THE BLOG BY CPD FOOTBALL | The World of Indian football and beyond by Chris Punnakkattu Daniel

DFL licensing process with examination of economic performance resumes

Logos of the Bundesliga. Bundesliga 2 and Deutsche Fußball-Liga (DFL)

After financial criteria were largely left out of the licensing process last year given the countless questions brought about because of the coronavirus pandemic, economic performance will again be examined, both ahead of and during the 2021-22 season. An unanimous resolution to this effect, which also provides for sanctions in the event of misconduct, was adopted today by the 36 clubs of the Bundesliga and Bundesliga 2 at an Extraordinary DFL Members Assembly. Some points in the regulations approved take into account the special situation due to the coronavirus pandemic – but they will only apply for one season, hence the original licensing process standard is planned to automatically return for the 2022-23 season.

Submission of documents by 15 March

As usual, the pre-season licensing process (part 1) will begin on 15 March – the latest date by which applicants must have submitted the necessary documents. In examining various criteria, the DFL can impose conditions or obligations on applicants in accordance with its Licensing Regulations. A condition stipulates that certain requirements must be met by a set date before the new season so that – subject to all other criteria being satisfied – a licence can be issued for the coming season. An obligation on the other hand defines the criteria that must be maintained throughout the season once a licence has been issued.

If, when calculating liquidity in conjunction with the examination of the financial criteria prior to the season, the DFL detects a liquidity shortage, the Licensing Regulations stipulate the condition to provide evidence to show that this gap has been closed ahead of the season (or that a corresponding liquidity reserve has been established). Against the backdrop of the ongoing economic uncertainty due to the coronavirus pandemic, such conditions will be replaced on a one-time basis for the 2021-22 season with obligations that must be satisfied by 15 September 2021. The deadline is therefore during the newseason but after the end of the summer transfer period, which gives the clubs more time and more chancesto make up for liquidity shortages, for example by transferring players to other clubs. If a club is unable to make up its liquidity shortfall by the deadline, it will be deducted six points with immediate effect (during the 2021-22 season). The club will still be required to ensure the financing of match operations until the end of the season.

Second part of the licensing prodecure in the season

In order not to further exacerbate the financial constraints already imposed by the pandemic, the Extraordinary DFL Members Assembly also resolved that capital or planning quality requirements will not be placed on the clubs concerned in the 2021-22 season despite negative equity. Regarding the calculation of revenue from ticket sales, the DFL will not impose any general stipulations given the uncertainty as to when fans will be allowed back into the stadiums, which could also vary from location to location. In the event of deviations, and in other scenarios, the DFL will also review the calculations made in the second part of the licensing process in the autumn.

As usual, this examination of economic performance during the season will begin from the end of October 2021, including the possible stipulation of obligations to close any liquidity gaps and the so-called “transfer obligation”, which requires a club to prove that it can settle all its liabilities stemming from a transfer. This condition is due by 30 June and before the transfer can go ahead. This part of the licensing process also takes the clubs’ activities in what will then be the past summer transfer period into account in the liquidity calculation until the end of the season. If an obligation to close a liquidity gap identified in the second part of the licensing process is not complied with by 15 January 2022, four rather than two points will be deducted with immediate effect.

Working group to strengthen the financial stability of professional football

Independent of the regulations that have now been adopted by the DFL Members Assembly, which were devised in coordination with the Finance Commission consisting of representatives from twelve clubs, the Executive Committee of the DFL had recently decided to create a working group to boost the financial stability of professional football. With the Finance Commission on board, this group will dedicate itself to areas such as coping with the financial repercussions of the coronavirus crisis and the honing of national licencing and finance criteria in line with the international body of rules. One key foundation for this will be formed by the corresponding recommendations of the task force, “Future of Professional Football”.

(DFL Deutsche Fußball Liga)