April 12 – English Premier League clubs have agreed new financial fair play rules but they will not be introduced until the 2025-26 season.
Leading the rule changes is a shift away from the profitability and sustainability rules (PSR) that allowed clubs to report losses of no more than £105 million over a three-year period.
Instead clubs will be governed by a ‘squad cost control’ system that will allow clubs to spend a set percentage of their turnover on first team and coaching staff wages, plus the amortised costs of their transfer fees and all agents’ fees.
The Premier League will have a two-tier turnover percentage. For clubs in European competition the rule will match UEFA’s new regulation, with clubs allowed to spend up to 70% of turnover, while for the rest of the Premier League’s clubs the percentage will be 85%.
While clubs agreed the new rules at a board meeting this week, they still have to be ratified at the Premier League’s AGM in June.
“The idea behind squad cost rules is to restrict the amount of money that clubs can spend on items such as wages, transfer fees and agents’ fees to a percentage of revenue. Critics of these rules will argue that they operate as a soft wage cap which reinforces the status quo and bakes in a system of inequality thereby making it harder for “new money” clubs, such as Newcastle to compete with the likes of Chelsea, Manchester United and Manchester City,” said Tom Murray, a sports lawyer at Mischcon de Reya.
The current PSR rules have this season seen Everton hit twice with points deductions as well as Nottingham Forest. Under the new rules there is still the possibility that clubs will be deducted points.
It had been suggested that a ‘luxury tax’ would be issued as a financial penalty on clubs that break the rules, rather than a points deduction.
The details of the penalty system are still to be worked out, but there is a feeling within clubs that the rules and sanctions must be transparent and not open to interpretation or a judicial committee that can be influenced by a strong argument at a hearing.
However, Murray believes that the new rules will see more sanctions for rule breaking clubs.
“The introduction of additional financial hurdles will accelerate the trend of increased regulatory action taken by the Premier League as we have seen this season with Everton, Nottingham Forest and Leicester,” said Murray.
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