Explained: How will the Premier League’s new squad cost rules work?

As per Sky Sports, Premier league clubs have unanimously agreed in principle to introduce new financial fair play regulations from the 2024/25 season.

This agreement – which took place at a meeting in London between the clubs – comes after the league had agreed last March to “prioritise the swift development and implementation of a new league-wide financial system”, which would “provide certainty for clubs in relation to their future financial plans”.

Furthermore, as this is just an agreement in principle, the new regime will still have to be officially voted in by clubs at the Premier League’s annual general meeting in June.

The potential new system is set to be similar to that of UEFA’s ‘squad cost control’ rule, and will initially be introduced to shadow the Premier League’s current profit and sustainability rules (PSR) as part of a transition period. The PSR rules would then be scrapped and replaced with the new system from the 2025/26 season onwards.

The current PSR rules are assessed over a three-season period, and determine that a club cannot exceed losses of £105 million over said period, with allowances made for spending on women’s football, youth development, and infrastructure.

As for the new system, this will be assessed over just one season and would limit each club’s spending on first-team wages, coaching staff, and amortised costs of transfer fees and agents fees to 85% of a their annual income.

As mentioned, this is much like UEFA’s squad cost rule. Introduced in 2022, this restricts a club’s spending on player wages, transfer and agent fees up to 70 per cent of their revenue. This 70 per cent limit will officially be adhered to next season, having been set at 90 per cent in the 2022/23 season and 80 in 2023/24 as part of a gradual implementation process.

Consequently, if the Premier League’s proposed new rules were to be fully ratified, this would see club’s not competing in UEFA competitions able to spend a higher portion of their revenue than those clubs who are competing in said competitions.

However, it must be noted that those UEFA competing clubs will also have a higher income due to additional prize money, broadcast, and matchday revenues received through European competitions.

Finally, points deductions will remain as potential sanctions for clubs in breach of the new rules – as has been the case for Everton and Nottingham Forest when breaching the current PSR regulations.

Travis Levison | Get Football

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