Premier League clubs have agreed a deal in principle to cap squad spending – with new regulations setting limits based on the television revenue earned by the league’s worst-performing club.
According to Sky News, clubs have agreed to form a cap on expenditure. However rules anchoring spending to a multiple of the lowest club’s earnings are yet to be agreed on.
One of the options being discussed is capping spending to five times what the lowest-earning club rakes in from broadcast revenue and prize money.
Based on last season’s figures, in which Southampton took home £103.6-million, the maximum spend would sit at £518-million (± R10-billion).
The model could be presented to clubs at the league’s annual general meeting in June; and if voted through, we could see a change in the profit and sustainability rules from the 2025/26 season onwards.
Manchester City, Manchester United and Aston Villa repeatedly voted against a spending cap while Chelsea abstained from voting.
The current rules permit clubs to lose £105-million (± R1.1-billion) over a three-season period.
According to football finance expert Adam Davis, the new proposal will allow clubs like Nottingham Forest and Newcastle United to spend more in order to be competitive.
“The spend cap will be a hard multiple, and the rumoured amount is five times that amount, which would basically mean a spend cap of approximately £500-million,” Davis said according to the BBC.
“From a good perspective, that will open up the likes of Aston Villa and Newcastle to spend more than what they currently have because under the current regulations it is tied to their own revenues.
“It would also mean under a new regulation, teams like Nottingham Forest could spend what they want to spend, or claim they need to spend, to stay competitive.”
Davis adds that it could also push some sides to breaking point, though.
“A potential negative is that spending will increase in the Premier League to potentially unsustainable levels.”
“The danger is that by saying you are able to spend more, it could be interpreted as you must spend more to remain competitive. We could potentially see more and more clubs pushing to breaking point.”
Pictured above: Manchester City.
Image source: @syed_sumair1
