LONDON (Reuters) - Football club AS Monaco is living up to the principality's reputation for big spending as it prepares for its return to the French first division next season.
Bankrolled by Russian owner Dmitry Rybolovlev, the club has signed coveted Colombian striker Radamel Falcao as part of a 120 million euro ($160 million) investment to try to regain a place among Europe's elite despite attracting only a few thousand fans to home games at the Stade Louis II.
However, the spending spree has put the club on a collision course with French football authorities unhappy at the way it can use local laws to tempt top foreign players with tax-free salaries.
Monaco also ultimately risks falling foul of Financial Fair Play rules designed to force Europe's top clubs to curb their losses or face exclusion from continental competitions.
Rybolovlev, who had lived in Monaco for a number of years before buying the club in 2011, has made it clear he wants a swift return to the Champions League, a competition in which Monaco were runners-up as recently as 2004.
"ASM (Monaco) is continuing to strengthen its team with the goal of creating a team that will be highly competitive in Ligue 1 while also playing an attractive brand of football," a club spokesman said.
"The Club President (Rybolovlev) has said publicly he would like to achieve qualification for (the European) Champions League."
Though French champions on seven occasions, the club had fallen on hard times and was languishing in the second tier of French football when Rybolovlev bought control in late 2011.
The Russian had cash to spend after selling his stake in fertiliser producer Uralkali for billions of dollars the previous year.
He is following in the footsteps of fellow Russian billionaire Roman Abramovich, who transformed the fortunes of London club Chelsea after a takeover in 2003.
Indeed, former Chelsea coach Claudio Ranieri, jettisoned by the English team a year after the Abramovich takeover, took over at Monaco in May 2012 and led them to promotion last season.
However, football has changed over the past decade and its European governing body, UEFA, is keen to ensure that notoriously spendthrift clubs move to a sounder financial footing and stop relying on the deep pockets of benefactor owners.
"AS Monaco FC is aware of its obligations and will respect the rules," the club spokesman said when asked about the impact of Financial Fair Play.
UEFA has shown that it means business by barring Qatari-owned Spanish club Malaga from next season's Europa League because of late payments to creditors.
Daniel Geey, a sports lawyer with London firm Field Fisher Waterhouse, believes that clubs may be given a little initial slack by UEFA on rules that put a 45 million euro cap on aggregate losses before clubs are forced to move to breakeven.
"It's certainly not a foregone conclusion that every club in breach of the breakeven rules will be expelled or banned," Geey said. "Some believe that, initially, warnings and less harsh sanctions may be appropriate for non-compliant clubs.
"However, such a soft-touch approach will not go down well with clubs that have complied. They will want the heavy sanctions to have the necessary deterrent effect."
Like other clubs that have enjoyed cash injections from wealthy backers, Monaco argues that the money is an investment that will be yield increased revenues as it achieves more success and its profile is raised around the globe.
The new season does not start until August, but the club has an important date on Friday, when it begins legal action over a ruling by the French league that would force it to move its head office to France next year. That would mean all Monaco's players would be liable to pay tax in France.
"The decision puts the future of the club in jeopardy," Monaco said in a statement last month. The club declined further comment ahead of Friday's hearing.
(Editing by David Goodman)