Friday marks an important day in modern Premier League history as clubs prepare to vote on new financial regulations.
The current profit and sustainability rules (PSR) would be scrapped in favour of a new system which could have a sizeable impact on the Premier League in both the the immediate and long-term future.
New rules have caused significant controversy already prior to Friday’s vote, with many staunchly opposing the mooted implementation of changes, but Premier League clubs remain divided in their thinking.
Here is a breakdown of the Premier League’s new proposed financial rules.
What Are the Premier League’s New Proposed Financial Rules?
There will be three votes conducted on Friday regarding different strands of financial regulation.
Top-to-Bottom Anchoring
Top-to-bottom anchoring (TBA), often simply referred to as ‘anchoring’, is the most controversial of the rules being suggested. An initial vote among Premier League clubs in early 2024 gave the green light for the trialling of the process, which limits spending across the league in accordance with the division’s bottom club.
Current anchoring proposals would result in all Premier League clubs only being able to spend five times the amount earned in broadcast revenue and prize money by the team that finishes bottom of the table. Following the 2024–25 season in which Southampton finished last, the anchoring limit for the current campaign would have been set at around £546 million ($713 million), per The Athletic.
However, with expected increases to revenue earned from the Premier League’s TV rights package, the limit would have likely risen to around £600 million.
To put it simply, all 20 Premier League clubs would only have been allowed to spend a maximum of £600 million on player wages and transfer fee amortisation, which includes agent fees, regardless of their own individual revenue. That’s why anchoring has been referred to as a ‘salary cap’.
It would signal a significant change from PSR rules in which clubs were only forced to limit their losses to a maximum of £105 million over a three-year period.
Squad-Cost Rules
Squad-cost rules (SCR) are already utilised by UEFA for clubs participating in their competitions, limiting the amount the amount that can be spent by clubs on wages for players and managers, the amortisation costs related to them and agent fees.
The limit depends on a club’s income, with current UEFA SCR rules allowing for 70 per cent of income earned through revenue and player sale profits (over a three-year period) to be spent. However, the Premier League’s SCR rules would be less strict, allowing clubs to spend 85 per cent of their income.
Sustainability and System Resilience
Sustainability and system resilience (SSR) is focused around ensuring clubs can meet their financial commitments in both the short and long-term.
It consists of three tests, one of which centres around ensuring financial compatibility for clubs across a single season. The other tests are aimed at analysing the health of clubs over an extended period and ensuring they have the necessary funds to comply with regulations in the future.
How Would Premier League Changes Affect Clubs?
Anchoring would not have a large impact on clubs as things stand. According to The Athletic, based on the hypothetical cap of approximately £600 million for the 2025–26, only four clubs surpass that total in revenue, meaning the rest would be untroubled by TBA based on the potential implementation of SCR rules.
While the limit is liable to change in coming seasons, the majority of Premier League clubs come nowhere near being able to spend the £600 million limit which far exceeds the 85 per cent of revenue clubs would be allowed to splash if SCR rules are passed.
The clubs who would be in the biggest trouble if TBA and SCR rules come into play are the traditional ‘Big Six’—Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur. However, concerns would be centred around future problems arising rather than the immediate need to trim costs.
Those who spend a high proportion of their revenue on player wages and amortisation costs will also be worried by the implementation of SCR rules. Those clubs include the likes of Aston Villa, Newcastle United, Everton and Bournemouth.
Why Are the Premier League’s Proposed Rules So Controversial?
There has been strong opposition to a ‘salary cap’ from the Professional Footballers’ Association (PFA) and player agencies.
The chief executive of the PFA has already threatened legal action against the Premier League if the new rules come into effect, describing legal battles as “inevitable”. CAA Base, CAA Stellar and Wasserman, three of the biggest agencies in English football, have also threatened to sue the Premier League.
The PFA pointed towards cuts to player wages and costs, which will impact members, while there are also arguments to suggest that the Premier League’s financial restrictions will see them unable to compete with Europe’s elite clubs—many of whom would be able to offer much higher wages and transfer fees.
Not all Premier League clubs are aligned in their views, with a 14-club majority required to enact changes. Separate votes will take place on TBA, SCR and SSR, meaning some of the proposed alterations could be enforced while others are rejected.
The two Manchester clubs and Arsenal are known to be opposed to anchoring, although the latter were previously supportive of the concept. The likes of Liverpool, Everton and Aston Villa are expected to vote in favour of the new system.
However, until Friday’s vote has concluded, it’s impossible to know exactly in which direction clubs will choose to go.
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This article was originally published on www.si.com as The Premier League Salary Cap Rules That Have Caused So Much Controversy.
