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Europe's top clubs face being banned from the Champions League if they do not curb their spending, following a Uefa strategy council meeting. The council - which includes members of Europe's wealthiest clubs, leagues and players' unions - approved a deadline of 2012 for clubs to balance books.
Uefa is insisting that the spiralling inflation of transfer fees and players' wages cannot be sustained.
It also wants to prevent billionaire owners investing huge amounts of money.
Some of Europe's major clubs are carrying debts counted in hundreds of millions, with Real Madrid estimated to be in the red by £500m at the end of the 2007/08 season.
Now, Uefa wants to limit clubs to spend only what they earn from football-related income such as ticket sales and television deals.
The details follow an earlier statement from Uefa president Michel Platini, who has been pressing for measures which would ensure clubs "live within their means".
606: DEBATE
About time! - but how would it work though?
Zico
He says the measures, which are being formulated and would come into force in 2012, are backed by owners including Chelsea's Roman Abramovich.
"We have everyone on board with this - the owners, the players, the leagues, the national associations," said Platini.
Chelsea reported losses of £65.7m up to June last year, while Red Football, Manchester United's parent company which is owned by the Glazer family, recorded a £21m loss last year to increase their total debt to £575m.
Platini added: "If a club can get loans from a bank to buy players and is able to pay back bank loans then it is not a problem.
"But if a club gets a lot of money or subsidies from a big backer and is still in deficit in two years then it is a problem and we don't want that."
Man Utd chief David Gill is backing Platini's plans
The measures would mean owners such as Manchester City's Sheikh Mansour bin Zayed al Nahyan would not be able to make huge gifts of cash to their clubs.
Platini added that an independent panel would be set up to judge whether clubs had broken the rules.
"It's mainly the owners that asked us to do something - Roman Abramovich, (AC Milan's) Silvio Berlusconi, (Inter Milan's) Massimo Moratti. They do not want to fork out from their pockets any more," added Platini.
"I have told Mr Abramovich about this and he said nothing against it."
Uefa would also look at losses incurred by clubs' parent companies who have to service loans, said Platini.
Sanctions - if implemented - would depend on the size of a club's losses, said Uefa deputy general secretary Gianni Infantino, who is in charge of the detailed planning process.
Chelsea chief executive Peter Kenyon believes the proposals have broad support
He said around 20 clubs had been sanctioned in the past few seasons and not given a Uefa licence because their finances were not in order.
But Infantino insists the new rules would not stop clubs like Manchester City breaking up the domination of the "big four" of United, Chelsea, Arsenal and Liverpool in the Premier League - as long as they were run on the right lines.
"Clubs have generated revenues by investing in stadiums otherwise it is an artificial bubble which inflates the system and is unhealthy and unsustainable."
The measures have gained the support of both Manchester United and Chelsea.
United chief executive David Gill said: "It is basically something that should be looked at and brought in."
His Chelsea counterpart, Peter Kenyon, said: "We as a club are very supportive of all the principles of what Michel has outlined.
"He has got the support of the clubs in terms of the financial fair play model. It is an initiative that will develop and impact football for the positive."
http://news.bbc.co.uk/sport2/hi/foot...pe/8225941.stm
Uefa is insisting that the spiralling inflation of transfer fees and players' wages cannot be sustained.
It also wants to prevent billionaire owners investing huge amounts of money.
Some of Europe's major clubs are carrying debts counted in hundreds of millions, with Real Madrid estimated to be in the red by £500m at the end of the 2007/08 season.
Now, Uefa wants to limit clubs to spend only what they earn from football-related income such as ticket sales and television deals.
The details follow an earlier statement from Uefa president Michel Platini, who has been pressing for measures which would ensure clubs "live within their means".
606: DEBATE About time! - but how would it work though?
Zico
He says the measures, which are being formulated and would come into force in 2012, are backed by owners including Chelsea's Roman Abramovich.
"We have everyone on board with this - the owners, the players, the leagues, the national associations," said Platini.
Chelsea reported losses of £65.7m up to June last year, while Red Football, Manchester United's parent company which is owned by the Glazer family, recorded a £21m loss last year to increase their total debt to £575m.
Platini added: "If a club can get loans from a bank to buy players and is able to pay back bank loans then it is not a problem.
"But if a club gets a lot of money or subsidies from a big backer and is still in deficit in two years then it is a problem and we don't want that."
Man Utd chief David Gill is backing Platini's plans
The measures would mean owners such as Manchester City's Sheikh Mansour bin Zayed al Nahyan would not be able to make huge gifts of cash to their clubs.
Platini added that an independent panel would be set up to judge whether clubs had broken the rules.
"It's mainly the owners that asked us to do something - Roman Abramovich, (AC Milan's) Silvio Berlusconi, (Inter Milan's) Massimo Moratti. They do not want to fork out from their pockets any more," added Platini.
"I have told Mr Abramovich about this and he said nothing against it."
Uefa would also look at losses incurred by clubs' parent companies who have to service loans, said Platini.
Sanctions - if implemented - would depend on the size of a club's losses, said Uefa deputy general secretary Gianni Infantino, who is in charge of the detailed planning process.
Chelsea chief executive Peter Kenyon believes the proposals have broad support
He said around 20 clubs had been sanctioned in the past few seasons and not given a Uefa licence because their finances were not in order.
But Infantino insists the new rules would not stop clubs like Manchester City breaking up the domination of the "big four" of United, Chelsea, Arsenal and Liverpool in the Premier League - as long as they were run on the right lines.
"Clubs have generated revenues by investing in stadiums otherwise it is an artificial bubble which inflates the system and is unhealthy and unsustainable."
The measures have gained the support of both Manchester United and Chelsea.
United chief executive David Gill said: "It is basically something that should be looked at and brought in."
His Chelsea counterpart, Peter Kenyon, said: "We as a club are very supportive of all the principles of what Michel has outlined.
"He has got the support of the clubs in terms of the financial fair play model. It is an initiative that will develop and impact football for the positive."
http://news.bbc.co.uk/sport2/hi/foot...pe/8225941.stm