Premier League clubs are set to adopt a more transparent sanction framework as part of their new squad cost rules. This move comes after criticism of the current profitability and sustainability rules (PSR), which have faced backlash from supporters of clubs like Everton and Nottingham Forest. Under the new framework, clubs spending 115% or more of their revenue on squad costs will face sanctions, with the severity of the punishment determined by factors such as whether it is a first offense and the size of the overspend. Sporting sanctions, including points deductions, will still be part of the framework.
The squad cost rules will limit Premier League clubs to spending 85% of their revenue on player and coach wages, agents’ fees, and transfer amortization costs. Clubs that exceed this limit but stay below 115% will face a financial levy. However, to prevent clubs from consistently overspending, the rules will require them to meet a lower ratio in subsequent measuring points. For example, if a club has an 87% ratio, they may need to meet 83% at the next measurement.
These new rules are being developed amidst the progress of football’s new independent regulator through Parliament. However, the government has chosen not to extend the regulator’s authority to oversee competition financial rules in the Premier League and other leagues. Premier League chief executive Richard Masters and EFL chairman Rick Parry both believe that football bodies should be responsible for governing these rules, rather than an external regulator.
Another significant element of the Premier League’s new financial rules is anchoring, which would impose a hard spending cap on wages and agents’ fees. The cap would be a multiple of the amount earned by the league’s bottom club in central revenue. Most clubs have voted in favor of exploring this proposal further, and discussions have begun with the Professional Footballers’ Association (PFA). However, the PFA has stated its opposition to any proposal that resembles a hard salary cap.
Overall, these new financial rules aim to provide greater transparency and certainty for Premier League clubs. By implementing a sanction framework and introducing measures like anchoring, the league hopes to promote financial sustainability and competitive balance among its member clubs. It remains to be seen how these rules will be finalized and implemented, but the discussions and analysis currently underway indicate a commitment to addressing the concerns raised by supporters and ensuring the long-term success of English football.