Monday 30 March 2020


Premier League will tighten financial rules to avoid repeat of Portsmouth debacle

New Premier League club owners could face a form of "means testing" to ensure that they have the money to fund the business under new rules intended to strengthen the competition's financial regulations.

New Premier League club owners face means testing
Fit and proper: disgruntled Portsmouth fans protest outside Fratton Park Photo: ACTION IMAGES

Under the enhanced regulations, which will be considered at the League's summer meeting, new club owners would have to prove that they have the funds to run it on sustainable lines.

Club sources said that the rules, discussed at a shareholders meeting on Thursday, were intended to prevent a repeat of the disastrous events at Portsmouth this season that resulted in four owners in as many months.

"The League just want to make sure that it is much more vigilant in future about the finances of those coming in," said one.

The "means and abilities test", which would be added to the fit and proper person rules, would require owners to provide the League with proof of funding and evidence that they have a plan to take the club forward.

Owners will also in future have to meet League officials, unlike erstwhile Portsmouth owner Ali al Faraj, who never visited Fratton Park and was dubbed "Al Mirage" by supporters.

Under rules adopted earlier this season the clubs have to provide the League with financial information for the year ahead, but it can only intervene if independent auditors raise concerns.

The new rules would allow them to examine a club's affairs every time it changes hands. Had these applied this season it may have prevented Portsmouth's problems being compounded by a succession of owners who did not have the means to run the club.

The clubs also agreed the principles of a new parachute payment system to be negotiated with the Football League.

Parachute payments are due to more than double to £48 million from next season because of the increase in the Premier League's overseas rights and sponsorship income, and it is proposed that they be spread over four years instead of the current two to avoid unbalancing the Championship.

Clubs would get £16 million in each of the first two seasons they were in the Championship, with £8 million in the next two. Solidarity payments to the rest of the Football League would also increase.

The new deal is dependent on the Football League agreeing to a series of measures designed to close the gap between the divisions.

The Premier League will demand that the Football League unify its rule book in key areas, possibly including the requirement for the identity of club owners to be declared publicly. They also want Championship clubs to enhance some of their facilities including dressing rooms and media facilities so that the step-up is not so demanding.

These conditions are considered non-negotiable by the Premier League, and talks with new Football League chairman Greg Clarke and representatives of Championship clubs will begin shortly.

Premier League chief executive Richard Scudamore also confirmed that he is to challenge the recent Ofcom ruling that Sky must reduce the price it charges rival distributors for its sports channels.

Virgin Media, BT Vision and Top-Up TV brought a complaint to the regulator that Sky's wholesale pricing made it impossible for them to compete and build subscriber numbers.

Sky, the Premier League and several other governing bodies, including the Rugby Football Union and the England and Wales Cricket Board, believe the ruling is a perverse and unjustified intervention in the market, with the sports fearing it will ultimately reduce the value of their rights.

"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," Scudamore said.

"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."

The RFU and ECB are expected to support the Premier League's appeal to the Competitions Appeal Tribunal, and Sky will launch its own challenge shortly.

If these fail the Premier League and Sky may seek a judicial review.

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