UEFA have informed the likes of Manchester City that they need to cut down the size of their squads if they break the governing body's break-even rules.
The European organisation has confirmed that up to £1.3 billion was lost over a number of clubs in 2010, with the Premier League leaders spending over 100% of their turnover on wages.
"This is the last wake-up call," said UEFA general secretary Gianni Infantino.
"This trend has to change very quickly to safeguard European football. These losses just cannot continue."
Clubs who breach these rules could face exclusion from the Champions League or the Europa League in the 2014-15 season.