Financial Fair Play is now a familiar concept in football (Picture: Michael Regan/Getty Images)

Some of the wealthiest individuals and companies on the planet now have a stake in football through their ownership of clubs.

As such, without Financial Fair Play (FFP) regulations to limit spending, owners would have carte blanche to flex their financial muscles – to the potential detriment of the long-term health of the sport.

FFP is once again dominating the headlines, following the news that Manchester City have been charged by the Premier League for alleged offences between 2009 and 2018.

Whilst the concept of FFP has been around for a while now, its various guises and regulations can be a minefield for the average football fan.

Let’s take a look at how FFP works, why it was introduced and the punishments clubs can face for breaking the rules.

What is Financial Fair Play?

The Premier League, Football League and UEFA all have their own set of regulations governing club finances, which fall under the umbrella term of FFP.

The most recognised set of regulations are from UEFA, who first implemented FFP ahead of the start of the 2011/12 season.

Under UEFA’s initial regulations, clubs were not permitted to spend more than €5m (£4.2m) of what they earnt over a three year rolling period, or €30m (£25m) if the owner was able to cover the losses.

UEFA moved to help secure the financial future of clubs (Picture: FABRICE COFFRINI/AFP via Getty Images)

In 2022, new rules were approved by UEFA stating that by 2025, a club’s total expenditure on transfers, wages and agent fees must not exceed 70 per cent of its total revenue.

Clubs will be allowed to lose €60m (£53.6m) over a three year period, with an extra €10m (£8.9m) annual loss permitted if the club is deemed to be ‘in good financial health’.

Expenditure on infrastructure, training facilities and youth development are not included in the FFP formula.

The Premier League has its own financial framework, which prevents clubs from paying substantially more than they earn.

Premier League clubs must also submit accounts annually, disclose all payments made to agents and pay transfer fees, salaries and tax bills on time.

Why was Financial Fair Play introduced?

The general principle of FFP is to safeguard the future financial security of football.

A review by UEFA in 2009 concluded that more than half of 665 clubs across Europe lost money over the course of the previous year – with 20 per cent believed to be in serious financial danger.

The Premier League keeps a close eye on club accounts (Picture: Catherine Ivill/Getty Images)

When the rules were introduced by UEFA over a decade ago, then president Michel Platini said: ‘Fifty per cent of clubs are losing money and this is an increasing trend. We needed to stop this downward spiral.

‘They have spent more than they have earned in the past and haven’t paid their debts. We don’t want to kill or hurt the clubs; on the contrary, we want to help them in the market.

‘The teams who play in our tournaments have unanimously agreed to our principles. Living within your means is the basis of accounting but it hasn’t been the basis of football for years now.’

Clubs have increasingly found it difficult to comply with FFP regulations, due to inflated transfer fees and spiraling wages.

More: Football

What are the UEFA and Premier League punishments for breaking Financial Fair Play rules?

UEFA have a range of financial and sporting punishments available at their disposal should any club be found guilty of breaking the rules:

Meanwhile, the Premier League has its own array of punishments for breaking FFP rules:

MORE : Manchester City charged by Premier League for breaking Financial Fair Play rules

MORE : How many games do players miss for a red card in the Premier League?

Follow Metro across our social channels, on Facebook, Twitter and Instagram

Share your views in the comments below

It’s not easy to get your head around it.