Many of the European soccer clubs have been facing financial distress since the last year due to the pandemic. They have lost a fortune in the ticketing revenue. To provide these clubs with financial aid, the Union of European Football Associations (UEFA) will soon be setting up a relief package of $7.1 billion.
The European football governing body is also working on a set of measures and reforms that would help teams recover from the pandemic revenue hit and will further help in restructuring the financial system of European soccer.
They would be establishing a credit facility of $2.4 billion to $7.1 billion, which clubs could borrow from at a low rate. The period that clubs could now restructure existing debt would lengthen to five-to-seven years.
UEFA would also be introducing a luxury tax on teams whose player salaries exceeded a certain percentage of revenue, possibly 70%. Funds collected from the tax would then be redistributed to other clubs.
Through these many reforms, the body seeks to ease the pain of future financial shocks while creating more parity among teams. The reform package is expected to roll out in the coming weeks.
UEFA has been in talks with the investment firm Centricus Asset Management on financing the credit facility.
According to Deloitte, the European soccer market fell to $29.7 billion in the 2019-2020 season, a 13% drop from the previous season. It was also the first time in history that the Premier League’s revenue declined.
The financial restructuring process comes in continuation to UEFA’s announcement for a new Champions League format to be introduced as of the 2024/25 season which would see the total number of teams from 32 to 36 in the UEFA Champions League.