Liverpool Reportedly at Risk of FFP Rule Breach and Champions League Penalty

Updates from Thursday, Sept. 25

Roma offered a statement on the club website:

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We support UEFA’s efforts through Financial Fair Play to ensure financial stability in football – it is very much in line with our strategy and actions. Our current ownership took over a club in economic distress just three years ago and were very clear from the outset that our club would be run as a business in order to maximize economic success along with on-field performance. 
 

We are very proud of the economic and competitive accomplishments achieved in a very short time and are even more optimistic about our future.  We look forward to a dialogue with UEFA and are confident they will recognize our accomplishments and consider us a model for future investment in European football.

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Oliver Kay of The Times of London has the full, official statement on the investigation:

Dan Roan of the BBC reports that Liverpool will officially be amongst the clubs who will be under investigation for Financial Fair Play violations:

Brendan Rodgers has backed the Financial Fair Play (FFP) push by UEFA, amid reports that Liverpool face investigation over their own finances.

Rodgers said, per James Pearce of the Liverpool Echo:

Dominic King of the Daily Mail explains that the investigation could prompt UEFA to order a "provisional sanction to withhold Champions League money."

However, Chris Bascombe of the Telegraph reports that Liverpool anticipated UEFA's investigation and hold no concerns of a potential punishment:

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Liverpool expect to be cleared of any breaches of Uefa’s Financial Fair Play rules after it emerged that they would be quizzed for more information on their accounts.

The Merseyside club will be named alongside Monaco, Inter Milan and Roma as one of those clubs that must provide further detail to the governing body regarding their finances over the past three years.

[...] Liverpool believe that such probes are part of the ongoing process, something they anticipated upon returning to European football.

John W Henry, the club’s principal owner, has been one of the most vocal supporters of the Financial Fair Play concept, consistently calling for its stringent application.

  

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Original Text

Liverpool could reportedly face action from UEFA after posting significant financial losses over the past two seasons.

Prolific football writer Gabriele Marcotti penned an article for The Times (subscription required) in which he suggested the Reds are likely to come under scrutiny after potentially breaching the governing body's Financial Fair Play sanctions. 101 Great Goals posted an excerpt from the main text and also tweeted the full article, as seen below:

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Liverpool could have almost £7 million of Champions League prize money withheld pending a Uefa inquiry into a possible breach of Financial Fair Play regulations.

In the summer, Liverpool and the other sides not involved in Uefa competitions last year submitted their accounts for the past two seasons. For the Anfield club, these showed a loss of £49.8 million for the 2012-13 financial year, after a loss of £41 million for a ten-month period through to May 2012.

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Marcotti indicated "it appears plausible" that Liverpool "could be among" the sides referred to UEFA's Club Financial Control Body.

Clive Brunskill/Getty Images

The Reds would have to post detailed financial information to the European board for further inspection if this happens. Earnings from Champions League qualification could then be withheld if the club is said to have breached the FFP guidelines, which tasks all teams competing in continental competition to "comply with break-even requirements," per UEFA's official website.

Despite the potential problem, club officials are said to be "very relaxed" about the situation, reported by David Prentice of the Liverpool Echo.

Liverpool signed players including Stewart Downing (£20 million), Jordan Henderson (£20 million), Charlie Adam (up to £8.75 million), Joe Allen (£15 million) and Fabio Borini (£11 million) during the time frame noted in Marcotti's report. Only Henderson has progressed to be a major success at the club, with the likes of Downing and Adam having already been sold for cut-price fees.

Brendan Rodgers hasn't been shy when landing the players he wants, as highlighted with his dramatic squad transformation since taking charge in 2012. Although UEFA's rules won't take into account his 2014 spending just yet, Rodgers' decision to bring in nine players, per Transfermarkt, underlines the investment needed to reach and sustain a place in the Champions League.

Chris Brunskill/Getty Images

It would be disappointing for the club to lose its reward for finally making it into the elite competition. UEFA recently punished nine sides during its first official set of sanctions linking to FFP, with Manchester City and Paris Saint-Germain among the most heavily affected. Both were punished with hefty fines, European squad limits and transfer caps.

Andrea Traverso, head of Club Licensing and Financial Fair Play at UEFA, believes the governing body's ability to hold back payment until a full investigation is completed should be outlined as a "preventative measure," per Marcotti's report for ESPN FC. Prize money will be released if future accounts confirm the club in question ticks all the criteria when moving forward.

Marcotti provided further details on the matter, per ESPN FC:

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Note that losses of that magnitude don't automatically mean a club is in breach, because UEFA's FFP parameters don't consider certain types of "virtuous" spending -- like investment in youth or infrastructure -- as losses. And, when arguing their case, clubs can also include future revenue projections to show they are trending in the right direction.

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Clive Brunskill/Getty Images

Liverpool will be hoping to make the Champions League a permanent fixture, but they will need to improve quickly if they are to replicate last season's second-place finish in the Premier League. Steven Gerrard's late penalty saved the side's blushes during their 2-1 win over Ludogorets during this season's European opener, but Rodgers' men have just six points from five games in the domestic division.

While some of this poor form comes down to the difficulty of embedding so many new players at once, the Anfield side have lost their attacking intensity since Luis Suarez departed for Barcelona. Raheem Sterling's importance has galvanised the club, especially considering Daniel Sturridge's current injury problems, per Luke Augustus of the Daily Mail.

UEFA's FFP guidelines are sure to catch many clubs out over the coming years, especially as the financial parameters tighten as the process evolves. Serious pre-planning is needed for sides who are hoping to make the Champions League, as dropping major funds quickly in order to do this could receive reprimand.

Although it appears Liverpool will have ample opportunity to state their case before being punished, Marcotti's coverage highlights how easily clubs can be brought under the spotlight with the new measures in place.