Premier League clubs agree squad spending cap ‘in principle’

Premier League clubs agree squad spending cap 'in principle'

Premier League clubs have agreed in principle to a form of cap on squad spending ahead of regulations being formulated, Sky News understands.

Clubs still have to agree whether to introduce the rules that would anchor the maximum spending to a multiple of the league’s lowest-earner from TV revenue and prize money.

After a meeting in central London on Monday, Sky News was told three clubs voted against the plan – current champions Manchester City, Manchester United and Aston Villa. It is understood Chelsea abstained.

But the plans could now advance to the league’s annual general meeting in June that could lead to the spending cap being introduced.

One option floated is capping spending linked to transfers and salaries to five times that of the lowest-earning club.

Chelsea owner Todd Boehly. File pic: PA

Last season Southampton banked £103.6m in prize money and broadcast cash from the league. So the maximum a club could theoretically then spend would be £518m.

Chelsea might have breached that last season if the rules were in place but it is unclear which precise aspects of club spending would be factored in.

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A Professional Footballers’ Association (PFA) spokesperson said: “We will obviously wait to see further details of these specific proposals, but we have always been clear that we would oppose any measure that would place a ‘hard’ cap on player wages.

A new approach with a dual purpose

Rob Harris

Rob Harris

Sports correspondent


The new squad cost controls and anchoring rules are aimed at promoting financial sustainability and preventing unrestricted spending by the richest owners.

That is why two interlinked mechanisms are required.

Only 70% of revenue will be allowed to be spent on transfers, salaries and agent fees by clubs playing in European competitions – aligned to UEFA’s looming new formula replacing FFP. The cap rises to 85% for those clubs who don’t qualify for Europe.

These controls would still allow lavish spending by clubs able to generate the most cash.

So that is why the Premier League plans an anchoring formula – pending full approval by the majority of clubs.

So the maximum a club could spend would be tied to the earnings in TV revenue and prize money from the bottom-placed team.

Ratios of four-point-five and five have been floated.

So if the worst-performing team earned £100m from the league, the maximum that could then be spent is £450m or £500m based on the anchoring.

Does it impede ambition? Certainly for clubs like Saudi-owned Newcastle trying to gatecrash the elite but they are not understood to have opposed the anchoring plan presented in a meeting on Monday.

But there are owners who would welcome being able to tell fans their transfer ambitions are restricted under the threat of sanctions.

And these are rules trying to address spiralling wage bills and vast transfer fees.

But the Premier League needs to ensure European leagues with laxer regulations do not gain an advantage in being able to sign the top talent.

“There is an established process in place to ensure that proposals like this, which would directly impact our members, have to be properly consulted on.”

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The form of salary cap is linked to new cost controls – eventually replacing profit and sustainability rules that led to points deductions for Everton and Nottingham Forest this season over the scale of their losses.

Clubs had previously backed aligning with new UEFA rules that will see clubs participating in European competitions only allowed to spend 70% of revenue on transfer fees, player wages and agent fees.

The limit would be set at 85% for clubs not playing in the Champions League or Europa competitions.