Premier League clubs unanimously agreed in principle to introduce new Financial Fair Play rules from next season at a meeting in London on Thursday.
Profitability and Sustainability Rules (PSR) which have capped the amount clubs can spend over the past decade are set to be scrapped from the start of the 2025-26 season and replaced with a ‘cost control’ rule. teams” similar to that of UEFA. adopted in 2022.
The new system, which still needs to be fully ratified at the Premier League’s annual general meeting (AGM) in June, will operate as a shadow of the existing PSR regime next season.
There were actually two votes at Thursday’s shareholders’ meeting. The first, which received unanimous support, was to progress discussions on the finer details of the Premier League team cost rules, with a view to adding the new regime to the regulations this summer. The second, supported by a strong majority, concerned how the new regulations would be gradually implemented.
Under the proposed new regime, clubs will only be allowed to spend a set percentage of their annual turnover on the payroll of the first team and its coaching staff, plus the amortized costs of their compensation. transfer and all agent fees.
The major difference, however, between the Premier League and UEFA regulations will be that they will operate a two-tier system, with clubs playing in European competitions only able to spend 70 per cent of their turnover. business, while clubs not participating in European competitions will be able to spend 70 percent of their turnover. spend 85 percent.
Contrary to recent reports, clubs that break Premier League rules will still be subject to points deductions.
Current PSR guidelines – which allow clubs to lose a maximum of £105million over a rolling three-year accounting cycle – have seen Everton hit twice with points deductions this season, with Nottingham Forest also penalized.
However, some clubs still wish to explore the possibility of introducing financial sanctions, instead of points deductions, for minor violations of the squad cost rule.
Some clubs have suggested it could function as an American-style luxury tax, while others have preferred to speak of a “buffer zone” for less serious cases that do not merit a points deduction.
This, among several other discussions over the finer details of the new rules, will be resolved at the league’s two-day AGM in Harrogate, with a final vote on the matter scheduled for June 5.
There has still been no discussion about increasing the current PSR threshold of £105m, with some clubs believing the figure, set ten years ago, should be increased to reflect rising wages and salaries. transfer fees.
What is the UEFA “team cost control” rule?
UEFA approved the team cost ratio rule at an executive committee meeting in April 2022 as part of its new financial viability and club licensing regulations, which also cover “solvency” and stability “.
It replaces UEFA’s previous Financial Fair Play (FFP) system, which allowed clubs to suffer losses of up to €30 million over a three-year accounting period.
The team cost rule limits a club’s spending on player and coach salaries, transfers and agent fees to 70 percent of their revenue.
UEFA spreads its rules over three seasons, with clubs participating in its competitions allowed to spend 90 percent of their turnover on their teams this season, 80 percent next season and 70 percent in 2025-26. when the new Premier League rules are also expected to come into full force.
What are UEFA’s sanctions in the event of financial misconduct?
UEFA regulations state that failure to comply with the squad cost ratio will result in a financial penalty for clubs – unless it is a “significant” breach.
The extent of the financial sanction is decided based on the extent of the breach and the number of breaches of the new rules over the last three seasons.
A “significant” violation, according to UEFA, comes in three forms:
- A club’s ratio is 20 percent above the threshold
- A club’s ratio is 10% above the threshold and has exceeded the limit in one of the last three seasons.
- A club’s ratio is any amount over the threshold that has exceeded the limit in two of the last three seasons.
In this case, UEFA states that “additional disciplinary measures” may be applied in addition to the financial sanction.
Under previous FFP rules, UEFA could, and did, sanction clubs in various ways, depending on the seriousness of the infraction.
What has the Premier League already said about its financial rules?
Following a general meeting of shareholders on March 11, the Premier League released a statement saying its clubs had “agreed to prioritize the rapid development and implementation of a new financial system at the league-wide,” without disclosing further details.
He added that this new system would “provide certainty to clubs regarding their future financial plans”.
The Premier League also said clubs had “reconfirmed their commitment to entering into a sustainable financial agreement with the EFL”, although this itself remains subject to this new financial system.
(James Gill – Danehouse/Getty Images)