Premier League clubs have voted to overhaul their financial rules in a significant change to the way England’s top football clubs can spend money.
The new system, designed to ensure clubs do not spend more than they generate in revenue, will penalize teams if they spend more than 85% of revenue on player transfers and wages.
The new “squad cost ratio” rules will replace the Premier League’s controversial profit and sustainability regulations, known as PSR, which punished clubs if their financial losses over a rolling three-year period exceeded £105m.
The PSR rules, for which Everton and Nottingham Forest lost points last year, have been criticized by some fans and clubs. The Premier League remains in a legal battle with Manchester City over alleged breaches of spending rules over several years.
Under the new regime, clubs will be given additional permission to spend above the 85% limit, but will incur a fee if they do so. Some American sports operate a similar regime in which teams can pay extra to spend above the league’s salary cap.
“The new SCR rules aim to promote opportunities for all clubs to aspire to greater success,” the league said in a statement after the vote this Friday morning (21).
The new system will also involve “transparent in-season monitoring and sanctions”, the league added, and will also allow clubs to invest to prevent poor sporting performance.
Many Premier League clubs already operate under similar rules, set by European football’s governing body UEFA. Teams that qualify for European competitions next season will not be able to spend more than 70% of their revenue on transfers and player salaries.
The new Premier League rules, which have been under discussion for years, will come into force from next season.
At Friday’s shareholder meeting, the clubs also adopted new “sustainability and systemic resilience rules”, which the league says will establish new criteria for assessing a team’s financial health in the short, medium and long term, based on working capital, liquidity and positive equity.
However, they voted against a separate plan to tie spending to revenue for the team with the lowest broadcast revenue, a plan known as top-down anchoring.
Anchoring would, in practice, represent the introduction of a salary cap, a measure that has provoked threats of legal action from unions and players’ agents.
The 20 Premier League clubs made a combined pre-tax loss of around £100 million during the 2023/24 season, against revenue of £6.3 billion, according to consultancy Deloitte.
Despite clubs’ persistent losses, European football has attracted a wave of interest from professional investors eager to gain exposure to the world’s most-watched sport. Apollo Global Management was the latest to invest, agreeing last week to buy a majority stake in Atlético de Madrid.
Twelve English top-flight teams have American shareholders, including Chelsea, which is controlled by private equity firm Clearlake Capital.
