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Premier League spending cap explained as clubs agree to scrap controversial PSR

Premier League spending cap explained as clubs agree to scrap controversial PSR
Premier League spending cap explained as clubs agree to scrap controversial PSR

Premier League clubs have agreed ‘in principle’ to implement a spending cap from next year onwards.

The new rules, which would come into effect from the 2025/26 season, will replace the current Profit and Sustainability Rules (PSR), which saw Everton and Nottingham Forest receive points deductions.

The proposed spending still has to be approved in a final vote, but with only three clubs – Aston Villa, Man City and Man United – voting against, and Chelsea abstaining, it would appear likely that will happen later this year.

But what is a spending cap exactly? How will it be implemented? And what will clubs be able to spend on transfers and wages?

What are the new Premier League spending cap rules?

The spending cap aims to anchor each club’s maximum amount of expenditure to a multiple of the league’s lowest-earner from TV revenue and prize money.

It will be implemented alongside another new rule, which will see clubs not in Europe capped at spending 85 percent of their revenue on squad costs, while those in Europe will be limited to 70 percent (as per Uefa’s new spending rules).

This limit alone would still allow the biggest clubs to far outspend their poorer rivals, hence why the anchor is also being introduced.

 

It is suggested that clubs will be allowed to spend up to five times the amount the bottom club earns. Currently, the bottom club gets £103.6m, so clubs would be permitted to spend up to £518m.

The details still have to be ironed out, but had these rules been in place for this season, Chelsea would have broken the threshold having spent £539m on their squad.

This proposal could allow for greater parity across the Premier League, as the more money the last-placed club earns the more money every other club can spend.

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Why does the Premier League want to introduce a spending cap?

The current PSR model is both controversial and unpopular following points deductions to Everton and Nottingham Forest, while other clubs are also at risk of being docked points in the future.

PSR allows clubs to lose £105m over three years, but it is not considered fit for purpose, which is why clubs are keen to implement a change to the rules.

There is also a feeling that the independent commissions and appeals that happen in season are a major distraction, lead to uncertainty and affect the integrity of the Premier League, particularly given these processes can continue beyond the final day of the campaign.

 

When will they be implemented?

PSR will still be in place for next season. If 14 clubs agree to the spending cap, it will come into force from the 2025/26 season onwards.

Premier League executives will now work on the proposal and draw up a legal framework which will be presented at the AGM in June. That is when the final vote will take place.

Read – Major question marks hang over Liverpool heading into the future

See Also – The Premier League clubs who survived with the fewest points

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