LONDON: Premier League clubs voted Friday to overhaul the competition’s financial rules, bringing in a new system that focuses solely on spending that directly affects what happens on the pitch.
Clubs opted by a majority of 14 to six to introduce the squad cost ratio (SCR) model, which will limit clubs’ “on-pitch spending” to 85 percent of their football-related revenue and net profit or loss on player sales.
Squad-related costs include player wages, agents’ fees and transfer fees.
European football’s governing body UEFA operates a similar model, which limits spending on player and coach wages, transfers and agent fees to 70 percent of club revenue.
The Premier League said in a statement that clubs would have a “multi-year allowance” of 30 percent which they can use to spend above the 85 percent limit, and that using the allowance would incur a levy—effectively a luxury tax.
Once the allowance is used up, teams will face sporting sanctions such as points deductions if they go above 85 percent.
The Premier League said the system, which will come into effect from the 2026/27 season, would be simpler because of its focus on “football costs”.
Under the new rules, clubs will not be able to sell assets such as hotels and women’s teams to related companies in order to spend more on squad-related costs.
Chelsea sold two hotels to a sister company in 2023 and sold their women’s team to parent company BlueCo, helping boost the club’s balance sheet under existing existing profitability and sustainability (PSR) rules.
Clubs also voted Friday to bring in sustainability and systemic resilience (SSR) rules, which will assess a club’s short, medium and long-term financial health through a variety of tests.
The clubs, however, voted against a new financial mechanism that would have put a hard spending cap on player-related costs.
Top-to-bottom ‘anchoring’ would have limited any club’s spending on squad costs to five times the amount received in central income by the league’s bottom club.
The Professional Footballers’ Association, said the measure would have effectively been a salary cap and threatened strike action.
Under PSR, clubs are entitled to lose a maximum of £105 million ($137 million) over a rolling three-season period.
Both Nottingham Forest and Everton were given points deductions in the 2023/24 season for breaching PSR rules.
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.
