On Thursday, the Premier League clubs agreed to new financial restrictions aimed at reducing irresponsible spending and renewing a focus on clubs balancing their books rather than operating within a deficit.
The following statement comes from the Premier League's website:
The Premier League Clubs today 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.
Even more specifics can be found here via PremierLeague.com. The main takeaway is that Premier League clubs cannot lose an excess of £105 million aggregated costs for the next three seasons.
Tariq Panja of Bloomberg offers an example of what that would mean if these new protocols were already in place:
If the Premier League's new £105 million deficit cap across three seasons started three years ago 3 teams would be in breach: CFC, LFC, MCFC— tariq panja (@tariqpanja) February 7, 2013
For clubs like Arsenal and Manchester United that are expected to remain among the elite in Europe while emphasizing balanced books, this is good news. Really, for most of the Premier League clubs outside of Chelsea and Manchester City, this will be considered a positive development.
Any clubs in breach of these new regulations will potentially face a points deduction, according to the BBC, so one will imagine clubs will play within these rules.
With Financial Fair Play being emphasized across UEFA, England's top clubs are wise to embrace this new direction of responsible spending within their own bylaws as well.
Not only will this ensure that the money that flows into the Premier League is spent responsibly, but it should also add a bit more parity into league play as well.
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