Month: December 2022

As usual, summer is the window of football transfer. The club will strengthen and make necessary adjustments to the lineup before the start of the new season, which is a period full of expectation and new hope for fans. But what is the behind-the-scenes operation of this process? What kind of operations must the club complete when signing a new player to register in La Liga? What measures are included in the economic control and team cost restrictions implemented by La Liga? This article will show you how the La Liga transfer window works from the inside. The Economic Control system (Economic Control) is the self-management framework of major clubs and listed companies under the Spanish league. Since its launch in 2013, its clear goal is to ensure the sustainable development of this competition and the clubs themselves through financial review. This framework applies to La Liga and West B, and all clubs under it must abide by the same rules. The economic control system of La Liga league is a preventive measure, which is parallel with the post-event regulatory measures such as the financial fairness policy of UEFA. The club knows in advance how much money they can invest, so that it is easier to keep the expenditure within the limit and prevent the debt that affects their sustainable development. This measure makes the clubs under La Liga different from other five major European leagues in the transfer market. When signing players, in order to conform to the self-management of economic control, a core foundation is the team Cost Limit. In short, this stipulates the total amount that each club can spend on rosters. It is worth noting that the lineup consists of two parts: registrable and registrable. Registrable lineup refers to players from 1 to 25, head coach, assistant coach, physical coach and other coaches with similar responsibilities. However, there are still some players who are not in this particular rosters, or those who have left the team but still incur costs such as compensation. Such players and coaches are included in the non-registered lineup. This framework not only involves the salaries of these professionals, but also involves various other factors, such as variable payment, portrait right payment, agency fee, amortization of transfer right, loan cost, social security fee, compensation, 25% purchase option price (when possible), license fee and other salary. Therefore, any new player that the club wishes to register must meet the team cost limit of the club. Looking at all the factors that constitute the cost limit of the team, the limit of each club corresponds to a simple equation: the budget income deducts the budget non-sports expenditure, and also considers the debt repayment and the losses to be recovered. The remaining amount is the cost limit of the club’s team. When a club or company signs a new player, they will submit all the documents to La Liga, according to the rules and the team cost limit of the application date, the Spanish league will approve or reject the registration of players. There will be a valuation agency that will use reports from independent experts and review any specific operation according to the rules stipulated in the policy framework, for example, to ensure that transactions conform to market value and/or economic trends. This ensures that all players registered by La Liga clubs are in line with economic control. Only in this way can we ensure that all teams compete under the same rules without any form of financial stimulants. Most importantly, this ensures the sustainable growth of La Liga club. The implementation of economic control in La Liga league and the emergence of club responsibilities have already produced undoubted benefits. From the 2014/15 season to the 2019/20 season, the club’s comprehensive net value increased by 250%. Meanwhile, the debt of public institutions decreased from 0.65 billion euros (most overdue) in 2013 to only 3 million euros (all paid off in time) in 2023. In addition, complaints from players due to unpaid payments dropped sharply, from 89 million euros in 2011 to zero. Since the introduction of economic control, the positive results outside the court have been accompanied by the success on the field. In the past 31 seasons, 19 European titles have been won by Spanish teams. All the players in the Spanish League know that they are participating in a competition that is very strong in sports and stable in finance at the same time. This is a dual achievement, which is even more impressive in the recent new Crown crisis. Which organizations have played a role in setting team cost limits? When the club or public limited company submits the documents of new players, the administrative authority of economic control of La Liga league is responsible for approving the registration request. In addition, La Liga is also responsible for approving the team cost control of each club. In order to make these decisions, there are some specialized agencies and tools that serve as guarantors for the compliance of rules. In the economic control department of La Liga alliance, there is an analysis team, a verification organization and related technical equipment (software, business intelligence analysis, artificial intelligence, etc.), and nothing is accidental. All this is to make the club feel at ease, because the rules are strictly observed. In order to provide more assurance, the data is also audited and an independent expert report is prepared. In case of any inconsistency, the Financial Supervision Committee (Financial Supervision Committee) and UEFA appeal Committee (UEFA Appeals Committee)(Spanish football association) of the economic control of UEFA can be used. Or an ordinary court to seek a solution. Details of economic control Obviously, the common regulatory framework of economic control is perfect, and all clubs of La Liga and Western B must abide by it. But not all clubs are the same. Therefore, according to these different situations, there are some special situations. What happens if the club exceeds the cost limit? Faced with this special situation, that is, the situation caused by the new Crown epidemic and the sharp decrease in income, the economic control framework of the league has been considered. If the limit is exceeded, the club is allowed to spend no more than 40% of the pre-reduced cost, which temporarily increased to 50% in the 2023/24 season. The idea of this temporary increase is to encourage transfer when the market is depressed, and at the same time to ensure a balance between the club’s financial needs and the market needs, so that the club can continue to operate in the market, the