FINANCIAL Fair Play has been something of a veiled threat hovering in the background of English football – until now.
The system aims to inject financial stability and stop clubs spending more than they earn by gradually limiting over a period of time the size of losses they incur.
Derby County's finance director Stephen Pearce says financial fair play is here to stay.
"It is for real. It has actually been in for a couple of seasons," he said. "The season we are in is the first season when it is actually live with the sanctions.
"It is based around making sure clubs work within certain set financial criteria, effectively trying to stop clubs funding themselves by debt."
Clubs in the Championship, Derby's division, are allowed to post a maximum loss of £8m for this season, 2013-14.
The figure reduces to £6m next season and £5m in 2015-16.
"Clubs have been given a couple of seasons to get used to the rules," Pearce said.
"The amounts of loss you are allowed to make are slowly reducing – £8m to £6m to £5m – and they may reduce further from there but, at the moment, we don't know.
"All the clubs have to operate within those limits."
Derby's losses in the past two years have been £7.9m and £7.7m.
Their figures for the year ending June 2013 were submitted at the beginning of this month.
The figures for this season, the first season that financial fair play kicks in, will be submitted in December next year and sanctions, punishments for failure to fall within the limit, will be handed out on January 1, 2015.
Will Derby comply?
"We will, indeed," said Pearce.
"It (financial fair play) is on the agenda when it comes to every decision we make, mostly regarding player transfers in and out.
"Your day-to-day operational costs around the football club will tend to remain fairly constant. The only things that change are your commercial revenues and player wages, effectively, and your transfers."
Striking a balance between being competitive and staying within the rules, financially, is more important than ever.
"We are working to stay within them and it is a constant battle, definitely," Pearce said.
The initial punishment for clubs who fail to comply this season will be a transfer embargo from January 1, 2015.
"Current season financial results will be reported next December and then any club who have breached those financial losses will be subject to a transfer embargo," Pearce said.
"If clubs continue and are not improving their financial losses, they will be handed financial penalties as well."
There will be a sliding scale of fines, starting from 1% of the amount a club goes over the limit rising to 100% (pound for pound) if a club breaches the limit by £10m or more.
The Football League continue to monitor club's finances.
"All the clubs submitted their figures on December 1 this year for the 2012-13 season," Pearce said.
"There are no sanctions for that but the Football League will still be looking at the figures and no doubt they will question them if a club is going in the wrong direction."
