Premier League clubs vote in 'salary cap'… so how does it work? – Daily Mail
By Adam Shergold
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Premier League clubs have agreed in principle to a proposed ‘salary cap’ designed to stop the super-rich dominating everyone else.
Amid concerns over the widening gulf between the financial ‘haves’ and ‘have nots’ in England’s top flight, plans to introduce controls on squad costs and maintain competitive balance have been voted on.
In a new referendum, three clubs voted against the proposals to 16, with one side abstaining their vote in London on Monday.
It is the first time ever a cap would be introduced to the Premier League, and the vote will now go to an Annual General Meeting (AGM) before it is potentially passed.
But how would they work, who is opposed to the idea and would it make much difference? Mail Sport has everything you need to know here.
The Premier League – won last season by Manchester City – wants to introduce a ‘salary cap’ to maintain competitive balance, with a key vote on the proposals scheduled for Monday
The Premier League’s global popularity is based on the belief that anybody can beat anybody
What are the concerns driving all this?
Fundamentally, a worry that the Premier League isn’t very competitive and can only be won by a handful of wealthy and well-resourced clubs with the rest making up the numbers.
We’ve seen Manchester City win three consecutive titles having spent large sums on star players, while Chelsea splashed out over £1billion on new signings after Todd Boehly bought them.
For the Premier League to maintain its huge appeal all over the world, matches need to be competitive with a feeling anyone can beat anyone.
Hence the proposals for the league’s first fixed cap on spending.
How would it all work?
The principle is based on ‘anchoring’ and would limit the amount of money any club can invest in their squad.
It would be tied to a multiple of what the lowest earners receive from the Premier League’s centralised broadcast and commercial deals.
Todd Boehly has spent over £1billion on new players since buying Chelsea in 2022
Everton have been hit by two points deductions this season under the league’s PSR rules
When the idea was first suggested last year, the proposed multiple was a factor of 4.5 from that figure.
But following opposition from several clubs, a looser multiple of five has now been suggested though that is set to be decided at June’s AGM meeting.
What type of sums are we talking then?
Based on last season, the key figure would be the £103.6million that Southampton – the bottom club – earned from TV and commercial revenues.
That would then be multiplied by whatever amount is agreed on and everyone else would have to keep their wages, amortised transfer fees and payments to agents below that figure.
If working on a factor of five, the cap would be £518m.
Chelsea had an estimated squad cost of £539m last season, putting them above this cap. Man City, on about £501m, would just sneak underneath.
Chelsea would have to keep a tight rein on their spending if the new restrictions came in
The other clubs would have a little more wriggle room but the key would be the multiple decided upon.
A factor of 4.5, as football finance expert Kieran Maguire points out, would see Chelsea and City needing to reduce their squad spending and others keeping a very watchful eye.
There also remains a debate over which figure to use as the base – should it be total TV income or just the domestic deal? All this needs to be thrashed out yet.
Much talk about new financial control measures based on total spend on player wages, amortisation & agent fees being a multiple of the broadcast revenue for the lowest TV earner in PL. If multiple is 4.5x then only 2 clubs would have to reduce spending & others *can* spend more pic.twitter.com/wIdqcVoV8j
If the multiple is 5X broadcast revenue then only Chelsea would have to cut spending pic.twitter.com/800ntZdYHh
How does this relate to the Profitability and Sustainability Rules [PSR] we hear so much about?
Yes, those words which strike fear into fans of Everton, Nottingham Forest and others.
Well actually, for all the points deductions imposed, PSR will become a thing of the past from the 2025-26 season with a squad cost control introduced.
Manchester United’s new part-owner Sir Jim Ratcliffe is reportedly against the proposals, fearing English clubs will fall behind their European rivals
Clubs will be limited to spending 85 per cent of their total revenue on wages, transfer payments and agents’ fees.
So essentially this ‘anchoring’ will just be a backstop to those new rules, fixing a ceiling on the spending.
Why now?
One fear is that those English clubs who qualify for the expanded Champions League from next season will earn more money and have too big an advantage over the rest of the division.
This would be a cumulative process if the same clubs keep qualifying for Europe’s top competition.
It also reflects concerns over state-owned clubs present and future with their bigger financial muscles than everybody else.
What happens if a club breaks the salary cap?
PSR has been shown to have some teeth with the points deductions but looks like being short-lived.
But as Mail Sport revealed, one proposal is for a ‘luxury tax’ which would see clubs fined should they spend more than permitted rather than having points taken away.
However, it is thought the ‘ultimate sanction’ of a points deduction would remain as a deterrent should anyone show a blatant disregard for the new system.
Who opposes it?
Manchester City are expected to oppose the proposals completely and it is understood Manchester United also strongly oppose the cap.
Chelsea have also expressed their concerns with one argument from these big clubs being it is potentially a breach of UK competition law.
Clubs have agreed to sign up to new protocols to replace the existing, controversial Profit and Sustainability Rules (pictured Premier League CEO Richard Masters during Man City’s 2022-23 trophy ceremony)
The Times suggest Ineos and Sir Jim Ratcliffe, new part-owners of United, are concerned that the salary cap would put Premier League clubs at a disadvantage compared to European rivals.
Spain’s LaLiga does have its own version of a spending cap.
What will today’s vote mean?
Earlier this month, the clubs unanimously backed a proposal to progress talks on the squad cost rules with a view to finalising them at the June AGM.
Now the Premier league has asked the clubs to back these proposals in principle, with the vote passing by 16 to three, with one abstention.
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