Premier League clubs have voted to introduce new financial regulations to replace the decade-old Profitability and Sustainability Rules (PSR).
The majority voted to progress new squad cost ratio rules. This financial system is expected to be implemented for the 2025/26 season.
The proposed new regime is similar to UEFA’s financial sustainability rules. It will limit club spending on wages, coaching staff salaries, transfer fee amortisation and agent fees to a set percentage of their annual revenue.
UEFA approved the squad cost ratio rule at a meeting in April 2022, replacing the previous Financial Fair Play (FFP) system, which allowed clubs to make losses of up to €30 million over a three-year accounting period.
However, unlike UEFA’s uniform 70% cap, the Premier League is proposing a two-tier system – 70% for clubs in European competitions and 85% for those outside.
Contrary to the latest rumours, point deductions will remain the penalty for breaching the rules, although discussions are underway to explore alternative punishments.
Some clubs have advocated for a luxury tax similar to the United States model, while others want a buffer zone for minor offences.
Final decisions on these details and the specific spending threshold will be made at the Premier League’s Annual General Meeting (AGM) in June.
The PSR allows clubs to accrue maximum losses of £105m over three years and will remain in place until the end of next season.
There has been no discussion about raising this limit, but some clubs believe it should be adjusted to reflect rising player wages and transfer fees.
The rule came into play around ten years ago, and a lot has changed in the football scene, with clubs believing they should be given more leeway.
This move towards squad cost control signifies a potential loosening of spending restrictions for some clubs, particularly those that do not compete in Europe.
However, the finer details and potential penalties remain to be ironed out at the upcoming AGM.
