What Today’s UEFA FFP Ruling Means In Practice For Inter
UEFA Club Financial Control Body Investigatory Chamber released an update on the monitoring of the settlement agreements signed with 12 clubs in the past years and on the monitoring of the break-even requirement for clubs having participated to UEFA club competitions 2017/18.
The statement read that with regards to Inter the club: “has partially fulfilled the targets set for season 2017/18. As a consequence, the foreseen conditional sporting measures, such as the transfer restrictions and the limitation on the number of players in the List A, will not be lifted and will continue to apply in the season 2018/19. Additional financial contributions, if applicable, will be withheld as specified in each respective agreement. The settlement regime will continue to apply for season 2018/19 for FC Internazionale Milano.”
What does it mean that Inter have only ‘partially fulfilled the targets’? According to Italian football finance site Calcio E Finanza, today’s ruling is based on the financial filings provided by Inter just under a year ago, on June 30th 2017. According to these filings Inter already achieved UEFA’s break even requirement 12 months ago and UEFA have approved Inter’s accounts which includes the sponsorship deals that Suning have provided Inter with. This is very important since if UEFA had deemed these deals to be inflated or not of fair value UEFA could have struck them out as income from Inter’s balance sheet. Therefore, Inter have not only managed to break even 12 months ago but will also do so this year, possibly even producing a profit which is unique in Inter’s history.
Where Inter have failed to meet the targets set out by UEFA, is concerning the amortization on player transfers like Joao Mario and Gabriel Barbosa. In accounting, amortization refers to charging or writing off an intangible asset’s cost as an operational expense over its estimated useful life to reduce a company’s taxable income. In terms of a loan amortization also means paying off an amount owed over time by making planned, incremental payments of principal and interest.
It is in this context that the term amortization must be read as Calcio E Finanza explains further “Inter had the obligation to reduce the amortization, according to their agreement with UEFA: however, the numerous player signings of the past few seasons like Joao Mario and Gabigol, did not allow the club to meet these obligations, in that not only have the amortizations not decreased but have instead increased.”
Furthermore, Inter are forced to maintain a financial balance between the sum spent on the transfer market and money received for selling players. As reported widely previously, Inter are currently working hard on selling a host of Primavera players before June 30th whom they together with the sales of Nagatomo, Kondogbia and Murillo are aiming to create a balance between the sum spent on signed players and the sum received on players sold so that next year, June 2019, when UEFA looks at Inter’s balance sheet for this year, June 3oth 2018, they will see that not only will Inter have broken even (probably made a profit) but that they will have raised revenue in terms of players sold which exceed €40 million. If Inter manage to do this they will be allowed to exit the settlement regime for the season 2019/2020.
In practice, this means that Inter’s penalty will be to be limited to calling up 22 players to be included in the so called A list of the team’s Champions League list with the A list being players that are not homegrown or raised at Inter but players the club has signed.
Furthermore, with the introduction of FFP 2.0 that UEFA has set forth, the new rules allow for UEFA to respond much faster to the financial statements as opposed to the 12 month period it takes for them to respond today.
So in conclusion today’s ruling means:
1) The ruling is based on financial report handed in to UEFA on June 30th 2017,
2) Inter managed to reach the target of breaking even 12 months ago and will do so this year (maybe even reporting profit for the first time ever),
3) There is no transfer ban in place for Inter,
4) No points deduction in domestic or international tournaments,
5) No fines allocated,
6) No disqualification from UEFA tournaments,
7) A slight reduction to the number of A List registered players (22 players allowed according to Calcio E Finanza).
8) Inter can still register new signings to play in the Champions League.
9) Inter have plenty of assets to make money off of such as Joao Mario, Eder, Kondogbia, Murillo, Biabiany, Nagatomo as well as a plethora of Primavera players who Inter are selling off with buy-back clauses inserted in every contract should these players bloom out to superstars.