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Club Structure and Financial Fair Play

September 30, 2025
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I. Legal Structure of Sports Clubs (Historical and Normative Framework)

1. Legal Nature of Sports Clubs

Sports clubs are legal entities that both organize sporting activities and influence large masses of people through their economic and social dimensions. From a legal perspective, the nature of sports clubs varies according to the legal system of the country in which they are located; however, the fundamental characteristic is the presence of both public interest and private enterprise elements.

In Turkish law, the legal structure of sports clubs has long of association law . Until the 1980s, amateur sports activities predominated, and association status was considered sufficient for the organization of clubs. However, the professionalization of football, high-cost transfers, broadcasting revenues, and sponsorship agreements have made it insufficient for clubs to be managed solely under association status.

2. Sports Clubs within the Framework of Associations Law

During the Republican era, sports clubs were established and operated as associations under the Law No. 5253 on Associations . During this period, the financial discipline of the clubs was supervised only within the limits of the associations legislation

The association status allowed for the democratic management of clubs, but it proved insufficient given the financial size of professional football branches. Particularly since the 1990s, the increasing debt burden of clubs highlighted the need to reform the association status.

3. Law No. 5894 on the Establishment and Duties of the Turkish Football Federation

Law No. 5894 , which came into force in 2009 , recognized the autonomous structure of the Turkish Football Federation (TFF), but did not fundamentally change the legal status of the clubs. This law strengthened the federation's licensing and auditing mechanisms, but failed to provide a structural solution to the clubs' debt problem.

4. Law No. 7405 on Sports Clubs and Sports Joint Stock Companies

The most significant reform in the legal structure of sports clubs was made in 2022 with the enactment of Law No. 7405 on Sports Clubs and Sports Joint Stock Companies . While this law allows clubs to maintain their association status, it mandates the establishment of a sports joint stock company for clubs wishing to operate in professional branches

4.1. Innovations Introduced by the Law

  • Professional football branches will no longer be managed by the association, but by a newly established joint-stock company .

  • An organic link has been established between the club and the company; the club will continue to exist as an association, while the professional branch will be managed by the company.

  • Through incorporation, clubs have been made subject to the provisions of the Turkish Commercial Code (TTK)

4.2. Legal and Financial Audit

The most important innovation introduced by Law No. 7405 is the auditing of clubs in accordance with commercial law standards.

  • Sports corporations Articles 397 et seq. of the Turkish Commercial Code .

  • This situation makes it mandatory for clubs to prepare and share their financial statements transparently with the public.

5. Sports Joint Stock Companies within the Framework of the Turkish Commercial Code

Sports corporations, being subject to the Turkish Commercial Code, have the same responsibilities as other commercial companies. In this context:

  • Capital structure,

  • General Assembly and Board of Directors Procedures,

  • Shareholders' rights,

  • Bankruptcy and insolvency proceedingsare
    regulated directly within the framework of the provisions of the Turkish Commercial Code.

This transformation has made it possible to define sports clubs not only as sporting organizations but also commercial enterprises .

6. Constitutional Framework

Article 59 of the Constitution stipulates that sports shall be protected by the state; it also mandates that disputes between sports federations shall be resolved through arbitration. In this context, the legal structure of sports clubs is shaped not only by private law but also by constitutional guarantees.

7. Evaluation

The transformation of sports clubs from associations to joint-stock companies is not merely a change of status, but also a process of financial discipline and compliance with international standards. UEFA's club licensing and financial fair play regulations require clubs to have a transparent and sustainable financial structure. The enactment of Law No. 7405 in Türkiye is a critical step towards complying with these international regulations.

II. Sports Joint Stock Companies in National Law (Detailed Analysis of Law No. 7405 and the Turkish Commercial Code Provisions)

1. Introduction

The transformation of sports clubs from associations to joint-stock companies is not only a structural change but also a necessity for ensuring the financial and administrative discipline of the clubs. The Law No. 7405 on Sports Clubs and Sports Joint-Stock Companies, stands out as a regulation that modernizes the legal status of sports clubs and brings them into compliance with international norms.

