Clubs such as Manchester City should be prohibited by Uefa from being sponsored by companies closely associated with their owners, a Council of Europe committee stated today.
The estimated £400million partnership deal between City and Etihad airline has been described as an "improper transaction" in a report by the Council's culture, science, education and media committee.
It also highlights Real Madrid's sale of its training ground to the city for more than €400million as possibly giving the club an unfair advantage.
The Council of Europe cannot impose any rules however - it is separate from the European Union and acts as a watchdog body.
Their report says Uefa will have to take care to ensure their financial fair play rules, where clubs must only spend what they earn, are not circumvented.
"Clubs will no doubt try to supplement their income if possible. They could for example call on sponsors to invest more so as to reduce or eliminate their deficits," says the report.
"Care will have to be taken to prevent any circumvention of the financial fair play rules in this way.
"A case in point is Manchester City, which has entered into a contract estimated at £400million with the airline Etihad. Etihad belongs to the Abu Dhabi royal family, and the Abu Dhabi United Group, which is led by Suleiman Al-Fahim, owns Manchester City.
"In order to avoid improper transactions of this kind, Uefa should prohibit clubs from sponsoring themselves or using associated bodies to do so.
"There is also a need to monitor the 'purchases' of sponsors, who should not overpay for the rights they acquire."
The committee warned that public authorities can indirectly give financial help to clubs - and that is part of the problem.
The report adds: "This poses the question at which point competition between clubs can significantly be distorted, and some clubs enjoy an undue advantage, as a result of the financing of sports infrastructure, its sale to sports companies or placing on loan to teams, the granting of subsidies, loans, tax breaks or other financial benefits, gifts, the purchase by public authorities of advertising space or, indeed, facilities belonging to clubs, or other measures to support sports companies.
"For example, in the early 2000s Real Madrid was able to sell its training ground back to the city for more than €400million.
"There is a need for strict application of the ban on state aid for professional sports companies."
The committee is against the introduction of a salary cap.
It says to do so would lead to a reduction in pay of less well-known players "especially young players or players from African or Asian countries" and the temptation for clubs to enter "into secret deals or to reach arrangements with sponsors to transfer part of the costs to them".
Mario Balotelli tells Noel Gallagher he needs to mature
In a BBC exclusive interview with former Oasis frontman Noel Gallagher, Manchester City's Mario Balotelli admits he has to grow up.
The Italian striker has been involved in a number of controversial incidents since joining City in August 2010.
Told boss Roberto Mancini had said he needs to mature, Balotelli replied: "If Mancini says something, he's right."
The forward added: "But I'm 21, so I'm still young. I think from last year, already I'm bigger [older] in my head."
Balotelli was fined a week's wages after breaking a curfew ahead of City's 2-0 win over Bolton at the weekend.
And he was disciplined by City for throwing a dart at a youth team player in March 2011.
Firefighters were also called to the forward's detached house in Cheshire in October when his bathroom was set alight by fireworks.
But the Italy international has also hit the spotlight for positive reasons, notably when he convinced a bullied truant to return to school before giving the antagonists a telling-off.
Balotelli rarely gives interviews but agreed to speak to Gallagher, a City fan and self-confessed admirer of the player, for the BBC's Football Focus.
He told Gallagher he is happy in England and said Mancini, who coached him at Inter Milan, was a major reason he decided to join City, for a reported fee of around £20m.
"If Mancini wasn't here, I never come here," said Balotelli, who was born in Sicily to Ghanaian immigrants. "But now that I'm here, I'm OK, I'm happy."
Balotelli, who began his career with Serie C side Lumezzane, added that he was a "really private" person and said he could not understand why being seen about Manchester caused such excitement in the media.
Use accessible player and disable flyout menusI've told Mario to behave - Mancini
"I just walk in town like a normal guy," he said, adding that he liked to go to the pub but "not to drink".
Balotelli has become one of many influential players for City, who currently top the Premier League.
He has scored 14 goals in all competitions this season, finding the net in each of City's last three league games.
With 11 matches to go, City, who take on Sporting Lisbon in the Europa League on Thursday, are two points ahead of neighbours Manchester United.
Ahead of the game against Sporting, Mancini confirmed Balotelli has been fined a week's wages for his latest indiscretion.
