Premier League spending offenders face new ‘luxury tax’ fines

The Premier League are to discuss a new “luxury tax” fine system to punish clubs who breach its financial rules.

However it will resist any attempts from clubs to do away with so-called “sporting sanctions” – the docking of points – if the profit and sustainability rules are broken.

Instead the Premier League wants a new layer of punishment to sit between a big breach of the rules and no breach.

This would suggest that, in future, clubs may be more likely to be fined rather than lose points unless they hugely go beyond the PSR limits.

The Premier League is adamant – and is believed to be supported by the majority of clubs – that the threat of points deductions is necessary otherwise owners could decide to overspend recklessly and take the hit of a fine. Removing sporting sanctions is therefore not set to happen and would be counter-productive.

So far Nottingham Forest have been deducted four points for a PSR breach and Everton have lost six points – after that was reduced from 10 on appeal – but are waiting to hear within the next few days if they face a second punishment.

There is undoubtedly discontent among the clubs at the current rules and changes are expected to be implemented at the Premier League’s annual meeting in June with discussion papers being circulated.

This has already been signalled by chief executive Richard Masters while following the shareholders’ meeting in February – at which, once again, there was a failure to agree a settlement with the EFL – it was announced that the clubs “agreed to prioritise the swift development and implementation of a new League-wide financial system”.

What appears likely to be introduced is a new financial sanction – a so-called “luxury tax” – which is similar to a system used in some American sports such as basketball and baseball where teams are punished for breaking the salary cap.

It means that Premier League clubs guilty of a minor PSR breach – and it being ‘minor’ is crucial – would be fined with that money then distributed among the clubs who stay within the rules.

The cash could also be used towards an eventual EFL settlement or an emergency fund. That would help appease Premier League clubs who argue the deal currently being demanded might eat into their loss allowance.

Any new system would “shadow” the current one next season and – if deemed to be working – would then be implemented in the following campaign.

The Premier League are also looking at increasing the current allowed losses of £105 million, over three years, to cover inflation.