Premier League Implements New Financial Regulations for 2024 Season

On Friday, Premier League clubs voted to revamp the league’s financial regulations, effective from the start of the next season. Notably, they dismissed the contentious proposal for ‘anchoring.’

The current Profitability and Sustainability Rules (PSR) will be replaced by the Squad-Cost Rules (SCR), which will cap clubs’ spending at 85% of their football revenue, alongside the net profit or loss from transfers.

In a statement, the Premier League articulated, “A multi-year allowance of an extra 30% will incur a levy, and once the allowance is exhausted, clubs must comply with the 85% rule or face sporting sanctions.”

This transition to SCR aligns the Premier League more closely with UEFA, which mandates that clubs participating in its competitions limit their spending to 70% of their revenue on football-related costs.

Additionally, clubs have endorsed new Sustainability and Systematic Resilience (SSR) proposals, aimed at evaluating a club’s financial health over short, medium, and long-term periods through the implementation of three assessments: the Working Capital Test, the Liquidity Test, and the Positive Equity Test.

Sources indicate that the SSR proposal received unanimous support, while only seven clubs backed the more radical ‘top-to-bottom anchoring’ (TBA) plan. This proposal would have restricted any club from spending more than five times the revenue earned by the bottom club in the league from centralized payments, which include prize money and television fees.

The Premier League stated, “The new SCR rules are designed to create opportunities for all clubs to strive for greater success, aligning the league’s financial framework with UEFA’s existing SCR rules, which operate at a threshold of 70%.”

Key features of the new system include transparent in-season monitoring and penalties, safeguards against sporting underperformance, the ability to invest ahead of revenues, enhanced off-pitch investment opportunities, and a simplification of the regulations by concentrating on football-related costs.

These votes mark the conclusion of two years of consultations, which included trialing both SCR and TBA during the previous season and the current one. This shadow monitoring aimed to assist clubs in understanding compliance with potential changes. The SCR supersedes the PSR, which had previously allowed a maximum loss of £105 million ($137.2 million) over a rolling three-year period.

The decision to reject the anchoring proposal has garnered significant attention, as its supporters believed it would enhance the competitive balance within the league. However, the Professional Footballers Association raised concerns that any spending cap might negatively impact player wages. There were also apprehensions expressed regarding top English clubs’ ability to compete for the world’s elite talent in the transfer market if a strict spending cap were imposed.

Three prominent sports agencies—CAA Stellar, CAA Base, and Wasserman—had signaled the possibility of legal action, contending that the introduction of TBA would violate section two of the UK’s Competition Act. By linking spending limits to revenue rather than a fixed amount based on centralized contracts, clubs are afforded greater flexibility.