As Portsmouth battle the tax man, Premier League clubs agree new rules to ensure the financial calibre of owners

By Nick Harris

3 August 2010

The Premier League has confirmed this evening the introduction of new ownership and financial regulations for the 2010-11 season in an attempt to avoid a repeat of the type of farcical situation that unfolded at Portsmouth last season.

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Pompey, who were in the High Court today in relation to their ongoing battle with the tax man, came to symbolise much of what was wrong in the practices of the League’s financially errant clubs.

A succession of unsuitable, hard-up and out-of-their-depth owners – including one who never visited Fratton Park and apparently had little practical awareness that he was even the owner – took successive control as debt spiraled and financial meltdown ensued, ending in administration.

The League is not able to guarantee absolutely that an owner deemed by some to be “unsuitable” will never again take control of a club; such judgements are often subjective in any case.

But the set of new checks and balances in place will reduce the risk of a repeat of the Pompey fiasco and ensure that the League as an institution monitors the financial well-being of its clubs. The League drew up its rules after, among other things, consultation with the Portsmouth fans’ group, SOS Pompey, who relayed their traumatic experiences of being on the wrong end of wayward ‘custodians’.

“Following consultation with our clubs, the Premier League has agreed to introduce a number of new rules for season 2010-11, specifically in the areas of club ownership, finance and HMRC reporting,” the League says in statement. “The Board believes that these new rules will complement existing financial regulation to further encourage sustainability and good governance.”

These new rules are as follows:

• Means and abilities test A prospective new owner must provide future financial information to show the projected financial position of the club should a takeover go through. A prospective new owner must also show proof of funds to prove they can sustain the Club for the year ahead.
• Meeting new owners The Premier League board will have the power to request a meeting with any person proposing to acquire control of a club.
• HMRC reporting The Premier League board can request quarterly information from each club showing that they are up-to-date with payments to HMRC in respect of PAYE and National Insurance. Each club will give HMRC permission to share directly with the Premier League board details of any non-payment of PAYE or National Insurance.
• Owners & Directors test Re-named and strengthened. Persons barred from other sporting organisations / competitions and professional bodies will not be permitted to be a director of a club.

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Premier League rules are formulated to work alongside national and EU legislation. In the inaugural Premier League season, 1992-93, League Rule Book contained 142 Rules in eight Sections. In 2009-10 there were 819 Rules in 20 Sections.

The new rules announced today are in addition to financial regulations introduced at the Premier League AGM in September 2009.

These included:

- Provision that clubs must submit independently audited accounts to the Premier League by 1 March each year with requirements to note any material qualifications or issues raised by auditors.

- A requirement for clubs to submit future financial information to the Premier League by 31 March each year. This will act as an improved early warning system should any club take undue financial risks which may have consequences for future financial stability.

- An annual requirement to demonstrate to the Premier League board that a club does not have outstanding debts to other clubs.

- Provision that any qualification raised in accounts or risk seen by the Premier League board could result in action to help prevent a club from exposing itself to financial difficulties that may be deemed unsustainable or put at risk the future financial sustainability of a club.

- Making Clubs that fall into such financial difficulty potentially subject to financial controls relating to transfer activity and/or player salaries.

- Each club must publicly declare the identity of every shareholder with a stake above 10 per cent.

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