AC Milan Free to Play in Europa League after UEFA Ban Overturned
AC Milan free to play in Europa League after the Court of Arbitration for Sport overturn UEFA ban

 

The Court of Arbitration for Sport (CAS) has partially upheld an appeal by AC Milan against a UEFA ban following the club's breach of UEFA Club Licencing and Financial Fair Play Regulations (FFP Regulations).

UEFA's FFP Regulations

The FFP Regulations were introduced by UEFA in 2012 to improve the economic and financial health of clubs and to protect the long term viability and sustainability of European club football. The break-even provisions at Articles 58-64 of the FFP Regulations require clubs to have an overall break-even surplus in the year of assessment and the preceding two years before the assessment. By way of exception, a deficit of up to €30m may be allowed where it is covered by a direct contribution from the club owner or a related party.

The FFP Regulations have generally made a positive impact on the financial sustainability of clubs with UEFA reporting an 80% reduction on net losses and a significant increase in net equity at clubs. The number of overdue payables owed by clubs has also been reduced.

AC Milan case

UEFA raised concerns about AC Milan's compliance with the break-even rules following the club's acquisition by Chinese investor Li Yhonghong in April 2017 and subsequent spending of over €200m on new players in the summer of 2017. Following assessment, the Adjudicatory Chamber of the UEFA Club Financial Control Body (CFCB) held that AC Milan had failed to fulfil the break-even requirement under the FFP Regulations and banned AC Milan from participating in the Europa League for the coming season.

AC Milan's spending spree was reportedly financed by a loan from Elliot Management Corporation. This resulted in a substantial deficit for the club, compounding previous years of financial losses sustained when it is understood that the club was under the control of former Italian Prime Minister Silvio Berlusconi's family. Elliott Management Corporation has since taken ownership of the club.

CAS decision

AC Milan further appealed the Europa League ban to CAS. In its decision CAS held that the ban was disproportionate given recent developments in the club's ownership and recent improvement in the club's financial situation. However, CAS did acknowledge AC Milan's breach of the FFP regulations and rejected its request to order a settlement agreement. The case has been referred back to UEFA to deliver a proportionate disciplinary measure considering the club's new financial situation. Significantly for AC Milan, it was free to compete in the Europa League this season where it has won its opening two matches.  

The decision raises important questions regarding the future enforceability of the FFP Regulations, particularly where heavily indebted clubs receive fresh funding from investors. 

Contributed by Patrick Murphy

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