1. Financial Fair Play Barcelona July 17th 2010

2. WHY is action needed? Overall picture of clubs’ finances WHERE did the idea of new financial controls come from? HOW has it been developed? Consultative approach WHAT are the objectives? WHAT are the financial fair play rules? Proposed concept HOW will the new rules be implemented? WHEN will new rules be introduced? Planning and Timeline Open discussion, suggestions…. AGENDA

4. 10% of European clubs (sample c400) had Going Concern emphasis of matter or qualification in 2008 Audit Report

5. Preliminary figures suggest modest income rise in FY2009 with second tier clubs in particular struggling to meet commitments

6. Longer term investment in football has not matched spending – Less than 1 in 4 clubs own stadium and less than 1 in 3 own training facilities

8. Despite revenue increases 47% of all clubs reported losses and 37% of larger clubs (revenue >€5m)

9. 145 clubs spent more than €6 for every €5 income

10. 57 clubs reported salaries > total income

12. 155 clubs reported losses and negative equity

13. This included 15 of TOP 60 largest revenue clubs

14. Net equity deteriorated in 44% of top division clubs

15. Clubs from 47 different countries reported negative equity

17. WHERE did the idea of new financial controls come from? UEFA investigated financial controls particularly salary controls 1999-2000 Salary caps also on agendas at club meetings UEFA concluded salary control not feasible at that stage but introduced its club licensing system in 2003 including some financial criteria 50+ clubs prevented from participating in UEFA club competitions and receiving financial reward due to licensing Prior to recession many stakeholders including prominent club owners requesting intervention at European level UEFA President took up invitation and investigations performed Agreed that new financial control panel should be set up and new financial controls included on top of current licensing system

18. HOW have new rules been developed? Financial situation of European club football – stakeholders calling for change; Extensive consultation with all stakeholders (NAs, EPFL, ECA, FIFPro Europe, SD Europe); New financial rules to be built on top and integrated with existing club licensing regulations in effect since 2004; New regulations approved by UEFA EXCO on May 27th 2010.

19. WHAT are the objectives of new rules? Agreed ‘objectives’ As approved by UEFA’s Executive Committee and key stakeholders, the new requirements aim principally to: Introduce more discipline and rationality in club football finances; Encourage clubs to operate on the basis of their own revenues; Protect the integrity and smooth running of the competitions; Encourage investment for the long-term benefit of clubs; Ensure clubs settle their liabilities on a timely basis; Protect the long term viability and sustainability of European club football.

20. WHAT are the objectives of new rules? Net benefits to club football Use carrot of UEFA competitions (‘ultimate stage’ + €1,400,000,000 per year) to encourage sustainable business models and reward fair play Tighten noose on clubs with questionable business practices Make clubs directors/owners aware that finances independently monitored Require transparency in owner’s objectives and LT business model Realign salaries with ability to pay salaries

21. WHAT are the new rules?Break-even requirement http://www.uefa.com/MultimediaFiles/Download/uefaorg/Clublicensing/01/50/09/12/1500912_DOWNLOAD.pdf The cornerstone of the Financial Fair Play concept; A club must not repeatedly spend more than its revenues (assessed over rolling 3 year period) A tailored approach with exemptions for small clubs, relative advantages to medium sized clubs and more relaxed requirements for clubs not exhibiting warning signs. ‘Investments’ in youth football, community schemes and infrastructure differentiated to ‘spending’ and excluded. Introduction of an ‘acceptable deviation’ over three years; Assessment of other factors (quantum, trend, budgets, debts); A web-based IT tool to be developed for use by clubs, licensors and the CFC Panel.

23. Broadcasting rights

24. Sponsorship & advertising

25. Commercial activities

27. Youth development activities

28. Community development activitiesNote: Only represents a simplified version of calculation.

29. WHAT are the new rules?Warning signs/ indicators If club breaches the following indicators then further information required: Audit opinion in annual and/or interim financial statements includes emphasis of matter or qualified opinion regarding going concern; Annual or interim financial statements disclose deteriorating net liabilities; Club reports a break-even deficit in period t-1 and/or t-2; Club has overdue payables as of 30 June in year club competitions commence.

30. WHAT are the new rules?Other rules In support to the “break-even” rule Enhanced overdue payables rule (backward mechanism) To ensure that clubs have honoured their commitments when these were due Enhanced Future Financial Information (forward looking mechanism) To monitor clubs’ projected results; To monitor that clubs will dispose of sufficient liquidity to continue servicing their commitments in the future.

31. HOW will the new rules be implemented?Integrated approach Club licensing Club monitoring

33. Training of licensors and clubs

34. Prepare for implementation of enhanced requirements

35. Implementation of new financial rules

36. Creation of CFC Panel

37. Development of enhanced requirements

38. Consultation process

40. Supplementary slides