This section will examine the establishment, management, auditing, and liability mechanisms of sports corporations in light of the fundamental regulations of Turkish law (Law No. 7405 and the Turkish Commercial Code).

2. Basic Provisions of Law No. 7405

2.1. Establishment Requirements

According to the law, when sports clubs want to operate professionally, they must establish a sports limited liability company . The most important characteristic of this company is that it has an organic link with the club.

  • The sports club participates in the newly established limited liability company as the controlling shareholder

  • The club will continue to exist as an association, but the professional branch management will be run through a company.

2.2. Organs and Administration

The organizational structures of sports corporations are structured in parallel with the classic corporation structure:

  • General Assembly: The highest decision-making body formed by the shareholders.

  • Board of Directors: This is the body that represents and manages the company. Board members must meet professional management criteria.

  • Audit Mechanism: Companies are subject to independent audits.

2.3. Financial Obligations

Sports companies are required to regularly report their income and expenses. This obligation is in compliance with UEFA's Financial Fair Play regulations.

3. Subject to the Turkish Commercial Code

Sports joint-stock companies the Turkish Commercial Code No. 6102. Within this scope:

3.1. Capital Structure

  • The minimum capital requirement for sports joint-stock companies 50,000 TL(Turkish Commercial Code, Article 332).

  • However, in publicly traded companies, this capital may be higher.

3.2. Board of Directors Responsibility

Board members are personally liable for damages caused by their negligence, in accordance with Articles 553 et seq. of the Turkish Commercial Code

  • Club officials who violate financial discipline may be held liable with their personal assets.

  • This regulation aims to prevent the "debt crisis" problem that has frequently occurred in sports clubs in the past.

3.3. Independent Audit

Sports corporations are subject to independent auditing in accordance with Articles 397 et seq. of the Turkish Commercial Code.

  • Audit reports must be submitted to both the TFF Club Licensing Board and UEFA.

  • This ensures the transparency and reliability of the financial statements.

3.4. Bankruptcy and Composition with Creditors

In the past, clubs have faced financial difficulties, and concordat processes have come to the forefront in resolving these problems. According to Articles 285 et seq. of the Turkish Commercial Code, sports joint-stock companies can also request a concordat. However, this situation may directly and negatively impact the club's sporting activities.

4. Tax Obligations

Sports corporations Corporate Tax, VAT , and withholding tax obligations, just like commercial enterprises. This has resulted in the elimination of some tax advantages they enjoyed while operating as associations.

  • While this change has improved clubs' compliance with financial fair play rules, it has also increased their financial burden.

5. Intersection Points of Sports Law and the Turkish Commercial Code

  • Law No. 7405has ensured compliance with international norms by subjecting the professional activities of sports clubs to the Turkish Commercial Code.

  • This ensures that the clubs' financial statements comply with national law while also aligning with the UEFA Club Licensing Regulations

6. Evaluation

Sports corporations represent a legal model that strengthens the financial discipline of clubs, increases the responsibilities of managers, and mandates transparency. Introduced in Türkiye by Law No. 7405, this system both enhances national-level oversight and facilitates compliance with UEFA's financial fair play rules.

II. Sports Joint Stock Companies in National Law (Detailed Analysis of Law No. 7405 and the Turkish Commercial Code Provisions)

1. Introduction

The transformation of sports clubs from associations to joint-stock companies is not only a structural change but also a necessity for ensuring the financial and administrative discipline of the clubs. The Law No. 7405 on Sports Clubs and Sports Joint-Stock Companies, stands out as a regulation that modernizes the legal status of sports clubs and brings them into compliance with international norms.

This section will examine the establishment, management, auditing, and liability mechanisms of sports corporations in light of the fundamental regulations of Turkish law (Law No. 7405 and the Turkish Commercial Code).

