New Premiership spending rules

[Rosco]

Thursday 7 February 2013 19.37 GMT

Premier League clubs face points penalty under new spending rules
• Premier League seeks to control wages after new TV deal
• Clubs will be limited to £105m losses over three seasons

Richard Scudamore said the new rules would make it easier for smaller clubs to invest enough to challenge for Europe. Photograph: Tom Jenkins
Owen Gibson

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 £5.5bn TV deal kicks in next season.

The league's chief executive, Richard Scudamore, claimed that the measures, which will curb wage bill increases in the short term and force clubs to cut losses in the long term, would bring to an end the era of rampant short-term spending and make clubs more stable.

From 2013-14 onwards, clubs will be limited to losses of £105m 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.

Under the complex new rules, which have been intensely debated around the Premier League boardroom table since the summer, when it became clear that they were on course to share a £5.5bn TV income bonanza, clubs with a wage bill in excess of £52m will be able to increase it by only £4m, then £8m and finally £12m per year from 2013-14.

However, further increases to the wage bill are permissible in line with any uplift in a club's commercial or match-day income – the curbs apply only to the central TV money distributed by the league. On the latest available figures, only seven clubs would be under the £52m cap.

In future, Scudamore said, the rules would ensure that no other owner would be able to come into English football and invest hundreds of millions of pounds overnight to compete for the title, as first Roman Abramovich at Chelsea and then Sheikh Mansour at Manchester City have done.

"A new owner or even an existing owner with a change in attitude or a change in fortunes can invest proportionally a decent amount of money to improve their club," he said. "But what they aren't going to be doing is throwing hundreds of millions at it in a very short period of time. I'm not criticising that; I've been supportive of them, supportive of what they have done to make it a more competitive league."

But Scudamore said that if new owners with deep pockets wanted to come into the league in the future "it's going to have to be done in a slightly longer-term way without the huge losses being made".

Four clubs – Chelsea, Manchester City, Aston Villa and Liverpool – would have fallen foul of the rules if they had been in place between 2008 and 2011. Abramovich has poured £1bn into the London club since he bought it a decade ago and won his first Premier League title in his second season as owner.

The Premier League claimed the rules would allow smaller and newly promoted clubs to invest sufficiently to challenge for Europe, while also promoting greater sustainability and controlling wage inflation.

But Scudamore made it clear any clubs that breached the limit could expect tough sanctions, including points deductions. At present, any club entering administration is docked nine points.

Owners of clubs making a loss will be required to cover any deficit and guarantee their funding for the three years that follow, which Scudamore said was a major step forward. Anyone buying the club would have take on those guarantees.

"From a fairly low threshold of financial regulation we have had a journey," he said. "This is a leap but an extension of where we were heading anyway. This is a fairly decent leap into the tightening up, particularly the future guarantees."

Despite the unprecedented riches that have flowed into the coffers of top-flight clubs during the Premier League era, clubs made losses of £361m last year despite record income of £2.3bn.

Scudamore said that such was the uplift in TV revenue that clubs would not be forced to spend less but that the measures would put the brakes on further inflation. "We shouldn't be worried about the competitiveness of the league in terms of our ability to attract players," he said.

The development of the new controls has been contentious. The so-called "gang of four" – Arsenal, Tottenham Hotspur, Manchester United and Liverpool – had strongly argued that the Premier League should adopt the same spending limits as Uefa.

The top clubs in the Premier League have to comply with the Uefa rules from this season, which limit losses to €45m over a three-year period and will be assessed for the first time next spring.

But others argued that the limits should be set higher to allow sustainable spending by smaller clubs with ambitions to challenge for Europe.

Six clubs – Manchester City, Fulham, West Bromwich Albion, Southampton, Swansea and Villa – are believed to have voted against any restrictions for a range of reasons and Reading to have abstained, so the vote narrowly got the necessary two-thirds constitutional majority.

Fulham want their owner, Mohamed Al Fayed, who recently converted his loans to equity to leave the club debt-free, to be able to continue to pour money into the club.

West Bromwich Albion, on the other hand, believe that they are able to continue to run the club sustainably without the need for new regulation and that the new rules will harm their competitive advantage.

The sports minister, Hugh Robertson, said the new regulations were a "welcome and positive move".

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Premier League spending controls: what do they mean for your club?
The new financial restrictions are designed to rein in player wages and encourage youth investment, but may increase ticket prices

 

[Buddha]

So nothing about the ridiculous Man City stadium sponsorship deal then?

 

[mark1975]

It's all a bit fucking pointless without stipulations about clubs exploiting loop holes in the whole charade.

 

[Sheik Yerbouti]

Shouldn't this be in General Chat with all the other comedy threads?

