LONDON (Reuters) – England’s top flight football clubs could be docked points if they fail to comply with new limits on financial losses and curbs on increases in player wages, the Premier League said.
The complex measures agreed on Thursday are designed to help ensure that a five billion pound television windfall brings a new era of financial stability rather than being frittered away on lavish wages for players.
The curbs are less stringent than UEFA’s Financial Fair Play (FFP) rules which will force top clubs from all leagues across the continent to move towards breakeven or face exclusion from European competition.
The Premier League, the richest in the world by revenues, is seeking to promote financial stability without preventing rich owners from investing in their clubs to take them to the top.
Manchester City, bankrolled by cash from Abu Dhabi, and Chelsea, owned by Russian oligarch Roman Abramovich, have both run up huge losses over the past few years but both have been rewarded by winning the Premier League.
However, clubs will be limited to maximum aggregate losses of 105 million pounds over the three years from 2013 to 2016, coinciding with the new TV contracts.
That means that the days of a super-rich new owner trying to buy instant success will be a thing of the past.
"A new owner or even an existing owner with a change of attitude or fortunes… can invest proportionately a decent amount of money to improve their club," Premier League Chief Executive Richard Scudamore told reporters.
"But what they aren’t going to be doing is throwing hundreds and hundreds of millions at it in a very short period of time."
Top leagues in Germany and Spain have already adopted financial controls for their clubs while similar measures are also in place in the English Championship (second division).
Scudamore said approval for the measures was not unanimous but declined to give a breakdown of voting. Under Premier League rules, such changes need to be backed by at least 14 of the 20 clubs that make up the top flight.
Clubs will also face limits from next season on how much of the new TV money they can spend on player wages.
Any club with a wage bill of more than 52 million pounds – all of the top teams – will only be able to add four million pounds from Premier League funds to their wage bill.
Any additional spending on players would have to be covered by increases from other commercial income like sponsorship.
As an example of the sums clubs have been spending, Manchester City had staff costs of more than 200 million pounds in 2011-12, when they won the title for the first time in 44 years.
Scudamore was blunt about the sanctions facing clubs who do not stick to the rules.
"Clubs I think understand if people break the 105 million (loss) we will be looking at the top end of our sanction range," he said, referring to points deductions.
"There is an absolute prohibition on losing more than 105 million over three years," he added.
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