guaranteed excess amount will gradually decrease at the same time until the required financial balance point is reached. If the money saved by a player exceeds 5% of the team’s cost limit, 50% of the saved money can be reused. Meanwhile, when the club exceeds the limit, the salary of new registered players cannot be increased by more than 25% in each season. How is player exchange calculated? In the case of player exchange between clubs or limited companies, these operations are regarded as independent transactions, just like one club has signed a contract and another club has signed another contract. If necessary, there will be a (independent) valuation committee that can review and adjust the value assigned by the club to each transfer. Can the club use the accumulated net worth to transfer? As mentioned above, between the 2014/15 season and 2019/20 season, due to good management, the club’s comprehensive net value increased by 250%. Under special circumstances, whether it is a single club or the overall situation, such as during the new Crown epidemic, whether the club can use the funds saved in previous years is people’s concern. Economic control does allow the team’s cost limit to be exceeded by using some accumulated net worth, provided that it is not lower than the club’s “acceptable proportion” threshold. Therefore, this is a resource only applicable to clubs that are financially stable and have deposits on hand. Are there penalties for clubs that do not meet the economic control restrictions? Yes. There is a penalty system for this, which is used to deal with the following problems: exceeding the team cost limit; Failure to deliver documents on time; Lack or incorrect documents; Debts with other clubs, employees or public administration departments; and failed to meet financial indicators. If the public limited company approves the capital increase, can it be used to increase the team cost limit? OK. However, the percentage that can be used for signing will depend on the financial situation of the club. From the best to the worst financial indicators, 80%, 65%, 50%, or 0% can be allocated for signing. Regardless of the percentage allowed, it cannot be used for signing, at least not immediately. The club of La Liga must postpone the money for more than four years, while the club of La Liga must postpone it for more than two years. In order to update the team cost limit, how to calculate the transfer amount that has not been completed? The formula for calculating the cost limit of the team is based on the budget revenue, that is, the club’s estimation of the expected revenue. In order to calculate the cost limit of the team at the beginning of the transfer market, it will be estimated and consistent as much as possible. These are based on the activities of the club in previous years. For the /24 season, the budget can be based on the average sales in the past three seasons, and each transfer made at this window will automatically increase the amount. What if the documents provided by the club are different from the actual market situation? When the club sends a document to register a new player, if the data provided does not match the market value or economic trend, the verification agency can make adjustments. Is there any special provision for salary evaluation? There are special rules applicable to all specified circumstances, and according to these rules, the minimum cost of the team cost limit is determined for the relevant players, regardless of the cost provided in the contract. Under these circumstances, the main special regulations include: if a player comes from one of the five major European leagues and plays a certain number of matches, then at least 50% of the salary of a single season in the past two seasons will be considered; The salary cannot be reduced without increasing the length of the contract; And the maximum salary increase between seasons is 25%. At present, this specific part of economic control is only approved for the West B league, but the salary increase between seasons is also applicable to La Liga clubs that exceed the cost limit of the team. Is the downgrade aid included in the team cost limit? The League of La Liga will provide some financial aid for clubs downgraded to West B. These downgrade aid payments vary according to specific conditions and precedents of each club. This season, 50% of the first year will be included in the team cost limit, and the remaining 50% of the second year will be included in the team cost limit, as long as the club remains in the West B league in that season. How to calculate the losses caused by the epidemic? The losses related to the epidemic can be recovered in the next five years according to the following percentages: 15% in the /23 season, and then 20%, 20% and% respectively, finally, it was 22.5% in the 2026/27 season. How do I calculate the participation of players in the reserve team? For players who register in the reserve team (or affiliated teams) and apply to participate in this season’s professional competition, they will be regarded as first-line players with team cost restrictions according to the following criteria: • If the player already belongs to the club: if he has participated in more than 30% of the first-team games, it represents the percentage of the reserve team participating in the games and the salary of the player. • For newly registered players: transfer amount and salary of players, as well as previous performance (in national team, former club and league, etc.). Can I increase the registration scale in advance? There is an option to increase the registered capacity by predicting the implementation of revenue or profit. This measure is essentially a strict transitional measure, and the club must promise to restore the previous situation within the same season. Therefore, guarantees in the form of cash deposits or bank guarantees must be provided, which must be provided by shareholders or third parties outside the club, but must not be provided by the club itself. In this regard, if the situation does not recover, the guarantees will be recorded as non-refundable equity in the balance sheet of the club, and the Spanish Football Association can use these guarantees to pay the overdue debts of the club. In addition, according to this regulation, the maximum amount that can be used is limited: La Liga is 5% of the net turnover, and the Western League is 1.5%. In the specific circumstances of all these economic controls, it should also be noted that the sum of the amount of any capital increase and the cumulative net value allocated to the increased cost limit shall not exceed 25% of the turnover.