He also warned Balotelli and the rest of the City squad that they needed to think about their actions before matches.
"I've spoken with Mario and given him a one-week fine for what he did," said the City boss.
"It's a no-no. Every player should have good behaviour before the game."
Watch the full interview on Saturday's Football Focus at 1215 GMT on BBC One and this website.
Edinson Cavani insists he is happy at Napoli and not considering his future at the club.
The Napoli striker is one of the most wanted men in world football, with the likes of Chelsea, Manchester City and Juventus all eager to land him when the transfer window opens.
Cavani has scored an impressive 41 goals in 57 Serie A games since moving to Napoli from Palermo in 2010, while he has also been the scourge of both Chelsea and City in the Champions League.
He scored in both matches against City in the group stages as Roberto Mancini's men went out early, while he also netted in Napoli's 3-1 win over Chelsea in their last 16 clash.
Napoli kept hold of Cavani, 25, in the transfer window at the turn of the year but Europe's leading clubs are expected to make their move in the summer.
Uruguay international Cavani, though, insists he is happy in Naples.
"My future? I have confidence that the president of Napoli loves me," he told Italian newspaper Il Mattino.
"I find it perfect here. It's perfect to live here and at the moment I am great personally. I do not want to pay attention to the market rumours.
"My dream is to win the Champions League (with Napoli)."
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OTHER BOLLOX
Robin van Persie will be offered a Thierry Henry-style £5m loyalty bonus to commit his future to Arsenal. Daily Express
Barcelona forward Cristian Tello, 20, who scored twice in his side's 7-1 demolition of Bayer Leverkusen on Wednesday, is wanted by Liverpool, Benfica, Malaga and Valencia, according to his agent. Inside Futbol
Championship side Blackpool have failed with an audacious bid to sign one-time Liverpool legend Robbie Fowler, 36. The Bloomfield Road outfit offered the former England international a £100-a-week, pay-as-you-play deal. Daily Mirror
Brazilian playmaker Kaka, 29, who had the chance to join Chelsea last summer, has reiterated his plans to stay at Real Madrid. talkShite
Liverpool are planning a double swoop for young English footballing talent and are preparing bids for winger Wilfried Zaha, 19, of Crystal Palace, and Wigan wideman Victor Moses, 21. caughtoffside.com
Juventus are weighing up an ambitious plan to pair Chelsea's Michael Essien, 29, and Arsenal's Alex Song, 24, in midfield next season. the Sun
Manchester United aim to tie defender Ezekiel Fryers, 19, to a new deal - to stop him joining a potential exodus of kids from Old Trafford. Daily Mirror
Blackburn Rovers boss Steve Kean wants former Sunderland midfielder Bolo Zenden , 35, but any deal is still far from certain. Lancashire Telegraph
Top English referee Howard Webb is in the midst of a bout of fixture congestion, with a remarkable four games in eight days including one European match to oversee. Daily Express
Manchester United manager Sir Alex Ferguson has told his squad to "wake up" in an effort to kickstart the Red Devils' European exploits. the Guardian
Alan Shearer has warned Chelsea striker Fernando Torres, 27, he is finished unless he quits Chelsea. Daily Star
Meanwhile The Guardian says that Torres turned down the chance to take Chelsea's 70th-minute penalty in their FA Cup replay win at Birmingham City, which might have allowed him to end his near five-month scoring drought. the Guardian
Arsenal captain Robin van Persie, 28, says he has no regrets about trying to chip AC Milan goalkeeper Christian Abbiati in Tuesday's Champions League defeat, and reckons he would do it again if given the chance. Metro
Gary Speed's eldest son has been called up to the Wales Under-16 squad. Midfielder Ed Speed, 14, delivered an emotional speech at the memorial match in honour of his late father only a week ago. Daily Mail
Liverpool defender Glen Johnson, 27, has accused defender Patrice Evra, 30, of acting "clever" in the line-up in February's Old Trafford match, and suggested the Manchester United captain did not really want to shake striker Luis Suarez's hand. Daily Mail
And Liverpool captain Steven Gerrard, 31, and Olympic champion swimmer Rebecca Adlington, 23, are among the top names to appear in a Sport Relief edition of the Beano. Metro
