Premier League have confirmed that clubs will be punished with a points deduction if they are to breach new financial regulations which are to be put in place.
No team will be allowed to have a loss of over £105million over a three year period and must limit their wage bills from next season.
“If people break the £105millon limit we will look for the top-end ultimate sanction range – a points deduction,” Premier League boss Richard Scudamore told BBC Sport.
The plans come in to improve financial sustainability for clubs and will be modelled on the Financial Fair Play regulations set by UEFA for sides in European competitions.
The Premier League are set to be more lenient however, as the FFP only allows a loss of £38million, substantially smaller than the £105million set out by the English top flight.
Agreeing to cost controls is a major move for Premier League clubs who made an accumulative loss of £361million in 2010-2011.
“As with all things in our rulebook, you will be subject to a disciplinary commission,” the Premier League chief executive added.
“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.”
By putting in these guidelines it will hopefully allow clubs to perform on a more sound financial position, eradicating scenarios such as Leeds and Portsmouth where clubs operated out of their means ultimately ending bankrupt.
The decision will certainly spark interest from Manchester City, Chelsea and Liverpool, the only clubs in the Premier League to report a loss of more than the £105million over the last three years.
The vote to put the financial regulations in place couldn’t have been any closer, with 13 out of the 20 clubs voting in favour, triggering the two thirds majority vote.
Fulham, West Brom, Manchester City, Aston Villa, Swansea and Southampton voted against the regulations. Chelsea who were reported to vote against it eventually voted in favour.
While there is a limit in place, Scudamore believes it won’t stop major investment to improve club squads.
“A new owner can still invest a decent amount of money to improve their club but they are not going to be throwing hundreds and hundreds of millions [of pounds] in a very short period of time.
“I think at £105m you can still build a very decent club with substantial owner funding but you have to do it over time, not in a season.”
By bringing in these new regulations we might see a league operated on a leveller playing field making for a much more open Premier League while bringing in the threat of a points deduction will make teams severely think about breaking the new regulations.