Scudamore announces new financial regulations for Premier League clubs
Top flight clubs could face a transfer ban if they fail to adhere to new financial rules brought in by the Premier League on Monday.
Under the proposals the Premier League Board has the power to punish clubs who fail to meet certain criteria.
"The whole purpose of this is to protect the viability and sustainability of the clubs", said Premier League chief Richard Scudamore.
In addition, clubs have also agreed to new rules on "home grown" players.
From next season, each club will, at the end of every transfer window, have to name a squad of up to 25 players, at least eight of which will have to be "home grown" - registered for at least three seasons at an English or Welsh club between the ages of 16 and 21.
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NEW FINANCIAL REQUIREMENTS
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
Clubs must submit future financial information to the Premier League by 31 March each year as early warning for any club taking undue financial risk
An annual requirement to demonstrate to the Premier League Board that a club does not have outstanding debts to other clubs
An annual requirement to demonstrate to the Premier League Board that a club is not in debt with regard to income tax or National Insurance and payroll taxes
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Squads can be boosted beyond the 25 limit but only by players under the age of 21.
The Premier League's new financial rules are similar to Uefa's current licensing guidelines, but differ in that they are compulsory to clubs and punishment takes the form of sanctions as opposed to outright exclusion from competition.
Each club will have to provide its annual accounts to the Premier League by 1 March every year, and show that it does not have outstanding tax debts, or debts to other clubs.
Clubs will also have to prove they can fulfil all fixtures and contractual obligations, and meet all payments due during a season.
As well as denying clubs the right to acquire new players, the Premier League can also prevent them improving contracts with current players.
"It is absolutely essential that these clubs are run as viable, going concerns," said Scudamore. "We would far rather intervene than risk a club going into administration."
Earlier this month, Portsmouth chief executive Peter Storrie admitted that the club almost went into administration, having lived "way outside its means".
At the end of August, Sulaiman Al Fahim completed his takeover at Fratton Park but prior to that Pompey were forced to rely on other clubs, agents and the Inland Revenue agreeing to allow a delay on payments owed to them to keep the club afloat.
But the new rules do stop short of Uefa president Michel Platini's "Financial Fair Play" proposals, which are due to be approved by Uefa's Executive Committee this week.
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It's a rule which we think will give clubs an extra incentive to develop players, and to make a better return from their investment in youth
Richard Scudamore
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These seek to limit clubs to spend only what they earn from football-related income such as ticket sales and television deals and punishments could include the banning of clubs from European competition.
However, the new Premier League rules do not prevent clubs from amassing large amounts of debt, serviced by wealthy owners.
Last year, Football Association chairman Lord Triesman warned of the potential danger posed by what he cited at the time to be over £3bn worth of debt owed by English clubs, a third of which was accounted for by Liverpool, Chelsea, Arsenal and Manchester United.
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.
Liverpool's American owners recently renegotiated the club's debt with the Royal Bank of Scotland, believed to be £290m, and have extended it for another year.
But Scudamore defended the Premier League clubs' financial health.
"Contrary to what many people think, the clubs from a financial point of view are well run," he said. "They all have qualified accountants running them.
"These clubs are extremely well regulated both in company law and certainly when you add our criteria and Uefa licensing on top."
In agreeing to 25-man squads featuring a minimum of eight "home grown" players from the beginning of the 2010-11 season, Premier League clubs have been guided by Uefa's interest in the development of young players.
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"It will encourage youth development and the promotion of young players," added Scudamore. "It's a rule which we think will give clubs an extra incentive to develop players, and to make a better return from their investment in youth.
"Make, rather than buy, is our intention."
According to a recent poll from the Professional Football Players' Observatory, English clubs employ the highest proportion of expatriate players, with 59.2% coming from abroad.
Liverpool have the highest percentage in Europe of expatriate players within their squad, measuring 90%.
In addition, Chelsea were recently found guilty by Fifa of inducing Gael Kakuta to break his contract with Lens in 2007 when he was 16 which has opened up the debate on the tapping up of young talent.
Whilst Scudamore admits this ruling will not prevent clubs from recruiting young players from abroad, it will work towards reducing squad sizes and allow greater opportunities for young players to advance.
"The clubs will always go abroad and look," he commented. "The important thing is are they looked after and is it done properly and I don't think we will stop that happening any more or any less because of this rule.
"I think it will reduce squad sizes, and stop the warehousing of players, if that is really what is going on."
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