Premier League clubs have agreed to introduce new financial controls in time for the 2025-2026 season that will limit the percentage of revenue that can be spent on wages and fees – in place of the current profit and sustainability rules (PSR).
The 20 clubs voted unanimously to introduce “squad cost controls”, which will place an 85 percent cap on the annual revenue that can be spent on player costs, including transfer fees, wages and agent fees. The current PSR system has seen point deductions to Everton It is Nottingham Forest this season – and PSR violations are part of the set of charges against Manchester City It is also Leicester City.
The PSR system will continue to operate next season in the Premier League in order to give clubs the opportunity to adapt their business models to meet the new requirements. The team’s cost controls will be implemented as a shadow model before taking effect exclusively for the 2025-2026 season.
The PSR system currently monitors finances over a three-year period, and no club can exceed £105 million of allowable losses over that period. Everton successfully argued mitigation in its most recent breach of the PSR, claiming it was being punished twice for the same losses. They had already been sanctioned for losses in two of the three years that constituted the monitoring period that was the subject of the second PSR violation.
New rules will inform EFL deal
The new squadron cost controls are expected to provide greater clarity and quicker enforcement of any sanctions. It also aligns the Premier League with UEFA, which is moving to a similar model, albeit with a much lower threshold of 70 percent of revenue spent on wages and fees. Given the differences in core revenue figures between the Premier League’s biggest and smallest clubs, it was considered unrealistic to expect smaller clubs to remain competitive by spending just 70 percent of turnover.
The biggest clubs also benefit from greater sources of income through participation in UEFA competitions.
The two votes that approved the principle of squad cost controls as well as the transition period are likely to lead to a vote on the details of the new system in the handbook at the Premier League General Assembly in June. With squad cost controls in place, clubs should now be able to move towards the long-awaited “New Deal” agreement with the Football League (EFL), which is at the heart of the proposed new consensus in English football.
Premier League clubs made it clear they would not agree to any New Deal offer with the Championship – which will receive 75 per cent of the payment – unless there were clear rules about how the money could be spent in both the top flight and the EFL. Last month, clubs refused to vote on a New Deal offer to EFL chairman Rick Parry and his members, estimated to be worth around £880 million, until new financial controls were implemented.
The Premier League remains concerned that whatever deal may be agreed, Parry will lobby the new government-backed independent regulator for a greater share of the Premier League’s revenue.
