Premier League to enforce stronger financial controls

Mon 19th Apr 2010 | Football Governance

The financial collapse of Portsmouth Football Club has prompted the Premier League to consider instituting stronger financial regulations reports the Telegraph. The new rules were discussed at the shareholders meeting on Thursday and they involve putting new owners through a "means testing." This is to make sure that the clubs are in the hands of people who have the necessary funds to keep the clubs in financial strong positions. "The League just want to make sure that it is much more vigilant in future about the finances of those coming in," said a person who attended the meeting.

The "means and abilities test", will involve the owners providing proof of funding and a sustainable long term plan. The League is also going to insist on new owners meeting League officials to avoid the kind of situation that developed with Ali al Faraj when he was owner of Portsmouth and never once visited Fratton Park. The new rules will also allow the League to assess a clubs affairs whenever it changes ownership. Such a rule in the last season may well have helped Portsmouth's problems from steadily increasing. Earlier this season the League adopted rules that require a club to provide a financial plan for the year ahead but the League cannot actually intervene unless independent auditors raise any red flags.

During the Thursday meeting there was also discussion of the increased parachute payments. Premier League has seen a dramatic rise in income from overseas rights and sponsorship and in distributing the money among the clubs it has been decided to give clubs which are relegated four years of parachute payments totalling around £48 million. The clubs will get £16 million in the first two years and £8 million in the next two. Solidarity payments to the rest of the Football League are also going to be increased if FL agrees to a set of steps intended to reduce the gap between the divisions. These steps include declaring club ownership publicly and some improvements in the infrastructural facilities of Championship clubs.

Richard Scudamore, chief executive of the Premier League, also spoke about the League challenging the Ofcom ruling that Sky Sports should reduce the price it charges for distributing content to its rivals. "By forcing Sky to sell its sports channels to its competitors at a discount, Ofcom will reduce the incentives of all broadcasters, Sky included, to invest in the acquisition of sports rights. This can only have a negative impact on the ability of sport to attract a fair return on its content in an open market, which is necessary to ensure appropriate investment in maintaining the highest quality of that content."

Rugby and cricket organisations will support Premier League's appeal to the Competitions Appeal Tribunal, while Sky plans to challenge the ruling on its own also. If these efforts fail, there is the possibility of a judicial review.

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