The three major teams who had been spending lavishly are Manchester City, Barcelona and Real Madrid. City just had their new owners, a billionaire who is providing funds to the club. On the other hand, Barcelona and Madrid have taken huge loans from banks in order to meet their extra budgetary bills. In the wake of financial crisis in global market, it was generally felt that the clubs should grow into genuine businesses, as their current expenditures were taking them into bankruptcy.
Therefore, UEFA has taken a hard decision of taking the financial matters into their own hands. There are three important steps in helping the clubs stabilize their economy. First and foremost is to break-even at the end of a season. The idea behind this is that the clubs should only spend what they actually make, which would put a stop to loaning from banks. These loans are a real burden, as they have created problems for teams like Liverpool and Manchester United.
In recent years, there has been a dramatic increase in player prices and wages. This has created problems for many teams, who cannot afford to hold on to their players. Many players have left their teams because they had far bigger offers, which were often unrealistic. Similarly, the price tags being attached to players are also impractical. Even the clubs doing such things are unable to make ends meet, which results in heavy loans from banks to support their wage and transfer bills. So, this regulation was required, so that unrealistic trade should be stopped and every club must be given an equal opportunity.
Second, the clubs are required not to have any overdue during a season. These overdue are towards other clubs, players or social/tax authorities. Again, this is a rule for the club to keep their finances in control. Every year, large amounts are being paid by many clubs because of the interest payments on such amounts, while UEFA has sought to put a stop to that.
Third, it has been made obligatory for the clubs to provide their financial information to UEFA. This has been done in order to check whether the clubs are going in the right direction. Also, this would also keep a check on future policies of the clubs and would seek to normalize their future expenditures.
Nevertheless, the regulations were sought for a long time, and it is a great achievement of UEFA. The real advantage would be to the clubs like Arsenal, who are big clubs but they also keep a check on their financial statements. Every year, Wenger announces heavy profits for his club, which has become a rarity for other big clubs like Liverpool, Chelsea and Manchester United. With these regulations, Wenger would definitely take advantage, as he would be able to retain his players as well. Many of his players leave because of a stricter wage budget overseen by Wenger himself.
However, the disadvantage would be to clubs like Chelsea or Manchester City. These clubs are being owned by billionaires who do not see their teams as business ventures. However, they are simple football fans, who want glory for their teams at any cost. So, these billionaires would feel that UEFA has tried to undermine their love for the sport.
In short, the regulations have their pros and cons, but in general it is an idea appreciated by many, while detested by only a few. However, the fans would have to wait for at least three years, before they could see the fruits of these rules. Until then, clubs have been given ample time to make adjustments to their expenditures, in order to break-even at the end of 2012 season.