Cliff Notes – Premier League clubs vote in new ‘squad cost ratio’ rules
- Premier League clubs will replace the Profitability and Sustainability Rules with Squad-Cost Rules, limiting spending to 85% of football revenue and net transfer profit or loss.
- The new regulations aim to align the Premier League’s financial framework with UEFA’s existing rules, which cap spending at 70% of revenue.
- A proposal for “top-to-bottom anchoring” was rejected, raising concerns about competitive balance and potential impacts on player wages.
Premier League clubs vote in new ‘squad cost ratio’ rules
Premier League clubs voted on Friday to overhaul the division’s financial regulations from the start of next season — but rejected controversial plans to introduce “anchoring.”
The league’s Profitability and Sustainability Rules (PSR) will be scrapped in favour of Squad-Cost Rules (SCR), which limit clubs to spending no more than 85% of their football revenue and net profit or loss from transfers.
The Premier League confirmed in a statement that “a multi-year allowance of an extra 30% will incur a levy and once the allowance is exhausted, they will need to comply with 85 per cent or face a sporting sanction.”
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The move to SCR brings the Premier League more into line with UEFA, which currently dictates that clubs participating in its competitions must spend no more than 70% of revenue on football costs.
Clubs have also approved new Sustainability and Systematic Resilience (SSR) proposals which the Premier League described as “assessing a club’s short, medium and long-term financial health through three tests — Working Capital Test, Liquidity Test and Positive Equity Test.”
A source has told ESPN that the SSR vote passed unanimously but there were just seven clubs who supported ‘top-to-bottom anchoring’ (TBA), a proposal which would have limited any club from spending more than five times the money earned in the previous season by the league’s bottom club from centralised payments — prize money, television fees and collective commercial income.
Premier League clubs have voted in new squad cost ratio rules. Getty
“The new SCR rules are intended to promote opportunity for all clubs to aspire to greater success and brings the League’s financial system close to UEFA’s existing SCR rules which operate at a threshold of 70 per cent,” the Premier League said in a statement.
“The other key features of the League’s new system include transparent in-season monitoring and sanctions, protection against sporting underperformance, an ability to spend ahead of revenues, strengthened ability to invest off the pitch, and a reduction in complexity by focusing on football costs.”
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The votes conclude two years of consultations which included trialling both SCR and TBA over last season and the current one in the form of shadow monitoring to help clubs understand how to comply were the changes brought in. SCR replaces PSR, which limited clubs to a maximum loss of £105 million ($137.2m) over a rolling three-year period.
The decision to reject anchoring will draw particular attention given its supporters believed the move would improve the competitive balance of the league. However, the Professional Footballers Association has argued that any cap on spending could affect players’ wages, while sources say concerns were raised that top English clubs would not be able to compete in the transfer market for the world’s best players if a hard spending cap was introduced.
Three of the sport’s biggest agencies — CAA Stellar, CAA Base and Wasserman — had threatened potential legal action by suggesting the introduction of TBA would be in contravention of section two of the UK’s Competition Act. Linking the limit to revenue rather than a fixed number based on centralised contracts gives clubs more flexibility.