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Feb 7, 2013

Spending controls approved by clubs

English Premier League clubs agreed Thursday to restrain spiraling player salaries and spending through financial controls or face point deductions.

The move, designed to ensure the expected $8 billion being generated by a new television rights deal isn't misspent, comes three days after UEFA warned that escalating player costs were jeopardizing the future of European clubs.

Teams with wage bills exceeding $82 million only will be able to increase them by $6 million per season for the next three years if the rise is funded through TV revenue.

And clubs only will be able to record a loss of $165 million from 2013-16 - a rule Chelsea, Manchester City and Liverpool recently would have breached if it was already in place.

The regulations are more lax than UEFA's Financial Fair Play rules, which are forcing teams entering European competitions to eventually make teams break even on their soccer-related business.

"The clubs understand that if people break the 105 million pounds we will be looking for the top-end ultimate sanction range, a points deduction," Premier League chief executive Richard Scudamore said.

The rules are designed to prevent a repeat of the financial meltdown at Portsmouth, which became the first Premier League club to enter bankruptcy protection in 2010. Any club losing more than $8 million a year will have to guarantee that the owner's assets can support them for three years.

Scudamore said the regulations will prevent teams from emulating Chelsea and Manchester City by embarking on turbo-charged spending sprees under new ownerships.

"You can still build a very decent club with substantial owner funding that over time can challenge anybody but ... it's just going to mean doing that is going to take a few years longer, which is not at all a bad thing," Scudamore said.

Scudamore believes that the spending by Chelsea and City has contributed to wages rising across the league.

Player costs at City hit $315 million last season as the team

won the English title for the first time in 44 years after investment of about $1 billion since being taken over by Abu Dhabi owner Sheikh Mansour bin Zayed bin Sultan Al Nahyan three years earlier.

Chelsea owner Roman Abramovich had to fork out $269 million last season on salaries as the team won the Champions League. The west London club won the Premier League in 2005, two years after Abramovich's took over and started spending heavily to strengthen the squad.

Such rapid spending will be curtailed by the new regulations approved by 13 of the 20 Premier League clubs on Thursday.

"If a new owner or even an existing owner with a change in attitude or a change in fortunes ... what they aren't going to be doing is throwing 100s of millions at it in a very short period of time," Scudamore said. "If that's going to be done in future, it's going to have to be done in a slightly longer term, slightly more controlled way without the huge losses being made."

British Sports Minister Hugh Robertson hopes the new rules will ensure clubs are run on a "more sustainable basis."

"The Government has been clear that we want clubs to be on a secure financial footing for the long-term health of the game," Robertson said. "This is a welcome and positive move."

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