EPL Agrees To System Of Enhanced Financial Regulations, Designed To Improve Sustainability
Premier League clubs agreed in principle to a system of enhanced financial regulations, which are designed to further improve the sustainability of clubs. The new elements of Premier League Financial Regulation include a sustainability clause that will require clubs to work toward break-even, while allowing a degree of owner investment going in as equity. A short-term cost control protocol was also agreed, which would limit the amount clubs could raise their player costs by above an agreed floor from centrally distributed revenue (EPL).
LAYING DOWN THE LAW: In London, Owen Gibson reported Premier League clubs will be "docked points" if they fail to comply with new financial control measures designed to "curb rampant wage inflation and stem losses" when their new £5.5B ($8.6B) TV deal kicks in next season. Premier League CEO Richard Scudamore claimed that the measures "would bring to an end the era of rampant short-term spending and make clubs more stable." From '13-14 onwards, clubs will be "limited to losses" of £105M ($165M) over three seasons based on their audited accounts. As with UEFA's stricter Financial Fair Play rules, money invested in youth development and infrastructure "can be discounted from the calculations" (GUARDIAN, 2/7). Also in London, Ashling O'Connor wrote reforms would make it "virtually impossible" for a repeat of Roman Abramovich’s takeover of Chelsea or Sheikh Mansour’s purchase of Man City. If the rules were already in place, four clubs -- Manchester City, Chelsea, Aston Villa and Liverpool -- "would have been in breach of it." The package of reforms is "intended to ensure greater financial stability" for the Premier League clubs, which collectively spent £1.4B ($2.2B) on players’ salaries, benefits and image rights in the '10-11 season and reported losses totaling £361M ($567M) (LONDON TIMES, 2/7).
VOTE BARELY PASSES: In London, Paul Kelso reported "only after the narrowest of votes" were the measures approved. The new rules passed with 13 votes to six, with Reading "abstaining from the crucial ballot." Under league rules a two-thirds majority "is required for any rule changes to be made." If all 20 clubs vote, "that means 14 have to approve." Reading's abstention, driven by new Owner Anton Zingarevich, meant that 13 votes was enough for the "controversial measures" to be passed, but even then "they only just squeezed across the line." The new rules "should also slow the speed of wage inflation," which club owners wanted to agree on as they prepare to bank the proceeds of a new £5.5B broadcast deal (TELEGRAPH, 2/7). BLOOMBERG's Danielle Rossingh reported Scudamore said that clubs that breach the new rules "will be subject to a disciplinary commission." Scudamore: "There is an absolute prohibition of losing more than £105M over three years." Scudamore said should clubs breach that amount, "we’ll be looking for the top end ultimate sanction range," including point deductions (BLOOMBERG, 2/7). In London, Martyn Ziegler reported West Ham's co-Owner David Gold said that the proposals for controls had received "backing of the majority of chairmen." Gold said, "We have all voted, and it was overwhelmingly supported, not by all the clubs -- some are a little concerned -- but the vast majority of the clubs voted in favour. It's not a salary cap, it's a restraint on over-spending. If clubs increase their revenues then they can increase their spending" (INDEPENDENT, 2/7).