Why financial fair play breaches trigger sporting disputes

Written by James Harris, Solicitor in our Dispute Resolution team.

When a club is docked points, fined millions, or threatened with relegation, the headlines write themselves. But behind the headlines lies a complex web of legal disputes. Financial rules in sport, from UEFA’s Financial Fair Play (FFP) regime to the Premier League’s Profitability and Sustainability Rules (PSR), are designed to protect the long-term health of clubs. Increasingly, however, they are also acting as flashpoints for litigation and arbitration.

From the Premier League’s sanctions against Everton and Nottingham Forest to the Premiership Rugby insolvency crises at Worcester Warriors, Wasps and London Irish, financial turmoil is reshaping the sporting landscape. For clubs, players, creditors and governing bodies, the consequences are far-reaching, and disputes are inevitable.

The rise of profitability and sustainability disputes

The Premier League and English Football League apply strict financial rules to ensure clubs live within their means. Known broadly as PSR, they restrict the level of permitted losses over a rolling three-year period.

Recent enforcement has been uncompromising. Everton were deducted points in both the 2023/24 and 2024/25 seasons for breaching PSR. Nottingham Forest were also sanctioned for overspending in pursuit of Premier League survival. Such penalties not only alter league tables but can decide relegation, broadcasting income and sponsorship deals worth tens of millions.

Unsurprisingly, this creates fertile ground for disputes. Clubs frequently fight the charges against them and challenge the severity and fairness of sanctions, raising questions about the meaning of rules, the proportionality of charges and sanctions, due process, and consistency across cases. Competition law arguments are also become more common place.  Independent commissions and appeal boards are now as much a part of the season as the transfer window.

When overspending becomes a legal battle

The consequences of overspending extend well beyond lost points. Fines, transfer restrictions and the threat of relegation destabilise finances and often trigger litigation. Disputes commonly arise on multiple fronts:

• With governing bodies – over the interpretation and application of financial rules.
• Between clubs – particularly where sanctions are seen to influence relegation battles or promotion opportunities.
• From investors or owners – who may argue that sanctions undermine their legitimate expectations or the value of their investment.

Arbitration panels, and in some cases the civil courts, are increasingly called upon to resolve these disputes. For example, claims of procedural unfairness in hearings, or challenges to how mitigating factors were assessed, are becoming familiar legal battlegrounds.

Insolvency in rugby: lessons for other sports

The collapse of Worcester Warriors, London Wasps and London Irish showed how quickly financial pressures can overwhelm clubs. In each case, unpaid wages, disputed tax liabilities, and issues around stadium ownership compounded the crisis.

When a club enters administration, disputes multiply:

• Players and staff seek recovery of unpaid wages.
• Creditors fight for priority in administration or liquidation.
• Landlords, sponsors and suppliers pursue contractual claims.
• Governing bodies decide whether to expel the club or permit its re-entry at a lower level.

These disputes are not just financial; they go to the heart of sporting integrity. Should a club be allowed to reform and retain its history? How should creditors balance commercial recovery against the preservation of community institutions? Rugby has had to grapple with these questions in real time, and football, with its escalating wage bills and transfer spending, is not immune.

The rugby experience also underlines the reputational risks for governing bodies. Criticism of decision-making, whether too lenient or too harsh, can linger for years. Clubs and administrators alike must be prepared for scrutiny.

Implications for clubs, leagues and stakeholders

For clubs, the implications are stark. Compliance with financial rules is no longer just a regulatory requirement, it is a matter of sporting survival. Missteps can lead to points deductions, relegation, and ultimately insolvency.

For governing bodies, the challenge is to enforce discipline while avoiding accusations of inconsistency. Every sanction risks appeal, media scrutiny and legal escalation.

For players and staff, insolvency threatens livelihoods and careers. For fans and communities, it risks the loss of treasured institutions. For investors, the regulatory landscape shapes both risk and opportunity: financial rules can protect the long-term value of a club, but they can also wipe it out overnight.

Future-proofing: the next wave of financial rules

Financial regulation in sport is not static. UEFA’s “squad cost ratio” phased model continues to tighten restrictions each year through, capping spending on wages, transfers and agents’ fees at a percentage of revenue.  In July this year, both Chelsea and Aston Villa were found to have breached UEFA’s squad cost rules. For Aston Villa in particular, the restrictions had a significant impact, limiting their ability to make permanent signings during the summer transfer window. Many commentators believe this lack of flexibility in the market has been a major factor in their slow start to the current Premier League season.

Each reform creates uncertainty and, potentially, disputes. Questions about retrospective application, transitional arrangements and consistency with competition law are likely to be tested. Clubs need to anticipate not only today’s regulatory risks but those on the horizon.

The dispute landscape ahead

As financial regulation evolves, certain themes will endure:

1. Sanctions will continue to be litigated – because they directly affect league standings, revenues and reputations.
2. Insolvencies will trigger multi-party disputes – involving players, creditors, landlords and governing bodies.
3. The balance between control and fairness will remain contested – particularly where sanctions alter competitive balance.
4. Boards will be expected to demonstrate foresight – with regulators and courts scrutinising governance decisions as much as financial accounts.

For clubs and stakeholders, preparation, education and focus on good governance and compliance will keep these sports bodies and stakeholders out of trouble, and investment on that brings a far greater return.

Understanding the dispute landscape, and how to navigate regulatory hearings, appeals and insolvency proceedings, is now as important as tactical awareness on the pitch.

Conclusion

Trying to predict the future of financial regulation in sport is challenging. It is clear there are two competing pressures. On the one hand, the regulators who are under more pressure to make it a level playing field and ensure long term sustainability. On the other hand, clubs and investors trying to compete at a high level in a global market hat continues to explode. The balance between sustainability and competitiveness will remain the central question.

Financial rules in sport were introduced to promote sustainability. But they have also created new battlegrounds for disputes. From point deductions in football to insolvencies in rugby, the message is clear: financial management and legal strategy are now inseparable.

Our experienced sports sector team works with clubs, governing bodies and stakeholders to manage a wide range of disputes. If your organisation is affected, please get in touch to discuss how we can help you navigate the challenges ahead.