Michel Platini warned "the values that football represents are in danger" and told the European parliament in Brussels that UEFA are considering enforcing a cap on the expenditure of clubs.
The UEFA president has been an outspoken critic of the frivolous spending by Europe's elite clubs - much of which is based on borrowed credit or the personal spending of wealthy benefactors - and insists it is the clubs themselves who have requested the move.
"European clubs are currently telling us that our system is in danger of financially imploding in the medium term," the 53-year-old former France captain said.
"In consultation with them, but also, I should remind you, spurred on by the reports of this parliament, we are currently looking at the idea of limiting, to a certain degree, a club's expenditure on staff - salary and transfer fees combined - to an as yet undecided percentage of its direct and indirect sporting revenue."
Platini hinted discussions over a salary cap were accelerated by one club's "astronomical bids" during the January transfer window. It is believed he was referring to Manchester City, who are owned by Sheikh Mansour's Abu Dhabi United Investment Group, and their bid for AC Milan's Kaka.
City tabled a reported bid of Â£90million (Euros 100million) for the Brazilian, offering wages in excess of Â£250,000 per week but the playmaker opted to stay at the San Siro.
"During this year's festive season, one club which had suddenly become very rich made various astronomical bids in the transfer market," Platini added.
"Of course, there was a tremendous outcry in the football family, people called it outrageous and scandalous.
"Is it morally acceptable to offer such sums of money for a single player? Many people have responded by talking about limiting players' wages by introducing a European salary cap."
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