England’s Football League, which covers the three soccer divisions below the Premier League, will introduce regulations to put caps on spending after teams approved the measure.
Beginning next season, clubs will be required to limit losses and owner investment under “Financial Fair Play,” the Football League said on its website. The rules are similar to those designed by European soccer’s governing body UEFA for clubs in continental competitions.
The regulations will entail sanctions for non-compliance commencing from the 2014-15 campaign, for which Championship teams have approved a move to limit total losses to 6 million pounds ($9.7 million) and owner investment to 3 million pounds.
Third- and fourth-tier clubs will operate a system based on curbing players’ wages as a percentage of sales.
“It means for the first time, all 72 Football League clubs have agreed to take concerted actions towards controlling their financial destiny,” league chairman Greg Clarke said in a statement. “While we cannot promise that these rules will deliver results overnight, they will begin to lay the foundations for a league of financially self-sustaining football clubs.”
The penalties for non-compliance will be either a transfer embargo or a fine. An offending Championship club will be fined if it is promoted to the Premier League, while one remaining in the lower league will be banned from signing new players until it shows compliance with the regulations.
UEFA’s rules could lead to clubs being barred from Europe’s elite Champions League from 2014 for failing to meet criteria on limiting losses. The regulations came in response to rising debt across the continent and the effect of cash infusions from wealthy benefactors in its competitions.
Like England’s Premier League, the second division has been unable to keep costs under control, even with rising revenue. Operating losses in the Championship during the 2009-10 season increased for the sixth straight year to a record 133 million pounds, according to a report published last year by accountant Deloitte LLP.