The Premier League’s new cost control measures come in 20 years too late, but will at least prevent another Man City or Chelsea from happening.
The Premier League has announced that its 20 member clubs have agreed in principle ‘a system of enhanced financial regulations, which are designed to further improve the sustainability of clubs.’
The two-fold measures will see pay packets pegged back when a lucrative new TV deal comes into place at the end of this season.
The Premier League will also limit losses to ‘just’ £35million per season over the next three years.
A media release from the Premier League outlined the reforms in the following terms:
Long-Term Sustainability Regulation
- From season 2013/14 Premier League clubs cannot make a loss in excess of £105m aggregated across seasons 2013/14, 2014/15 and 2015/16. - Any club that makes a loss up to that limit will be subject to a tighter regulatory regime that includes:
Secure Owner Funding for three years ahead
Increased Future Financial Information over the next three seasons
Short-Term Cost Control Measure
- Premier League clubs are restricted in terms the amount of increased PL Central Funds that can be used to increase current player wage costs to the tune of:
The Short-Term cost control measure applies only to clubs with a player wage bill in excess of £52m in 2012/13, £56m in 2014/15 and £60m in 2015/16.
Sanctions for clubs that fail to meet the requirements were not detailed.
Based on the most recently available financial results, the cost controls could pose problems for three clubs – Aston Villa (which made losses of £54.9million in its last financial year), Liverpool (£49.4m) and Manchester City (£97.9million). However the Premier League’s criteria is calculated on results over the next three years, a period which will see clubs’ revenue increase by record amounts due to the Premier League’s new £5.5 billion TV deal.
Fears that this extra money will be swallowed up by increased wages were partly allayed by the short term cost control measures, which limits clubs’ ability to spend their new money on wages.
Does it go far enough? Call me old fashioned, but I would hesitate to describe limiting financial losses to seven figures a ‘triumph’, particularly when the Premier League allow treble the losses that UEFA permit under Financial Fair Play. On the other hand the short term cost control measures will go some way in stopping the new TV money from being emptied into the local Bentley dealer’s cash register (via players’ bank accounts, of course) and for the money to be reinvested into the game or at least to mitigate some of the Premier League’s debt mountain.
What it will mean is that the sort of insidious financial doping witnessed at Chelsea and Manchester City will never be allowed to happen on such a scale again – although UEFA’s Financial Fair Play may have put paid to that anyway. It might also limit the chances of ‘another Portsmouth’ happening, although £105million of aggregated losses is a lot by any estimation and relegation could be deadly.
To be honest, it’s the sort of measure that should have been instituted 20 years ago. Alas, the Premier League has been governed by the short term interests of its ‘shareholders’ (i.e. clubs) and, by default, the crazy expectations of supporters for most of that time. Only now are the clubs growing up a little, but perhaps – after the damage caused by City and Chelsea and now threatened by QPR – it will be too late for the true competitive ethos of English football to return.
What has emerged in the two hours subsequent to the Premier League announcing details of the deal, are two tiers of losses.
The £35m per season allowable loss over three years must be underwritten by club owners. If it is not, it is limited to a £5million per year loss. This is still a lot but will at least prevent ‘another Portsmouth’ to use the term that ill probably be smeared all over tomorrow’s newspapers.