UEFA's executive committee has approved new "sustainability regulations" to replace the previous Financial Fair Play system, president Aleksander Ceferin said on Thursday.
A new "squad cost rule" will limit spending on wages, transfers and agent fees to 70% of a club's revenue -- with that figure reached after a three-year gradual change.
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"UEFA's first financial regulations, introduced in 2010, served its primary purpose," Ceferin said at the Executive Committee meeting in Nyon.
"They helped pull European football finances back from the brink and revolutionised how European football clubs are run.
"However, the evolution of the football industry, alongside the inevitable financial effects of the pandemic, has shown the need for wholesale reform and new financial sustainability regulations."
UEFA added that acceptable losses will double from €30 million ($32.74m) over three years to €60m over the same period.
Reacting to the announcement, Ivan Gazidis, CEO of AC Milan, said: "The new rules represent a significant evolution of the previous Financial Fair Play structure.
"It is clear that creating a financially sustainable model for European football remains a critically important objective and we hope that, after the period of transition from the previous system, the new rules will be strongly enforced to ensure that they can help drive us towards this ambition."
Milan were one of the clubs who initially signed onto join the rebel European Super League last year.
"The failure of the Super League demonstrated that the only way to do this successfully is by creating an open and constructive environment based on transparency, dialogue and trust," Gazidis added. "We have had positive and broad-ranging discussions with UEFA about the future development of the game and look forward to continuing to develop our strong relationship with its leadership in future.'
The new regulations will come into force in June 2022, with a gradual implementation over three years so clubs have time to adapt.