Top-flight clubs will face a points deduction if they breach new spending controls agreed today, Premier League chief executive Richard Scudamore has confirmed. The 20 club chairmen agreed to two significant controls - to limit players' wage bills from next season, and longer-term measures that will restrict the amount of losses clubs can make to £105m over three years.
Clubs whose total wage bill is more than £52m will only be allowed to increase their wages by £4m per season for the next three years, though that cap does not cover extra money coming in from increases in commercial or matchday income.
The effect of the financial controls should prevent hugely wealthy owners achieving the almost-overnight success of Chelsea and Manchester City. Any club breaching the rules will face tough sanctions - and Scudamore said they would be pushing for points deductions.
Scudamore told reporters: "As all things in our rulebook you will subject to a disciplinary commission. The clubs understand that if people break the £105m we will look for the top-end ultimate sanction range - a points deduction. Normally we stay silent on sanctions as the commission has a free range but clearly if there is a material breach of that rule we will be asking the commission to consider top-end sanctions."
Scudamore said there would be an "absolute prohibition" on clubs reporting losses of more than £105m over the next three years with the first sanctions possible in 2016. Of the 20 clubs in the top flight, only Manchester City, Chelsea and Liverpool have reported losses of more than £105m over the last three years, according to the most up-to-date published accounts.
Scudamore said that the measures would mean it will take longer for benefactor owners to achieve success - but that it would still be possible. "The balance we have tried to strike is that a new owner can still invest a decent amount of money to improve their club," he said. "But they are not going to be throwing hundreds and hundreds of millions in a very short period of time.
"While it has worked for a couple of clubs in the last 10 years, and I am not critical of that, if that's going to be done in the future it's going to have to be over a slightly longer term without the huge losses being made. I think at £105m you can still build a very decent club with substantial owner funding but you have to do it over time, you can't do it in a season."
Chelsea won the Premier League two years after Roman Abramovich's takeover, and Manchester City's title success came three years after Sheikh Mansour's takeover. Any club making any loss of over £5m a year will have guarantee those losses against the owner's assets.
"In some ways that's the most significant part, this is a three-year rolling system of secure funding - it's one year at the moment," added Scudamore.
The ceiling when the wage increase restrictions kick in will be £52m next season, £56m the following year and £60m in 2015-16. Only seven of the current top-flight clubs would be under that ceiling at the moment. West Ham's co-owner David Gold said that the proposals for controls had received backing of the majority of chairmen.
He said: "We have all voted and it was overwhelmingly supported, not by all the clubs - some are a little concerned - but the vast majority of the clubs voted in favour. It's not a salary cap, it's a restraint on over-spending. If clubs increase their revenues then they can increase their spending. We have got restraint, that's the important thing. What's driving the whole thing is we've got to avoid another Portsmouth."