Explained: What is the Premier League spending cap?

Premier League clubs have voted in favour of introducing a cap to help curb reckless reckless spending, from the 2025/26 season.

Manchester United, Manchester City, and Aston Villa were the only clubs to vote against the new measures, while Chelsea abstained.

The new rules will replace the current PSR system, which has led to Everton and Nottingham Forest being deducted points this season, with other clubs reportedly in the firing line.

Of course, it’s not quite as simple as giving clubs a set amount of money to spend each year. Thankfully, GetFootball has all the answers.

How is this different from PSR?

There’s a widespread acknowledgment that the current Profit and Sustainability Regulations (PSR) aren’t up to par, prompting clubs to push for rule changes.

The crux of the issue lies in the allowance for clubs to incur losses of up to £105 million over a span of three seasons. This could force clubs to sell homegrown players in order to comply.

Instances involving clubs like Everton and Nottingham Forest struggling within these confines have resulted in significant turmoil. This includes scenarios of points deductions, appeals, and disruptions to the league table.

The barrage of independent tribunals and appeals has proved to be a distraction.

Premier League clubs have now united, voicing the urgent need for updated regulations. While the PSR rules will remain in effect for the upcoming season, the implementation of these new financial regulations is slated for the subsequent season.

How much can clubs actually spend?

Nothing is settled just yet, but essentially, if a club isn’t playing in Europe, they would be allowed to spend 85% of their revenue on the club. Clubs playing on the continent would only be able to spend 70%.

This includes transfer fees, wages, agent fees, and amortised transfer fees.

Many have observed a fundamental flaw in the system: if a wealthy club is limited to spending only 85 percent of its revenue on the squad, it still retains a significant advantage over poorer clubs.

This perpetuates a cycle where affluent clubs consistently outspend their poorer counterparts when it comes to squad investment.

That’s where ‘anchoring’ comes in.

What is ‘anchoring’?

Simply put, this idea says that all clubs would be restricted to spending a maximum amount based on a multiple of the TV revenue earned by the lowest-earning club.

Presently, the bottom club receives £103.6 million. If, as discussed, the agreed multiple is set at 4.5, then the calculation would be £103.6 million multiplied by 4.5, resulting in £466 million.

Therefore, £466 million would serve as the spending ceiling in this scenario. This cap would encompass expenditures on wages, amortized transfer fees, and agent fees.

However, the specifics are still subject to refinement, meaning the multiple may not necessarily remain at 4.5.

Will these rules be implemented?

This wasn’t the final vote, and things will likely change before new spending rules are implemented.

Premier League executives, empowered by clubs to further develop these proposals, will proceed to draft and update the legal rulebook.

This revised version will be presented at the Premier League Annual General Meeting (AGM) next month, and a final vote will be had.

It appears highly probable that the ‘anchoring’ rules and spending cap will be implemented from the season following next.

This inclination was reinforced during an informal vote on Monday, where only three clubs dissented against the spending cap: Manchester United, Manchester City, and Aston Villa. Chelsea chose to abstain from voting.

Who would benefit?

Clubs with lower wage bills who sign players on the cheap before selling them on for huge profits would be the big winners.

Brighton, Brentford, and Bournemouth, clubs that are widely regarded as ‘well-run’ would be able to continue to grow under the new proposition.

Get Football | Alex Roberts

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