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Premier League clubs agree new financial rules

Fri 8th Feb 2013 | Money & Finance

The Premier League Clubs have 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 towards 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.

Premier League Chief Executive Richard Scudamore said: "Over the past decade the Premier League has enjoyed unprecedented growth driven by the performance of the clubs and the strength of the competition. With that growth challenges have presented themselves, and it is of great credit to the clubs that they have always been alive to these challenges and adopted the appropriate governance measures when necessary.

"The Rule Book has been enhances over recent years with the introduction of, for example, the Owners' and Directors' Test, Future Financial Information, Means and Abilities Test, HMRC Quarterly Reporting and Directors' Reports.

"Today the clubs have voted in principle for new Financial Regulations that 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.

 "I would like to thank the clubs for the time, effort and thought that they have applied throughout this process and the attention they have applied to helping secure the continued success and health of Premier League football both on and off the pitch."

Here is more information to the agreed regulations:

Long-Term Sustainability Regulation

From the 2013/14 season 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:

2013/14: £4m
2014/14: £8m
2015/16: £12m

The Short Term Cost Control measure applies only to clubs with a player wage bill in excess of £52m in 2013/14, £56m in 2014/15 and £60m in 2015/16.

Discuss this story in the fcbusiness LinkedIn Group.

Posted by: Kev Howland

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