EFL Financial Fair Play rules explained - and the punishments clubs like Bristol City could receive

Bristol City find themselves in a nervy position over the EFL’s Financial Fair Play rules, set to be in breach ahead of next year.

Bristol City find themselves in a nervy position over the EFL’s Financial Fair Play rules.

The deadline for clubs up and down the EFL and Premier League to submit their accounts and reports to league officials is coming up within the next two weeks.

And we already know City are in a very tricky position when it comes to next season’s assessment.

Following losses of £38.4million in 2021, losses impacted by the pandemic, the Robins must find the necessary money to reach compliance for the period encompassing that year.

But as Steve Lansdown and the City chiefs work away at the numbers, we have taken a look at the rules in detail to get you up to speed with the process.

Take a look below.

What are the rules?

On or before March 1 of each year, every EFL club has to submit copies of its accounts along with reports from a director and an auditor.

Among the report must be its estimated profit and loss along with the account balance.

A profit and sustainability calculation is then issued and each club’s losses must fall within the Lower Less Threshold, set by the EFL.

The assigned executive will then work out whether the club will be able to meet the obligations set out in the profit and sustainability rules.

Crucially, though, while assessments are done every season, they are calculated based on the previous three years.

What are the thresholds?

The lower threshold for EFL clubs is £5million, while the upper threshold is £13million.

The lower threshold for the Premier League is the same, but the upper amount is set at £35million. These figures are averaged per season and the calculation is made each March based on the previous three years.

To explain these limits further, in a nutshell, clubs can lose up to £13million per season, but that includes an injection of cash from the owner.

Club’s can only lose up to £5million per season without any owner funding.

What happens if the losses are greater than the threshold?

If a club loses or is set to lose more than the threshold during the three-season period, they must provide future financial information by March 31, proving the club can meet its obligations.

The club must also provide a calculation of estimated aggregated adjusted earnings before tax.

If clubs in breach cannot provide the future funding within the timeline, the assigned executive has the powers to punish them.

And the EFL aims to dish out any punishments by the end of each season.

Potential punishments

Under the most recent rules, the EFL are granted wide powers as far as punishments go.

A transfer embargo can be enforced, or a significant fine, but there are also more severe punishments available.

The EFL executive can also deduct points, or even move a team out of an automatic promotion position into the play-offs.