Premier League considers spending cap tied to division’s lowest revenue

Richard Masters, Chief Executive of the Premier League poses for a photograph with the Premier League trophy prior to the Premier League match between Manchester City and Aston Villa at Etihad Stadium
The Premier League is moving towards a cost control model - Michael Regan/Getty Images

Premier League clubs will discuss a proposal for a new spending cap based on a multiple of the lowest revenue in the division – which on current figures could potentially permit spending on wages and fees comfortably to exceed £500 million.

The league’s financial controls are moving towards a squad cost control model similar to that being introduced by Uefa for its competitions which will limit spending to a percentage of turnover – with the additional spending cap offering more leeway. The concept behind the cap is “anchoring”, in which the limit is a multiple of the lowest finisher’s central disbursements from the league’s shared broadcast and commercial deals.

Last season that club, earning the lowest from central Premier League distributions, Southampton, were paid out £103.6 million – a figure that combines a baseline equal share of broadcast deals, live television game “facility” bonuses and merit awards for league places. Based on that figure and a proposed ratio of 4.5 times the anchor base line, the cap would be around £466 million although there are suggestions that it be set as high as five times the anchor figure.

Clubs have already voted on progressing new financial controls and on Monday will be asked to authorise the Premier League to draw up proposals for an anchoring element to the new system. Currently PSR is based on permitted losses of £105 million over a three-year monitoring period which has in recent months led to Premier League charges for Everton, Nottingham Forest and Leicester City, relegated last season. The multiple charges against Manchester City also include PSR breaches.

There are concerns that setting the percentage of turnover a club can spend on wages and fees would prevent less wealthy clubs from being competitive. Earlier this month the clubs agreed that they would introduce the rules gradually with the new system shadowing PSR next season and then being used exclusively from the start of 2025-26.

The Premier League clubs will begin with that squad cost limit set at a higher level, giving the clubs the right to spend up to 85 per cent on wages and agents’ fees, with a view to it being scaled down closer to Uefa’s 70 per cent benchmark.

As ever with the Premier League in the last five years there is unlikely to be consensus. Some clubs oppose any financial controls and the Premier League executive is facing legal action from a single unnamed club over new rules governing associated-party transactions. That rule, preventing business or corporate entities associated with the club offering above market rate commercial deals that boost PSR compliant revenue is considered fundamental to effective financial controls.

The players’ union, the Professional Footballers’ Association, has always opposed any move to introduce a salary cap and would be likely to do so again. Clubs will likely point to the introduction of an independent regulator as evidence that they are being treated differently to conventional businesses. The Football League wants the Premier League clubs to hand over 25 per cent of their broadcast income to smooth the cliff edge of earnings between the top-flight and the Championship. No deal has yet been reached by the two sides.