including requirements for clubs to pay transfer fees, salaries and tax bills on time,” read part of the statement from the Premier League.
The Premier League FFP rules also require clubs to disclose payments they make to agents during transfer windows and submit their accounts annually.
However, despite having a similar objective, UEFA’s financial fair play rule is slightly different from the one which the Premier League adopted in 2013.
One major difference between UEFA’s and Premier League’s FFP is the financial losses they are prohibited from making.
Objectives of Premier League’s FFP
FFP rules are aimed at preventing Premier League clubs from spending more than they earn.
Overspending has the potential of resulting in financial instability and putting the future of a club at risk of being disbanded.
Another purpose of FFP is to prevent clubs owned by individuals with financial power from outspending the rest of their rivals and thus dominating the league.
Possible penalties
Some of the possible penalties a club can be slapped with according to the Premier League FFP rules include points deduction, fines, and expulsion.