European clubs have allowed losses to collectively soar to a record $2.3 billion and failed to control escalating player salaries, despite repeated warnings from UEFA about the grim future football faces unless such spending is curbed.
Football is reflecting Europe's economic turmoil, with half of top-division sides seeing their financial situations worsen in 2011, according to a financial analysis published by UEFA on Monday.
Over five years, club losses have trebled to a record $2.3 billion and the cost of paying players has leapt 40 per cent to $11.2 billion.
"Economic austerity ... has raised general awareness of the fact that action can no longer be delayed,'' Andrea Traverso, UEFA's head of Club Licensing and Financial Fair Play, said.
Traverso warned that the economic crisis has made "access to liquidity more difficult in many European countries.''
"An increasing number of clubs are currently facing limited funding availabilities. Without a change in behaviour, the risk of clubs going out of business will increase."
- Andrea Traverso, UEFA
"An increasing number of clubs are currently facing limited funding availabilities,'' he said.
"Without a change in behaviour, the risk of clubs going out of business will increase.''
UEFA was encouraged by some aspects of club finances, however. The total debt of the clubs whose accounts were analysed dropped by around 10 per cent to about $10.5bn, while the revenues generated by clubs in 2011 rose by 3 per cent to about $18bn - meaning an average growth of 5.6 per cent over the past five years.
"Which other industry has grown like that during the economic crisis?'' UEFA General Secretary Gianni Infantino said.
Infantino said he was confident the record losses are at their peak and that the increase in the number of sanctions handed to clubs, including Malaga and Atletico Madrid last year, for failing to settle overdue payments indicated that "financial fair play has teeth.''
The FFP rule that clubs must break even on their football-related business, or risk being excluded from European competition, comes into effect in the spring of 2014.
Chelsea, Manchester City and Paris Saint-Germain have been the major spenders in recent years.
"UEFA will not be happy to do that, but UEFA will do that,'' Infantino said of the potential exclusion.
"Everyone, including PSG or any other club, knows the rules and they know when they kick in, and they know that they must demonstrate that they can generate their revenues without cheating.''
UEFA President Michel Platini tells teams in the foreword of the report, which analyses nearly 700 club accounts across the organisation's 53 member nations, that financial fair play rules are vital to curbing the "financial distress'' facing football.
"Keeping costs under control and within sustainable limits is, and will continue to be, the clubs' biggest challenge,'' Platini said.
More than 60 per cent of clubs breached at least one of the rules designed to ensure debts are paid as they attempt to break even on football business - a condition of entry for the Champions League and Europa League.
And 139 of the 220 clubs playing in the Champions League or Europa League this season breached at least one of the "Financial Fair Play'' criteria.