New financial regulations will be introduced into the Premier League following a marginal majority win, with the two-thirds vote required scraping through, a 13 to 6 victory for clubs including initial fence-sitters Chelsea.
Reading sat the vote out, the very vote which could have swung the decision had owner Anton Zingarevich chosen to take part. The rules will come into effect from next season and in the most basic explanation, are designed to push for stability amongst club owners and rein in the embarrassingly exorbitant wage warfare that has driven clubs like Portsmouth to an early financial grave.
A £52 million cap will be applied on player’s wages each season, with teams already above this threshold restricted to a £4 million annual increase on this figure over the next three years. This type of pace-setting is what the league has needed however these figures refer to the cash flow stemming for the most part from broadcast income. This would mean injections from commercial and match-day profits could see this cap legally exceeded to top-up player bank accounts. Naturally, concerns lie as to who will absorb the financial responsibility of additional player expenses. While endorsements will provide undoubtedly generous top-ups, it’s a little worrying that ticket prices have the potential to increase in a bid to boost match day profits.
…Chelsea and Liverpool are reporting losses…
The other major linchpin of the changes is the restriction to £105 million in club losses over three years. This is critical to the survival of clubs within the league, and currently football giants Man City, Chelsea and Liverpool are reporting losses well above the new threshold, however sanctions on this rule will only be applicable from 2016. In addition, any club reporting losses exceeding £5m a year will have to guarantee them against the owner’s assets. We only have to look at Roman Abramovich’s Chelsea takeover and the title that closely followed or Man City’s title within three years of Sheikh Mansour’s takeover to know that big money is running the game, quite possibly into the ground.
The message coming from these controls is a clear and necessary one for clubs – break-even. The initiatives are designed to restore balance and redefine monetary attitudes that will ultimately steady football’s financial foundations. It would appear that sustainability is the name of the game, now let’s see who can sustain the results.