 

[Rosco]

Richard Scudamore, the chief executive of the Premier League, said the regulations his clubs have introduced should not be likened to Uefa's financial fair play, and indeed the most striking first impression was how much more slack the 20 clubs have cut for themselves. Uefa's financial fair play rules restrict clubs in European competitions to making total losses of €45m in 2012‑14, while the Premier League's limit, agreed after nine months of discussion, is £105m over three years. That is still a great deal of money to lose between 2013 and 2016, given the £5.5bn bonanza expected to arrive in TV income alone.

The rules, the £105m loss and the measures restricting players' wages increases, are clearly a compromise. A deal has been done to reach a middle ground between clubs such as Manchester United, Arsenal, Liverpool and Tottenham Hotspur who wanted a strict implementation of Uefa's €45m limit, and other clubs, including Manchester City, who wanted no restrictions at all.

Scudamore argued that these rules will protect the Premier League clubs financially in advance of this deluge of cash. The £105m is only allowed to be lost if an owner has guaranteed it and paid the money in. Losses not guaranteed by owners will be limited to the much more modest £15m over three years. That, the Premier League said, will prevent "another Portsmouth", the notoriously insolvent club that, in administration again, lurched into another tortured twist, with a new bid made to challenge that of the supporters trust, even as the current top 20 clubs were meeting.

The compromise is also broader, between a vision of football that has clubs living within their means, and one that wants owners buying them and pouring in cash to buy success. The compromise means the English game is still open to that model, but such an owner is limited to £105m over three years, plus investment in youth training and infrastructure. Scudamore specifically acknowledged that the rules will not allow turbo-fuelling like that of Manchester City, where Sheikh Mansour bin Zayed al-Nahyan has injected around £1bn since 2008 to elevate City from ninth in the Premier League to champions.

There will be sanctions for breaching the rule, and Scudamore said they will push for it to be severe, a points deduction if the £105m is seriously overspent. The aim is to allow owners to put serious money into clubs, but not quite so serious as Roman Abramovich and Sheikh Mansour have unleashed into their football ventures.

The wage limit is a little odd, and illustrates the greatest frustration with the conduct of these reforms. Most clubs' main aim is to ensure they do not blow the forthcoming vast fortune on ever-inflating players' wages. They have agreed to limit wage bill increases to £4m in 2013, then £8m, then £12m, out of the Premier League's TV income. Clubs, though, can increase wages from commercial revenue – or ticket income.

The Premier League says clubs will not be seeking ways to evade the rules because they themselves have introduced them. But this rule builds in an incentive to raise ticket prices – at a time when there is an almighty outcry about the high cost of supporting football.

There lies the missed opportunity. These rules do something to restrain overspending, although it is notable they are aimed at a Manchester City project, which at least sees money going in, rather than the Glazers' milking of Manchester United for £550m to pay the interest and costs of their own takeover. This has been pushed for by the American owners of United, Arsenal and Liverpool, who bought English clubs as investments, and have no intention of spending money on them.

They, and the other Premier League clubs, three of whom will be relegated at the end of the season, have been allowed to introduce these rules with no reference to the wider game and no involvement of the governing body, the Football Association. They are designed to guard against spending the prospective windfall on player wages, but not tied to any broader discussion, perhaps a commitment to reduce ticket prices, or increase investment in the grass roots. There has been no great consideration of wider issues affecting football, and the clubs have voted from their own self-interest or peculiarities of opinion, passing the rules by the narrowest required majority.

Scudamore said they have been on "a journey" from "a fairly low threshold of financial regulation" to a set of rules requiring solvent, non-criminal owners and a reasonably sustainable way to run clubs. Many believe that journey should go a lot further, not just dampen player wages, and the millions owners can spend on the clubs they have bought.

 

[Mors]

So they think a club being in 105mill of debt after 3yrs of silly spending is a reasonable thing? So going by those numbers, it'd be perfectly alright by them to be in 350mill of debt after 10yrs? What an absolute bunch of ass clowns.
The figure needed to be more like 10-50mill over 3yrs. Get people spending only what they've got. Or could in theory be paid back.

And like mentioned above, it also doesn't take into account that abramovic keeps turning debt into equity (wiping the debt off the club but taking the losses himself) nor city sponsoring themselves 100mill a year to make the books look legit.

I have no faith what so ever in the european or premier league FFP. It's an utter farce and blatantly easy to bypass - sponsor yourself or turn the debt into equity. Idiots.

 

[the count]

 

[Gerry_A_Trick]

According to that, Chelsea, City, Arsenal and us all get about the same value out of our wages, paying about 3.5m in wages per point. Spurs(1.9m) and United(2.5) do a lot better. If we were to win tonight, we'd actually be best of the four, but with a long way to catch the top two..