Premier League Cost Controls: What are they?

Premier League

All Premier League clubs have agreed in principal to a set of cost controls which are designed to ensure financial fairness. What will it mean for super-wealthy Manchester City and Chelsea?

The Premier League have launched their own attempt at financial fair play rules which were first introduced by UEFA and there are two ideas on the table; the first is a break even rule which would prevent clubs spending above their income and the second is a wage cap which would allow clubs to only increase their wage bills each season by a certain percentage.

The Premier League cost controls are a good idea in theory but it is difficult to see how they will stop the elitism in the Premier League. Neither idea suggests any way to handle the issue of back door funding with clubs still allowed to instantly inject cash which can be used for transfers via sponsorship.

However, there is widespread support for the break even rule which would stop clubs from running at a loss because they have a wealthy financial backer. Manchester City are thought to be one of the clubs opposed to financial controls which is understandable considering they made a loss of just under £100 million when they released their last set of results.

The cost controls also seem to be aimed at stopping TV money from going straight into the pockets of agents and players via wages and bonus payments. With TV rights set to produce £5 billion from 2013 onwards, these measures would be a very sensible way to ensure that the external income is not abused or funnelled into a certain area which will have a counter productive effect against the initiative.

There is also the issue of penalties to be discussed. The similar idea used by UEFA states that any club which does not break even cannot take part in the Champions League or the Europa League which are the two competitions runs by UEFA. Those competitions also open up extra revenue streams via match day sales and also TV rights and sponsorship related to the tournaments.

Penalties with the Premier League methods are much more likely to be points deductions. There is no point implementing fines because the top clubs have proven that they can afford these easily and the revenues generated by all Premier League clubs would make this a pointless action.

The next meeting over this issue is on February 6 where the ideas and how to impose them will be discussed further and it’s about time.

image: © edwin11

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