UEFA have approved plans to force clubs in European
competition to only spend what they earn with the body's president
Michel Platini insisting they want to "protect clubs and not punish
them".
The financial fair play rules will require clubs to break even
over a rolling three-year period if they want to play in the
Champions League or Europa League.
Clubs will also be assessed on a risk basis, taking into account
"debts and salary levels", UEFA say.
Platini, speaking after UEFA's executive committee had approved
the rules at a meeting in Nyon, Switzerland, said: "We have worked
on the financial fair play concept hand-in-hand with the clubs, as
our intention is not to punish them, but to protect them.
"We have an agreement with the clubs. The philosophy is that you
cannot spend more money than you generate.
"This approval today is the start of an important journey for
European football's club finances as we begin to put stability and
economic common sense back into football. I thank all the
stakeholders who have supported this along the way."
There will be some leeway granted for the six years after 2012
but some Premier League clubs, notably Manchester City, Chelsea and
Aston Villa could still fall foul of the rule unless they change
their spending habits.
Manchester United have carried out a 'dummy test' and believe
they would pass the rules despite the handicap of paying out
£45million to service their debts every year.
Arsenal and Tottenham would pass the test comfortably, while
Liverpool, Celtic and Rangers would probably do so too.
A United spokesman said: "We support the financial fair play
measures. We are confident that we pass them and that we will
continue to do so."
The chairman of the European Club Association (ECA), Karl-Heinz
Rummenigge, said the new rules were "a huge achievement" that would
shape the future of European club football into a more responsible
and sustainable business."
The new UEFA scheme will come into effect in 2012 although some
leeway is given for an introductory period.
It is understood that initially clubs must not return losses of
more then 45million euros (£38million) for the 2012-15 period.
After 2015, clubs are given a leeway of 30million (£26million) for
three-year losses after which the figure will be reduced still
further.
If clubs breach the rules then they will not be granted a UEFA
club licence to take part in European competitions.
The rules will also limit the amount of cash 'sugar daddies'
will be able to pour into the clubs to fund transfers and high
wages, though they will be allowed to finance capital projects such
as stadiums and academies.
Attempts to bypass the rules by owners handing out huge
sponsorship contracts to their clubs from other companies they own
will also be checked by an independent watchdog panel appointed by
UEFA to ensure they are not paying above the market rate.
The FA and Premier League - who will be the bodies that jointly
provide the UEFA licences to English clubs - have given the new
rules a cautious welcome.
A joint statement from the organisations read: "The FA and the
Premier League are fully supportive of the principle of
sustainability and of football clubs living within their means.
"The vast majority of what has been agreed by UEFA is in line
with current domestic regulations and English football will respect
any rules put in place for clubs competing in Europe.
"We recognise the difficult task undertaken by UEFA in this
process and we have asked that certain issues be monitored so as to
ensure these rules do not create unintended consequences such as
preventing smaller clubs from having the opportunity to invest the
resources required to compete at a higher level."