Considered by many to be the best football league in the world, the English Football League has a number of regulations in place to ensure financial benefits and sustainability that extend beyond the strictly sporting realm. These regulations, which have been in place since the 2013/14 season, include penalties such as points deductions that affect the sporting and competitive aspects. 

The aim of these financial regulations is to minimise the losses that clubs can incur while pursuing success on the pitch, thereby preventing bankruptcy or irrational spending. These regulations followed the introduction of UEFA's Financial Fair Play rules, which were designed to curb excessive financial losses in European football. 

"They were introduced in 2013-14 with the specific purpose of ensuring that unsustainable spending did not go too far by putting a limit on how much clubs could invest in pursuing their goals," said Premier League CEO Richard Masters on Tuesday. 

An example of the impact of these rules on team performance is the case of Everton, who were docked 10 points for overspending in the 2021/22 season. Everton and Nottingham Forest could also face further point deductions after admitting to breaching the Premier League's financial sustainability rules at the end of the 2022/23 season, AFP reported.

So what rules have English clubs allegedly broken and how do they regulate financial sustainability? 

For example, Premier League clubs are allowed to lose a maximum of £105 million (€122 million) over a three-year assessment period. However, if a club spends a season in the second division, the limit is reduced to £22 million (€25.6 million). 

Similar parameters are set for clubs that are promoted to the Premier League. Forest, for example, who are returning to the top tier after 23 years, were allowed to lose of £61 million (€71 million) in the 2022/23 season. 

It's important to note that over and above the regulated figures, various deductions are permitted for expenditure deemed to be in the general interest of the club and the game, such as investment in infrastructure, youth development and women's football. 

Clubs also use amortisation as an accounting tool to minimise the impact of transfer fees on their accounts. For example, a player signed for £50 million on a five-year contract would be recorded as an expense of £10 million for each of the five years, rather than an initial cost of £50 million, regardless of when the money is transferred between clubs.

This amortisation and accounting technique was one of the reasons why Chelsea signed the Premier League record signings of Enzo Fernández and Moisés Caicedo on eight-year contracts in 2023. 

In addition, a change in Premier League rules last December imposed a five-year limit on the spreading of transfer costs on a club's books. 

In light of this analysis of the current situation and the rules in place, the question is whether these rules have had the desired effect of restricting clubs to spending within their economic means and in proportion to the revenue they generate. Or have they allowed elite clubs to gain financial, structural and sporting advantages over others? 

This last point is often criticised, as these regulations seem to have helped elite clubs to maintain their privileged position by generating more money through larger stadiums, better commercial deals resulting from larger fan bases, and regular participation in lucrative European football.

Despite the backing of Saudi Arabia's sovereign wealth fund, Newcastle chief executive Darren Eales admitted last week that the club could be forced to sell one of its prized assets in order to reinvest in Eddie Howe's team because of the Performance and Sustainability Regulations. 

"It's counterproductive, and part of the inherent system of PSR is that there's an incentive to sell your players if you want to reinvest, because of the nature of the restrictions," said Eales. 

One notable case is Manchester City, who are the Premier League's highest earners with a record £713m (€831m) in their triumphant 2022/23 season. 

However, the English champions are facing more than 100 charges from the Premier League for historic breaches of financial regulations. City incurred significant losses in the early years following their Abu Dhabi-backed takeover in 2008 as they built a competitive team and off-field infrastructure.