Magic Number 85! Premier League Sides Agree To Spending Caps

Premier League teams agreed to introduce spending caps in England’s top flight starting from the next season, with clubs’ on-field spending limited to 85% of their football revenue and net profit or loss on player sales, with an additional allowance of 30%. Exceeding this limit will result in a points deduction.

English football’s top clubs voted to implement the new financial rules called “Squad Cost Ratio” (SCR) and “Sustainability and Systemic Resilience” (SSR), replacing the “Profitability and Sustainability Rules” (PSR) which had led to points deductions for Everton and Nottingham Forest in recent years.

The league stated the new regulations align more closely with those used by European football’s governing body UEFA.

These rules aim to provide

all clubs the opportunity for greater success while maintaining competitive balance and the league’s compelling nature.

Squad costs include salaries of players and the head coach, as well as agents’ and transfer fees. Football-related revenue encompasses total earnings from football operations, including revenues from the league and other competitions. Club-generated revenues can also include commercial deals and net profits from non-football events held at the stadium, such as concerts.

Under the previous PSR, clubs’ profit accounted for all revenues and costs, rather than focusing specifically on on-field spending.

By focusing on squad costs, SCR allows clubs greater freedom to invest in other areas of their operations. SCR will also establish spending limits on a seasonal basis, unlike the previous three-year rolling assessment.

Exceeding the 85% cap within the additional 30% allowance will result in fines. If a club surpasses this into the “Red Threshold,” sporting sanctions will be enforced.

The second part of the new financial rules, based on “Sustainability and Systemic Resilience,” aims to support the financial sustainability of all clubs in the short, medium, and long term. It will assess the working capital, liquidity, and positive equity of each Premier League club.

(With Inputs From Agencies)