Man City voted down as Liverpool and FSG get what they've waited 14 years for

At the Premier League shareholders meeting in London on Monday, Tom Werner and Billy Hogan would have been pleased with the outcome.

The Liverpool chairman and Reds CEO were in the capital to represent the club, as is the norm, at the meeting of the 20 member clubs, where at the top of the agenda for discussion was whether or not to adopt a salary cap.

The idea of a salary cap in English football has been kicked around for some time, and the one that was agreed in principle was one tethered to the broadcast revenues of the team that finished in last place during the previous campaign.

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It has been widely reported that a multiple of four-and-a-half be adopted, meaning that based on the 2022/23 merit payments, that would be the £94.2m that Southampton achieved directly from TV revenue, with that sum made up of equal share, merit payments and facility fees that were derived from domestic and international rights. At four-and-a-half times multiplied, that would be £423.9m as a cap.

When John W. Henry and Fenway Sports Group acquired Liverpool back in 2010 they did so under the assumption that Financial Fair Play rules that were to be introduced in the wake of Portsmouth’s collapse into administration would have some teeth and that they would promote a more sustainable way of running clubs, something that FSG felt was very much within their wheelhouse. Henry shared his own thoughts on financial controls in the Premier League when he spoke exclusively to the ECHO last year.

But it hasn’t panned out like that, and despite profit and sustainability rules (PSR) having caught the likes of Everton, Nottingham Forest and Leicester City cold in recent months, it has done little to curb the relentless spending at the top of the Premier League from some of the Reds’ rivals, most notably Manchester City.

As first reported by The Times on Monday, Manchester City were against the proposed introduction of a salary cap, joined in their stance by Manchester United and Aston Villa, while Chelsea abstained from voting. Liverpool was among those in favour of such a control.

For context, Manchester City were the biggest spenders on wages in the Premier League last season, with a bill standing at £423m. That sum was largely down to the bonus payments required to players for success in winning the Premier League and Champions League. Chelsea were the second biggest spenders on wages at £404m.

Manchester City, who continue to have 115 charges for alleged breaches of financial rules over a 10-year period hanging over their heads, are already up to what that cap would be now after their competitive success, and with the addition of new players, improved contracts and plans for even more success, they will likely feel that they don’t have the headroom to grow in the way that they want, in a way that would allow them to maintain the advantage that they have financially over clubs.

The changes will have to be ratified at the Premier League’s AGM this summer, while there is also likely to be some pushback and clarity required from the Professional Footballers Association (PFA) given that it could impact the earning potential of its members.

But with the agreement in principle over its introduction, the likes of Liverpool, Arsenal, and Tottenham Hotspur will feel they have achieved something of a victory in stopping the gap between themselves and City growing even further.

For Liverpool, while transfer spending has been considerably lower than some of their rivals in recent years, the wage bill growth has seen the second steepest incline since 2017 at 79%, behind only Chelsea’s 83.6%.

Liverpool had the third highest wage bill in the Premier League last year at £373m, a rise of £165m from where it was in 2017, behind Chelsea’s £404m and Manchester City’s £423m.

Measures in place to stop others from pushing harder when it comes to wage spend means that the rate of wage growth should slow, which at a time when revenue growth may not be rising as quickly as it has in years previous, means there is a little more security moving forward from a financial perspective.

It isn’t without its potential drawbacks, however, with a salary cap potentially limiting the competitive edge of top Premier League sides in the market in the future when it comes to competing with a package that may be on offer from a club like Real Madrid, or a team from the Saudi Arabian Pro League.

In the main, though, the introduction of a cap is something that Liverpool and FSG will be a greater beneficiary of than Manchester City.