© The Financial Times Ltd 2013 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
February 7, 2013 10:22 pm
Premier League clubs face points deductions if they breach new financial controls agreed on Thursday, including wage restraints and a limit to the losses they can incur.
Over the next three seasons, clubs will be allowed to incur aggregate losses of £15m but will face tougher scrutiny of their finances if they exceed that level, including those losses having to be secured against the assets of owners.
If their losses exceed £105m in that period, they will be reported to an independent commission with the power to deduct points.
Three clubs – Chelsea, Manchester City and Liverpool – would have faced the sanction had the regime been in place in the past three years.
The move is likely to make it harder for an aspiring club with a new wealthy backer to buy success with a rapid injection of money, as Russian billionaire Roman Abramovich and Sheikh Mansour bin Zayed bin Sultan al-Nahyan of the Abu Dhabi royal family have achieved with Chelsea and Manchester City respectively.
It is also intended to prevent a repeat of the Portsmouth saga, where the south coast club built up a £100m-plus debt and in 2010 became the first Premier League club to go into administration.
Clubs whose player wage bill this season exceeds £52m will not be allowed to increase next season’s by more than £4m. Similar restrictions will apply in subsequent seasons.
The deal, narrowly approved in principle at a meeting in London, represents a compromise between the 20 clubs, some of which wanted tougher sanctions while others wanted freedom to decide how to invest.
Commercial income will not be subject to the restriction and can go on to player wages.
Richard Scudamore, Premier League chief executive, said the regulations approved by the clubs “will further benefit the sustainable running of their businesses, while allowing secure owner investment, as well as enhance the reputation of the Premier League as an organisation that takes its responsibilities in the governance arena seriously”.
The measures are also designed to slow the cycle of clubs using new television rights deals to boost their squads, leading to inflated wage increases and transfers.
The new season sees the first year of a three-year deal likely to take broadcast deals for domestic and overseas rights beyond £5bn.
Clubs are also subject to Uefa’s “financial fair play” rules, which limit their losses to €45m over three years if they wish to play in the European governing body’s Champions League and Europa League competitions.
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.