Villa Park
Villa Park(Image: Getty Images)
Aston Villa are set to be hit with sanctions by UEFA for breaching financial regulations for last season, with Chelsea also facing a similar fate.
Villa’s run to the quarter-finals of the Champions League, where they were edged out by eventual winners Paris Saint-Germain, has provided a major revenue boost for the club for the 2024/25 financial year, which comes to an end on June 30 for Villa, but with the previous financial year being assessed by UEFA, the club are set to face a financial penalty.
The Times had previously reported that both Villa and Chelsea were in dialogue with UEFA’s Club Financial Control Board over a fine for breaching UEFA rules, which permit £170m of losses over a three-year period and a squad cost ratio of 80%, changing to 70% next season.
The fines for both clubs, if imposed, will be more a slap on the wrist and in the hundreds of thousands as opposed to the millions, meaning it won’t be hugely detrimental to Villa’s finances. But the club, now back in the conversation for European football on a regular basis and competing in next season’s Europa League, will have to be mindful of bringing themselves in line with regulation swiftly.
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Villa will be keeping a close eye on what happens to Barcelona, with the Spanish giants at risk of sanctions from UEFA for breaching its rules for the second year in a row.
According to a report in The Times, Barcelona face the possibility of points deductions in European competition or having a smaller squad to submit for their breaches.
The pandemic impacted Barcelona significantly, with the club forced to sell future broadcasting rights to try and offset major losses, with that income attempted to be booked as ‘other operating income’, which would have been allowed to go towards their UEFA calculations. But UEFA disagreed and believe that it represented the ‘sale of intangible assets’, something that doesn’t count towards it.
Villa and Chelsea are set to find out the severity of their fines later this month.
The Premier League currently has profit and sustainability rules (PSR) in place as a means of financial regulation, where club losses are capped at £105m over a three-year period before sanctions kick in, with allowable deductions for such things as investment in infrastructure, the academy, the women’s team and community initiatives.
The Premier League has plans to align itself with UEFA rules, with clubs who qualify for European competitions currently having to be mindful of two different sets of rules.
UEFA allows teams to lose a maximum of €200m (£170m) over a three-year period. Deductions can be made by the club for spending on youth and women's teams as well as on their stadium and facilities. They also have a squad cost ratio in place to assess how much clubs are spending on their squads, and if it is sustainable.
UEFA’s Squad Cost Ratio (SCR) works by using relevant wage costs (for playing staff and manager), amortisation costs (how transfer fees are accounted for by dividing the guaranteed fee over the length of the player’s deal), severance costs for sacked managers, and intermediary fees. Those costs are then calculated against a club’s operating revenue and player trading profit (the best performing of the last three years to allow for transfer market volatility, to give a squad cost ratio percentage.
Clubs were given time to comply, with the SCR sitting at 90% from 2023, 80% from 2024, and 70% from 2025, with sanctions arriving via fines for first-time breaches, with additional punishments possible for repeat offenders.