Uefa shelves proposals to impose a transfer ban on clubs that breach its financial fair-play rules

The European governing body confirmed on Tuesday that transfer embargo proposals, which had the support of leading clubs including Inter Milan and Arsenal, have been dropped because they were unenforceable. Control over player registrations lies with national associations and Fifa, not Uefa.

The move is a blow to Uefa’s prospects of producing a credible series of penalties short of the ultimate sanction of expelling teams from European competition.

Uefa intends to set out a sliding scale of proposed penalties for breaches of the rules in January, ahead of final ratification at its congress in March. Punishments will range from suspended fines, fines, to expulsion, but many of the alternatives under consideration are legally fraught.

Nyon is actively considering variations on the transfer embargo theme, including banning players whose signings contributed to clubs spending exceeding income, or limiting squad sizes, but these could face legal challenge from individual players.

Lawyers have advised that Uefa could be open to restraint-of-trade suits from players excluded from the competition. They could argue that they legitimately joined a club only because of the prospect of Champions League football, and now find themselves barred.

The issue has gained momentum in Europe in the last week following Manchester City’s revelation that they recorded a £195 million loss last season. The FFP rules require clubs to lose no more than £38 million over the next three seasons including this one, a goal City are certain to miss even if they meet their target of reducing losses to less than £100 million this season.

The credibility of FFP will rest on Uefa’s ability to establishing meaningful penalties, with fines by definition unlikely to deter clubs like City backed by billionaire owners. The withholding of prize money meanwhile will have the consequence of increasing the gap between income and earnings.

City have had a front-row seat in the discussions over penalties with finance director Graham Wallace a member of the European Club Association panel that has been liaising with Uefa on the issue and last met in September.

They have also been lobbying hard to convince Uefa that the City investment is not just a vanity project by Sheikh Mansour bin Zayed al-Nahyan, but carries community benefits as well.

Andrea Traverso, Uefa’s head of club licensing who is driving the regulations, has visited Etihad Stadium as City’s guest to see the plans to develop an academy campus and regenerate the local area.

Uefa general secretary Gianni Infantino has also been invited for the tour, with City believing that they can make a strong case for the community benefits of Abu Dhabi’s largesse even if, as seems likely, they miss the break-even targets by a distance.