2. Basic Provisions of Law No. 7405

2.1. Establishment Requirements

According to the law, when sports clubs want to operate professionally, they must establish a sports limited liability company . The most important characteristic of this company is that it has an organic link with the club.

  • The sports club participates in the newly established limited liability company as the controlling shareholder

  • The club will continue to exist as an association, but the professional branch management will be run through a company.

2.2. Organs and Administration

The organizational structures of sports corporations are structured in parallel with the classic corporation structure:

  • General Assembly: The highest decision-making body formed by the shareholders.

  • Board of Directors: This is the body that represents and manages the company. Board members must meet professional management criteria.

  • Audit Mechanism: Companies are subject to independent audits.

2.3. Financial Obligations

Sports companies are required to regularly report their income and expenses. This obligation is in compliance with UEFA's Financial Fair Play regulations.

3. Subject to the Turkish Commercial Code

Sports joint-stock companies the Turkish Commercial Code No. 6102. Within this scope:

3.1. Capital Structure

  • The minimum capital requirement for sports joint-stock companies 50,000 TL(Turkish Commercial Code, Article 332).

  • However, in publicly traded companies, this capital may be higher.

3.2. Board of Directors Responsibility

Board members are personally liable for damages caused by their negligence, in accordance with Articles 553 et seq. of the Turkish Commercial Code

  • Club officials who violate financial discipline may be held liable with their personal assets.

  • This regulation aims to prevent the "debt crisis" problem that has frequently occurred in sports clubs in the past.

3.3. Independent Audit

Sports corporations are subject to independent auditing in accordance with Articles 397 et seq. of the Turkish Commercial Code.

  • Audit reports must be submitted to both the TFF Club Licensing Board and UEFA.

  • This ensures the transparency and reliability of the financial statements.

3.4. Bankruptcy and Composition with Creditors

In the past, clubs have faced financial difficulties, and concordat processes have come to the forefront in resolving these problems. According to Articles 285 et seq. of the Turkish Commercial Code, sports joint-stock companies can also request a concordat. However, this situation may directly and negatively impact the club's sporting activities.

4. Tax Obligations

Sports corporations Corporate Tax, VAT , and withholding tax obligations, just like commercial enterprises. This has resulted in the elimination of some tax advantages they enjoyed while operating as associations.

  • While this change has improved clubs' compliance with financial fair play rules, it has also increased their financial burden.

5. Intersection Points of Sports Law and the Turkish Commercial Code

  • Law No. 7405has ensured compliance with international norms by subjecting the professional activities of sports clubs to the Turkish Commercial Code.

  • This ensures that the clubs' financial statements comply with national law while also aligning with the UEFA Club Licensing Regulations

6. Evaluation

Sports corporations represent a legal model that strengthens the financial discipline of clubs, increases the responsibilities of managers, and mandates transparency. Introduced in Türkiye by Law No. 7405, this system both enhances national-level oversight and facilitates compliance with UEFA's financial fair play rules.

III. UEFA Financial Fair Play Regulations (Detailed Guideline Analysis and Implementation)

1. The Emergence of the Financial Fair Play Concept

Financial problems observed in European football since the early 2000s have led to increased debt burdens for clubs and brought many to the brink of bankruptcy. During this period, UEFA introduced the Financial Fair Play (FFP) concept to protect the brand value of football, ensure the sustainability of clubs, and guarantee fair competition

The UEFA Club Licensing and Financial Fair Play Regulations , adopted in 2010 , came into effect from the 2011-2012 season. These regulations aim to bring financial discipline to clubs by encompassing both licensing criteria and spending limits.

2. The Main Objectives of Financial Fair Play

UEFA explains the rationale behind the FFP regulations under the following headings:

  • Financial Sustainability: The ability of clubs to maintain their existence in the long term by balancing their income and expenses.

  • Financial Transparency: Clubs' financial statements must be open to audit and reliable.

  • Equal Competition: Preventing unfair competition between clubs; in particular, preventing the establishment of sporting dominance through high levels of debt.

