Premier League's Explosive Salary Cap Rules Spark Fierce Industry Backlash
Friday represents a pivotal moment in contemporary Premier League history as teams get ready to cast their votes on fresh financial regulations.
The existing profit and sustainability rules (PSR) would be eliminated in favor of a new framework that could significantly influence the Premier League both immediately and over the long haul.
These new regulations have already sparked considerable debate ahead of Friday's voting session, with numerous parties firmly resisting the proposed implementation of modifications, though Premier League teams remain split in their perspectives.
Below is an analysis of the Premier League's newly suggested financial regulations.
What Are the Premier League's New Proposed Financial Rules?
Three separate votes will take place on Friday concerning various aspects of financial oversight.
Top-to-Bottom Anchoring
Top-to-bottom anchoring (TBA), commonly known simply as 'anchoring', stands as the most contentious among the suggested regulations. A preliminary vote among Premier League teams in early 2024 approved the testing of this mechanism, which restricts expenditure throughout the league based on the division's lowest-placed team.
Present anchoring suggestions would mean all Premier League clubs could only spend five times the revenue generated from broadcast income and prize money by the team finishing at the bottom of the standings. After the 2024–25 season where Southampton ended last, the anchoring threshold for the current season would have been established at approximately £546 million ($713 million), according to The Athletic.
Nevertheless, with anticipated increases to income from the Premier League's television rights deal, the threshold would likely have climbed to around £600 million.
In simple terms, all 20 Premier League teams would only be permitted to spend a maximum of £600 million on player salaries and transfer fee amortization, including agent costs, irrespective of their individual earnings. This is why anchoring has been called a 'salary cap'.
It would represent a major shift from PSR regulations where clubs were only required to restrict their losses to a maximum of £105 million across a three-year span.
Squad-Cost Rules
Squad-cost rules (SCR) are already employed by UEFA for teams competing in their tournaments, restricting the expenditure clubs can make on wages for players and coaches, related amortization expenses and agent fees.
The threshold depends on a club's earnings, with current UEFA SCR regulations permitting 70 percent of income generated through revenue and player sale profits (across a three-year period) to be spent. However, the Premier League's SCR regulations would be more lenient, permitting clubs to spend 85 percent of their income.
Sustainability and System Resilience
Sustainability and system resilience (SSR) focuses on guaranteeing clubs can fulfill their financial obligations in both the short and long-term.
It comprises three assessments, one of which centers on ensuring financial viability for clubs during a single season. The remaining assessments aim to evaluate the financial health of clubs over an extended timeframe and ensure they possess adequate funds to meet future regulatory requirements.
How Would Premier League Changes Affect Clubs?
Anchoring would not create a substantial impact on clubs in their current state. Based on The Athletic's analysis, using the theoretical cap of roughly £600 million for 2025–26, only four clubs exceed that figure in revenue, meaning the remainder would be unaffected by TBA given the potential introduction of SCR regulations.
While the threshold is subject to change in upcoming seasons, most Premier League clubs fall well short of being able to spend the £600 million limit which greatly surpasses the 85 percent of revenue clubs would be permitted to spend if SCR rules are approved.
The teams facing the greatest challenges if TBA and SCR regulations are implemented are the traditional 'Big Six'—Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur. However, worries would focus on future complications rather than immediate cost-cutting requirements.
Those spending a large percentage of their revenue on player wages and amortization expenses will also be concerned about SCR rule implementation. These teams include clubs like Aston Villa, Newcastle United, Everton and Bournemouth.
Why Are the Premier League's Proposed Rules So Controversial?
There has been fierce resistance to a 'salary cap' from the Professional Footballers' Association (PFA) and player representatives.
The PFA's chief executive has already warned of legal action against the Premier League should the new regulations take effect, calling legal confrontations "inevitable". CAA Base, CAA Stellar and Wasserman, three of the largest agencies in English football, have also threatened to take legal action against the Premier League.
The PFA highlighted reductions to player wages and expenses, which will affect members, while arguments also suggest that the Premier League's financial limitations will prevent them from competing with Europe's top clubs—many of which would be capable of offering significantly higher wages and transfer fees.
Not all Premier League clubs share the same viewpoint, with a 14-club majority needed to implement changes. Individual votes will occur on TBA, SCR and SSR, meaning some of the proposed modifications could be adopted while others are dismissed.
The two Manchester teams and Arsenal are known to oppose anchoring, though the latter previously supported the idea. Teams like Liverpool, Everton and Aston Villa are anticipated to support the new framework.
However, until Friday's voting concludes, it remains unclear exactly which direction clubs will ultimately choose.