English Premier League introduces new financial rules

  • Business
  • Wednesday, 04 Aug 2010

LONDON: England's Premier League has introduced new ownership and financial regulations for the new season in an attempt to avoid a repeat of Portsmouth's implosion last season.

Under a series of owners, Portsmouth ran up debts of more than 100 million pounds ($159 million) to creditors, including the British government's revenue and customs authority.

The league said Tuesday that it now requires prospective new owners to prove they have sufficient funds to sustain the club for another year and can now contact the government directly to check that clubs are up to date with taxes.

The British government's revenue and customs authority chased Portsmouth over a claim for 37 million pounds ($59 million) in unpaid taxes and is challenging the club in court over its proposal to pay creditors just a fifth of the money it owes over the next four years.

"Had we had the rules in place in the transfer window in January 2009, we could have intervened," Premier League chief executive Richard Scudamore said. "We probably would have been able to stop some of the worst things that happened.

"We believe we have the early warnings in place to avoid having a repeat of the Portsmouth situation. I don't see any clubs at the same risk point Portsmouth was at this time a year ago."

Clubs will be required to publish ownership details annually on their website and provide the league with a directors report that declares any payments above 25,000 pounds ($39,800).

Scudamore said the league backed the right of Her Majesty's Revenue and Customs to pursue clubs for unpaid taxes. HMRC's case against Portsmouth could prevent the club coming out of administration, resulting in a points deduction when it starts the season in the second-tier League Championship.

"If we had had quarterly returns stating liabilities to HMRC, that could certainly have provided another early warning," Scudamore said. "I would support HMRC getting much harder with clubs much quicker."

The Premier League has not set fixed punishments for clubs that break the new rules, but existing penalties include points deductions and bans on transfer activity.

Mediocre for 50 years, Portsmouth spent extravagantly on players and won the 2008 FA Cup but foundered when owner Alexandre Gaydamak withdrew his financial support.

Portsmouth sold or released almost an entire squad of players, including Jermain Defoe, Lassana Diarra and Sulley Muntari, was banned from player transfers when its debts became apparent and became the first Premier League club to be placed under the form of bankruptcy protection known as being "in administration."

Portsmouth now has only 15 senior players and no goalkeeper in its squad ahead of Saturday's season opener at Coventry.

Scudamore said the Premier League's 20 clubs, which each get one vote on rule changes, approved tougher self-regulation in an effort to improve the public image of the league. The new rules came into effect on June 3.

"We recognized there was reputational damage from the Portsmouth situation," Scudamore said. "Those headlines were not good and unfortunately everyone gets tarred with the same brush."

The club passed through the hands of Sulaiman Al Fahim, Ali Al-Faraj and Balram Chainrai last season, but Al-Faraj at least would have struggled to get approval for his August 2009 takeover had the extra scrutiny of sufficient funds been in place.

The league can now insist upon face-to-face meetings with prospective new owners. It has also strengthened its "Fit and Proper Persons Test" and renamed it the "Owners and Directors Test" to more accurately reflect its purpose.

Former Thai prime minister Thaksin Shinawatra passed the former test to buy Manchester City in 2007 despite allegations of political corruption and human rights abuses.

"We changed the name because 'fit and proper' suggested it would cover things it was never going to cover," Scudamore said.

The new rules are not designed to prevent the sort of leveraged takeover that has angered fans of Manchester United and Liverpool, both of which are still heavily in debt, and Scudamore acknowledged that much still depends upon clubs' own efforts.

"What we're not going to be testing for is 'do they have enough money to qualify for the Champions League or enough money to win a trophy,'" Scudamore said. "It's 'can they sustain a club?'"

The Premier League is also introducing what it calls an "Elite Player Performance Plan," with which it hopes to increase the amount of direct coaching children at club youth academies to a total 10,000 hours by the time they reach 18.

Premier League director of youth Ged Roddy said that graduates of the academy Dutch club Ajax have typically spent 6,000 hours in contact training, compared to an average 2,500 for an English player of the same age. - AP

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