  • Investor Confidence: The financial stability of clubs increases investor confidence.

These objectives aim to preserve football not only as a sporting asset but also as an economic one.

3. UEFA Club Licensing System

To be eligible for FFP regulations, clubs must obtain a license from UEFA. The licensing process is carried out through national federations (in Turkey, the TFF Club Licensing Board)

3.1. Licensing Criteria

UEFA has set five main criteria for clubs to obtain a license:

  • Sporting Criteria: Investment in infrastructure, development of young footballers.

  • Infrastructure Criteria: Compliance with stadium and facility standards.

  • Personnel and Administrative Criteria: Availability of professional administrative staff.

  • Legal Criteria: The legal personality and legal compliance of the clubs.

  • Financial Criteria: Balancing income and expenses, keeping debts under control.

Among these criteria, the financial criteria in particular form the backbone of FFP.

4. Break-Even Requirement

The most important regulation of FFP is that clubs with the break-even requirement .

4.1. Content of the Rule

Clubs cannot spend more than their income.

  • Revenue sources include: matchday revenue, broadcasting rights, sponsorship deals, and player sales.

  • Expense categories: transfer fees, player salaries, agent fees.

4.2. Accepted Tolerances

UEFA allows minor deviations from the break-even rule:

  • Total 5 million eurosare acceptable.

  • If this loss is covered by the club owners through a capital increase, flexibility of up to 30 million euros may be granted

4.3. Exceptions

Expenditures on infrastructure, stadium construction, and women's football are not included in the break-even calculation. This exception aims to encourage clubs to make long-term investments.

5. Financial Fair Play Sanctions

The sanctions that UEFA can impose in case of FFP violations are decided by the UEFA Club Financial Control Body (CFCB)

The sanctions have been implemented in a phased manner:

  1. Warning and caution,

  2. Fines,

  3. Transfer restrictions,

  4. Squad limitations (e.g., registering 21 players instead of 25),

  5. Exclusion from European competitions.

These sanctions can be increased depending on the severity of the violation committed by the club.

6. FFP in Light of CAS Decisions

Financial Fair Play regulations have been brought before the Court of Arbitration for Sport (CAS) many times.

  • Manchester City Case (CAS 2020/A/6785): The club, banned from European competitions for two seasons by UEFA, was acquitted of this penalty by the CAS decision and only fined. This decision has raised questions about shortcomings in UEFA's evidence-gathering process.

  • Galatasaray Case (CAS 2016/A/4492): The Turkish club was banned by UEFA for failing to meet its financial obligations, and CAS upheld this decision.

These examples demonstrate that CAS reviews UEFA decisions in both procedural and substantive terms.

7. Criticisms and Academic Debates

FFP regulations have been criticized on many fronts:

  • Favoring Big Clubs: Clubs with higher revenues can spend more, undermining fair competition.

  • Development of Small Clubs: The practice of preventing small clubs that want to invest from growing through debt is criticized.

  • Transparency Issue: Overstating the market value of sponsorship deals (e.g., state-sponsored sponsorships) reduces the effectiveness of Financial Fair Play (FFP).

Nevertheless, FFP regulations are considered essential for ensuring financial discipline in football.

8. Evaluation

UEFA Financial Fair Play regulations are the most comprehensive regulations introduced to ensure the financial sustainability of football. From the perspective of Turkish clubs, past shortcomings in financial discipline have forced clubs such as Galatasaray, Fenerbahçe, Beşiktaş, and Trabzonspor to sign restructuring agreements with UEFA.

Therefore, FFP is not only an international norm, but also an influential tool in directly shaping national sports law and the financial policies of clubs.

