https://theathletic.com/5441916/2024/04/24/premier-league-salary-spending-cap?source=user-shared-article
The Premier League is heading towards another contentious vote on Monday with a majority of clubs keen to add a hard spending cap to the new “squad cost” rules that are being introduced for the 2025-26 season.
Based on the concept of “anchoring”, the de facto salary cap would limit the amount of money any club can invest in their squads by tying it to a multiple of what the lowest earners get from the league’s centralised broadcast and commercial deals.
Earlier this month, the clubs unanimously backed a proposal to progress talks on the squad cost regime, with a view to finalising the new rules at June’s annual general meeting. Since then, the league has sent out proposals on anchoring and scheduled a meeting on the matter for Thursday.
The plan is then to ask the clubs to back the idea in principle at another meeting of the league’s shareholders — the 20 clubs and the Football Association — on Monday.
When the idea was first suggested last year, the top-to-bottom multiple its backers had in mind was 4.5 but, with several clubs strongly opposed to the cap, the league is now suggesting a looser multiple of five.
The hope is that the cap will operate as a backstop to the more fluid squad cost rule, which ties the amount clubs can spend to their own revenues, and raising the multiple should placate the idea’s biggest critics.
However, Chelsea, Manchester City and Manchester United have already expressed their concerns about the idea, pointing out it is potentially a breach of UK competition law.
What will it look like?
If anchoring was in effect last season, the cap would have been £518million, five times the £103.6m that Southampton, who finished 20th, earned in centralised revenues, with Chelsea spending more than that on wages, amortised transfer fees and payments to agents, with Manchester City not far behind.
Unsurprisingly, the idea is far more popular with clubs further down the revenue table. They see it as a way to stop the league’s biggest earners from being able to outspend them at an ever-expanding rate. Without it, they fear the league’s already fragile competitive balance would be further eroded.
The move could be viewed as a boost for other leagues looking to close the gap on the Premier League, although rivals such as La Liga in Spain already employ their own bespoke spending cap regime.
This model though is the first tying a club’s spending to another club’s revenue with other iterations of financial fair play (FFP) rules based on a club’s own revenue.
For example, when the English Football League tried to apply a soft salary cap in the Championship at the start of the pandemic, the PFA successfully blocked it.
However, that was because the EFL had failed to properly consult with the union before proposing the cap. For anchoring — or the squad cost rule, for that matter — to have any chance of being introduced, the league knows it must be approved by the Professional Football Negotiating and Consultative Committee, the body that brings the union, the EFL, FA and Premier League together to discuss matters relating to the employment of players.
All that is for the future, though, as the first hurdle that anchoring must clear is finding sufficient support within the Premier League, where a two-thirds (14-6) majority of the clubs is needed to change the rulebook.
The recent rows over the league’s financial distribution offer to the rest of the pyramid and its rules on associated-party transactions have shown how hard it can be to clear that hurdle, with the 20 clubs less united on a whole range of issues than at any time in the last 30 years.For example, when the English Football League tried to apply a soft salary cap in the Championship at the start of the pandemic, the PFA successfully blocked it.
However, that was because the EFL had failed to properly consult with the union before proposing the cap. For anchoring — or the squad cost rule, for that matter — to have any chance of being introduced, the league knows it must be approved by the Professional Football Negotiating and Consultative Committee, the body that brings the union, the EFL, FA and Premier League together to discuss matters relating to the employment of players.
All that is for the future, though, as the first hurdle that anchoring must clear is finding sufficient support within the Premier League, where a two-thirds (14-6) majority of the clubs is needed to change the rulebook.
The recent rows over the league’s financial distribution offer to the rest of the pyramid and its rules on associated-party transactions have shown how hard it can be to clear that hurdle, with the 20 clubs less united on a whole range of issues than at any time in the last 30 years.
