UEFA APPROVE FINANCIAL FAIR PLAY RULES
UEFA have approved plans to force clubs in European competition to only spend what they earn with the body's president Michel Platini insisting they want to "protect clubs and not punish them".
The financial fair play rules will require clubs to break even over a rolling three-year period if they want to play in the Champions League or Europa League.
Clubs will also be assessed on a risk basis, taking into account "debts and salary levels", UEFA say.
Platini, speaking after UEFA's executive committee had approved the rules at a meeting in Nyon, Switzerland, said: "We have worked on the financial fair play concept hand-in-hand with the clubs, as our intention is not to punish them, but to protect them.
"We have an agreement with the clubs. The philosophy is that you cannot spend more money than you generate.
"This approval today is the start of an important journey for European football's club finances as we begin to put stability and economic common sense back into football. I thank all the stakeholders who have supported this along the way."
There will be some leeway granted for the six years after 2012 but some Premier League clubs, notably Manchester City, Chelsea and Aston Villa could still fall foul of the rule unless they change their spending habits.
Manchester United have carried out a 'dummy test' and believe they would pass the rules despite the handicap of paying out £45million to service their debts every year.
Arsenal and Tottenham would pass the test comfortably, while Liverpool, Celtic and Rangers would probably do so too.
A United spokesman said: "We support the financial fair play measures. We are confident that we pass them and that we will continue to do so."
The chairman of the European Club Association (ECA), Karl-Heinz Rummenigge, said the new rules were "a huge achievement" that would shape the future of European club football into a more responsible and sustainable business."
The new UEFA scheme will come into effect in 2012 although some leeway is given for an introductory period.
It is understood that initially clubs must not return losses of more then 45million euros (£38million) for the 2012-15 period. After 2015, clubs are given a leeway of 30million (£26million) for three-year losses after which the figure will be reduced still further.
If clubs breach the rules then they will not be granted a UEFA club licence to take part in European competitions.
The rules will also limit the amount of cash 'sugar daddies' will be able to pour into the clubs to fund transfers and high wages, though they will be allowed to finance capital projects such as stadiums and academies.
Attempts to bypass the rules by owners handing out huge sponsorship contracts to their clubs from other companies they own will also be checked by an independent watchdog panel appointed by UEFA to ensure they are not paying above the market rate.
The FA and Premier League - who will be the bodies that jointly provide the UEFA licences to English clubs - have given the new rules a cautious welcome.
A joint statement from the organisations read: "The FA and the Premier League are fully supportive of the principle of sustainability and of football clubs living within their means.
"The vast majority of what has been agreed by UEFA is in line with current domestic regulations and English football will respect any rules put in place for clubs competing in Europe.
"We recognise the difficult task undertaken by UEFA in this process and we have asked that certain issues be monitored so as to ensure these rules do not create unintended consequences such as preventing smaller clubs from having the opportunity to invest the resources required to compete at a higher level."