IV. Effects in Practice (Turkish Clubs, European Clubs, CAS Case Law)

1. Introduction

Although Financial Fair Play (FFP) regulations were theoretically developed to ensure financial discipline, transparency, and sustainability, they have had different consequences for different clubs in practice. Turkish football clubs have been directly affected by these regulations due to their long-standing debt problems, while strong clubs in Europe have sometimes developed different legal and financial methods to circumvent FFP. This section will examine the effects of FFP on both Turkish and European clubs in light of concrete examples and CAS (Court of Arbitration for Sport) case law.

2. Implications for Turkish Clubs

2.1. Structural Problems

Turkish football's chronic financial problems have led to clubs constantly being subject to FFP (Financial Fair Play) audits. These problems primarily include:

  • High-interest bank loans,

  • Short-term transfer policies,

  • Insufficient infrastructure investments,

  • Frequent changes in administration
    are a consequence.

2.2. The Galatasaray Example

In 2016, Galatasaray banned from European competitions for one year . The club appealed this decision to the Court of Arbitration for Sport (CAS), but CAS upheld UEFA's penalty with decision number 2016/A/4492 . This incident is a concrete example of Turkish clubs' non-compliance with FFP.

2.3. Fenerbahçe and Beşiktaş

Both clubs were required to enter into settlement agreements with UEFA. Under these agreements, the clubs:

  • They have imposed limits on transfer spending,

  • Having committed to achieving specific financial targets,

  • It has faced staffing constraints.

2.4. Trabzonspor

Trabzonspor also lost its right to participate in European cups in 2019 due to a Financial Fair Play (FFP) violation. This situation directly affected the club's sporting success and led to economic losses.

3. Implications for European Clubs

3.1. The Manchester City Case

Manchester City banned from European competitions for two seasons . However, the club (CAS) 2020/A/6785 . CAS ruled in favor of the club, citing procedural errors in UEFA's evidence-gathering process and issues of statute of limitations.

This case has sparked significant debate regarding the applicability of FFP and UEFA's enforcement power.

3.2. Paris Saint-Germain (PSG)

PSG has frequently been subject to Financial Fair Play (FFP) scrutiny, particularly due to sponsorship revenues from Qatari state-owned companies. Allegations that sponsorship deals were "above market value" have been investigated by UEFA, but have often not resulted in sanctions. This has led to criticism that FFP is not applied equally .

3.3. The AC Milan Example

AC Milan was banned from European competitions in 2018 for failing to meet Financial Fair Play (FFP) criteria. However, the club appealed to the Court of Arbitration for Sport (CAS) and had this decision overturned. CAS ruled that UEFA's sanction violated the principle of proportionality and found the penalty disproportionate.

4. FFP in Light of CAS Case Law

CAS decisions serve as an important judicial review mechanism in the implementation of FFP regulations

4.1. Procedural Guarantees

CAS requires clubs to have the right to a fair trial and to present their arguments transparently, and that UEFA present its evidence transparently

4.2. The Principle of Proportionality

CAS the principle of proportionality . It emphasizes that a reasonable balance must be struck between the financial violations of the clubs and the sanctions imposed.

4.3. Criticisms of Disproportionality

The fact that smaller clubs face harsher penalties while larger clubs can circumvent FFP regulations through sponsorship revenues is an inequality problem that CAS has also highlighted.

5. Academic Debates

The differences observed in practice are extensively debated in the academic literature:

  • Equality Principle: It is claimed that FFP has become a mechanism that favors big clubs.

  • Legal Certainty: Deficiencies in UEFA's evidence gathering and investigation processes may be considered contrary to the principle of legal certainty.

  • Club Rights: The extent to which the right to a fair trial under Article 6 of the European Convention on Human Rights is protected in UEFA disciplinary proceedings is a matter of debate.

6. Evaluation

For Turkish clubs, FFP has often a mechanism of sanctions and restrictions ; while for European clubs, it has mostly a legal battle and monitoring process .

  • Turkish clubs have frequently faced penalties due to debt and a lack of financial discipline

  • However, major clubs in Europe have achieved more flexible results by defending their rights before CAS.

This situation criticisms of double standards , but it also shows that the system is indispensable for the financial sustainability of football.

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