How Premier League's new FFP rules may affect Chelsea, Newcastle and Aston Villa – inews
Financial fair play, or FFP, has been a key theme of the Premier League this season.
Everton, Nottingham Forest and Manchester City are all currently under investigation for breaching the top flight’s FFP equivalent, profit and sustainability rules (PSR), while the Toffees have already been deducted six points, down from 10 after an appeal.
But it appears these rules, which have been criticised for being unclear and outdated, are now changing.
Here’s everything you need to know about the proposed PSR changes and how it’ll affect some of the clubs currently closest to breaching the original rules.
Let’s start with a recap of the current PSR rules. Among a slew of anti-corruption regulations is the key one teams are at the greatest risk of breaching – that clubs can only lose a maximum of £105m across any three-year period.
Now, it’s not quite that simple – you can deduct “healthy” expenditure like academy and women’s team investment from your losses, so teams can technically lose more than £105m.
But this is the rule Everton have breached and Forest are charged with breaching, while Manchester City’s 115 charges relate more to the anti-corruption regulations.
The latter are unlikely to substantially change, but the £105m limit is set to be scrapped altogether and replaced by a squad cost ratio, in line with Uefa’s financial sustainability rules (FSR), the successor to FFP.
A squad cost ratio is simply calculated – you divide any club’s first-team wage budget, transfer amortisation costs and agents’ fees by its overall revenue
FSR is currently winding down year-on-year to a squad-cost ratio of 70 per cent as the limit, starting with 90 per cent in 2023-24, before decreasing to 80 per cent in 2024-25.
The Premier League are reportedly aiming for a relatively generous 85 per cent squad cost ratio, meaning clubs just need to have their wage budget and amortisation costs below 85 per cent of their revenue.
It’s important to note that while clubs have agreed on a change to the regulations, it is currently unclear whether they will be introduced at the league’s AGM in June.
And any of these changes would not impact the current charges against City, Everton or Nottingham Forest, who will still be tried under the current regulations.
A Premier League statement released on Monday read: “At a Premier League shareholders’ meeting, clubs agreed to prioritise the swift development and implementation of a new league-wide financial system.
“This will provide certainty for clubs in relation to their future financial plans and will ensure the Premier League is able to retain its existing world-leading investment to all levels of the game.
“Alongside this, Premier League clubs also reconfirmed their commitment to securing a sustainably-funded financial agreement with the EFL, subject to the new financial system being formally approved by clubs.
“The league and clubs also reaffirmed their ongoing and longstanding commitment to the wider game which includes £1.6 billion distributed to all levels of football across the current three-year cycle.
“The Premier League’s significant funding contributions cover all EFL clubs and National League clubs, as well as women and girls’ football, and the grassroots of the game.”
There are probably fans of every Premier League club who want to know how changes to PSR will affect their teams, but none so more than Chelsea.
And for once this season, it’s good news for the Blues – Mauricio Pochettino’s side would probably be the biggest winners from this rule change.
As football finance expert Rob Wilson told i last week, Chelsea need to sell over £100m before the end of June to comply with PSR in its current state.
Yet because Chelsea’s revenue was announced at an all-time high of £512.5m in their 2023 accounts, a squad cost ratio would give them a lot more headroom, especially when capped at 85 per cent.
The club have been actively working to reduce their wage budget by buying younger players, who tend to demand lower salaries, which counts as a positive, compared to the £1.12bn they have spent on transfers since BlueCo bought Chelsea in May 2022.
Chelsea would comfortably fall within an 85 per cent squad cost ratio as it stands and would avoid what currently feels like an almost inevitable PSR points deduction.
This isn’t so positive in the short term but could be hugely beneficial for Newcastle United in the long term.
The Magpies’ revenue increased to £250.3m in 2022-23, a significant rise from £180m the season before, but still less than half the size of Chelsea or other “big six” sides’ turnovers.
This means they can still only spend £212.7m on wages, amortisation and agents’ fees, a figure they would currently breach by around £40m, despite their wage budget only being £187m.
These figures should also be concerning if they qualify for European competition next season, where the squad cost ratio figure decreases to 80 per cent next season.
It is believed Newcastle would currently comply with PSR in its old state, but may well be in breach if rules change.
Yet in the long term, if the Saudi-backed club continue to grow their revenue at the rate they have been and follow the model City have, the new PSR should give them much more headway to expand their playing budget and corps.
Much like Newcastle, Aston Villa are an upwardly mobile club at risk of breaching the new regulations.
Villa’s revenue this year increased to £217.7m from £178.4m, similarly to Newcastle, yet their wage costs are higher than the Magpies’ at £194.2m.
As Villa’s amortisation fees are lower than Newcastle’s over the past few years, they would likely breach a squad cost ratio by lower than their northern rivals, but crucially would still breach it by around £35m.
According to modelling by football finance expert Kieran Maguire, Newcastle and Villa are not the only teams at risk of breaching the proposed new PSR rules.
Fulham, Forest, West Ham and Wolverhampton Wanderers would all also be at risk due to their comparatively low revenues and ambitiously expensive squads.
Leeds United would also be at risk if they were to be promoted, especially given they will need to spend once they reach the Premier League.
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