Written by: Tushar Katheria | Founder & Lead Counsel, Katheria Sports Law Offices-INDIA
On Monday i.e., 29 April 2024, a meeting happened to discuss the salary cap on the player salary with the Premier League football club. In the meeting, the 16 football clubs in the premier league agreed to put a cap on the player’s salaries. The Annual General Meeting will be held in the coming weeks.
But why the stakeholders of the Premier League are looking to implement such regulations during the 2025-26 season onwards? Let us have a look at the article.
Background
The Premier League Profit and Sustainability Rules do hamper the points of the football club in case the football club does violate them by not complying with the finances of the club. In the sense that each club must tread carefully when it comes to striking a balance between revenue and expenses, it determines how much these teams may spend on items like transfers. Such issues do happen with the Everton Football Club and Nottingham Forest Football Club. Due to this, football clubs are not able to sustain their position on the points table and further incurred losses. To curb such issues, the shareholders of the Premier League are looking to introduce new regulations which will replace the Premier League Profit and Sustainability Rules.
The Concept of Anchor and Player Service
Based on the idea of “anchoring,” the new regulations would restrict the amount of money that a single club can invest by multiplying it by the amount that the 20 teams’ lowest-paid players receive from the league’s centralised broadcast deals.
However, it appears that the Premier League has given in even more to those who oppose the idea; as of right now, the cap calculation will only take into account the “player service” portion of an agent fee. This effectively cuts in half the amount that the Football Association (FA) reports as being spent on agents in its yearly public report.
Why now?!
The move might help other leagues trying to catch up to the Premier League, even though competitors like La Liga in Spain already have their unique spending cap system in place. However, with other versions of financial fair play (FFP) rules based on a club’s revenue, this model is the first to link a club’s spending to another club’s revenue.
Meeting on 29 April 2024
The representatives of all the 20 football clubs of the premier league were presented at the meeting to decide whether the capping of player’s salaries needed to be done or not. Out of 20, 16 clubs voted in favour, whereas clubs like Manchester City, Manchester United, and Aston Villa voted against this proposal. The Chelsea Football Clubs where put their vote for abstention.
Manchester United FC is not in favour of this proposal as it will hamper their recent acquisition done by Sir Jim Ratcliff with his INEOS Group. Further, the reason they gave was that such a proposal in future would have a detrimental effect on the premier league’s level of competition.
Aston Villa has been owned by V Sports, who are also running in a multi-club ownership model, also owning a football club based in Senegal, Portugal, and Spain. They recently pumped more investment into Aston Villa for their project as they are ambitious to be challenged for the Premier League title in the next three years.
There has not been any statement given by Manchester City as the club is already looking to fill up the key-managerial positions such as CEO of the City Football Group due to the resignation of Omar Berreda, who joined Manchester United FC in February.
Chelsea FC was recently been acquired by Todd Boehly in 2022 and they spent squad cost [first team wage bill, amortised transfer fees, and agents payment] almost GBP 539 million in 2022-23 season. The owners recently sold their 2 hotels to profits in their books of accounts as they failed to qualify for the premier league in the last two years and generate revenue for the club.
What will be next?
The next Annual General Meeting will be in June 2024 to put this proposal in motion in front of the shareholders of the Premier League before the final voting. Further, the proposal needs to get approved by the Professional Football Negotiating and Consultative Committee, the body that brings the union, the Football Association, the English Football League and the Premier League together to discuss matters relating to the employment of players. From 2025 to 2026, it would take the place of the existing Profitability and Sustainability Rules (PSR).
Analysis and Conclusion
Football Clubs that are recently acquired by new owners or owners who pumped more investment into the football clubs are the ones who are against these regulations. The way Javier Tebbas has implemented the same rule in the La Liga, we can see that same thing happening in the premier league. It is hardly strange that teams lower on the income scale find greater favour with this idea. They see it as a means of preventing the league’s highest-paid players from continually outspending them. They worry that in its absence, the already precarious competitive balance of the league would be severely undermined.
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