Premier League Clubs Divided Over Proposed Salary Cap
Premier League clubs are currently split on the potential introduction of a controversial new 'salary cap' ahead of next month's vote on financial regulations, according to BBC Sport.
The proposed 'top-to-bottom anchoring' (TBA) model aims to limit the amount each club can spend on player wages, agent fees, and transfer costs to five times the income generated from broadcasting and prize money by the lowest-ranked club in the Premier League.
This model would impose a spending cap on clubs, irrespective of their own income levels.
The TBA concept is being trialed alongside a 'squad cost ratio' (SCR) system, which permits clubs to allocate a percentage of their total revenues to squad-related expenses.
A meeting on November 21 will see Premier League clubs vote on whether to adopt either or both of these models to replace the current Profit and Sustainability Rules (PSR), which allow for losses of up to £105 million over a three-year reporting period.
Currently, nine of the 20 Premier League clubs must comply with UEFA's SCR regulations due to their qualification for European competitions, prompting some to advocate for regulatory alignment.
To promote sustainability, UEFA allows participants in its competitions to spend up to 70% of their revenues on their squads, while the Premier League has indicated it would permit a more generous limit of 85%.
However, several Premier League clubs have indicated they would only support the implementation of SCR if it was paired with the anchoring model, ensuring that clubs with higher revenues do not gain an unfair advantage and that competitive balance is maintained.
This perspective has been reinforced by the increased revenues generated from expanded European club competitions and the Club World Cup.
Last year, 16 clubs supported the detailed analysis of the TBA model, with only Manchester United, Manchester City, and Aston Villa opposing it. These clubs expressed concerns that being tethered to the revenue of the league's bottom club could disadvantage them compared to European rivals, who are only required to follow SCR rules.
Sir Jim Ratcliffe, co-owner of Manchester United, argued that anchoring would hinder the top clubs' ability to compete with major European teams such as Real Madrid, Barcelona, Bayern Munich, and Paris Saint-Germain, stating, "the last thing you want is for the top clubs in the Premier League not to be able to compete. That’s absurd."
In the 2023-24 season, Sheffield United, the bottom-placed team, earned approximately £110 million. Consequently, under TBA, no top-flight club would have been able to spend more than £550 million on player wages, amortized transfer fees, and agent fees.
In contrast, a European club generating £1 billion in revenue could spend £700 million while still complying with UEFA's SCR regulations.
For context, Manchester City spent £413 million on wages last year, with total revenue of £715 million.
As the meeting approaches, the Premier League has circulated proposals among its clubs, reportedly including a provision for points deductions for those breaching anchoring rules. Everton and Nottingham Forest faced points deductions in 2023 and 2024 for violating PSR.
In February, the Professional Footballers' Association (PFA) raised concerns about the potential impact of anchoring on player contracts, which the Premier League characterized as "legal demands." The league stated that the players' union had been given numerous opportunities to provide feedback. The PFA remains opposed to TBA and has retained barrister Nick de Marco in anticipation of possible legal action.
In 2021, an independent arbitration panel upheld the PFA's claim that a proposed salary cap by the EFL for League One and League Two was "unlawful and unenforceable."