The Football League has confirmed that it will adopt Financial Fair Play regulations in all three of its divisions next season. The League has outlined the sanctions that clubs not keeping to the rules will face, although these won't be enforced until 2013/14.
Championship clubs, who will have to provide the Football League with their accounts by December 1st each year, will be obliged to make sure their annual losses drop from an "acceptable deviation” of £4 million in 2011/12 to £2 million by 2015/16, certain areas of spending being excluded, including academy and community programmes.
The allowed level of shareholder equity investment will be reduced from £8 million in the 2011/12 campaign to £3 million by 2015/16.
Clubs which fail to comply with the rules will face sanctions but not until 2013/14, after "a sensible period of transition".
Sides that have been promoted to the Premier League will have to pay a Fair Play Tax on their spending excess, which ranges from 1% on the first £100,000 to 100% on anything over £10 million with that cash going equally to the clubs who have kept to the regulations.
Teams not playing by the rules and remaining in the Championship will face a transfer embargo.
Clubs relegated from the Premier League won’t face sanctions during their first season in the Championship if they have kept to Premier League regulations.
Championship clubs formally accepted the proposals at a vote in London this morning, although three voted against, with Football League chairman, Greg Clarke, welcoming the move which is aimed at creating a greater financial stability: "On the pitch we have three exciting, competitive divisions with crowds at their highest levels for 50 years.
"But that success isn't necessarily being reflected on our clubs' balance sheets and we have to remedy that situation or face an uncertain future.
"I'd like to commend the Championship clubs for the courageous decision they have taken today. It means that for the first time, all 72 Football League clubs have agreed to take concerted action towards controlling their financial destiny.
"Whilst we cannot promise that these rules will deliver results overnight, they will begin to lay the foundations for a league of financially self-sustaining football clubs."
Speaking to TWTD about the Financial Fair Play rules in some depth last month, Town chief executive Simon Clegg was similarly supportive: "When you step back and you look at the big picture, this can only be a good for football.
"It’s very sad to see Portsmouth, Port Vale and Rangers in the situations that they are in and no one would like to see Portsmouth go under completely. It is a massive wake-up call for the other 71 clubs.”
Owner Marcus Evans has injected around £5 million to £6 million a season since taking over at Town in December 2007 with the Blues' debts standing at £66.17 million in the accounts to June 2011.
Full details of the Financial Fair Play framework for the Championship, League One and League Two can be found on the Football League’s website.