The Premier League is heading towards another contentious vote on Monday with the majority of clubs keen to add a tough spending limit to the new ‘squad cost’ rules being introduced for the 2025-26 season.
Based on the concept of “anchoring,” the salary cap would effectively limit the amount of money each club can invest in its teams by tying it to a multiple of what lower earners get from the league’s centralized broadcast and trade deals.
Earlier this month, clubs unanimously supported a proposal to continue talks on the squad costs regime, with the aim of finalizing the new rules at the annual general meeting in June. Since then, the league has sent out proposals on anchoring and scheduled a meeting on the topic for Thursday.
When the idea was first suggested last year, the top-down multiple its supporters had in mind was 4.5 but, with several clubs strongly opposed to the cap, the league is now suggesting a more flexible multiple of five.
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The hope is that the cap will act as an underpinning for the more fluid team costs rule, which ties the amount clubs can spend to their revenue, and the increased multiple should appease the idea’s biggest critics.
However, Chelsea, Manchester City and Manchester United have already expressed their concerns about the idea, pointing out that it is a potential breach of UK competition law.
What will it look like?
If pegging had been in place last season, the limit would have been £518m, five times the £103.6m that Southampton, who finished 20th, earned in centralized revenue, with the Chelsea spending more than that on wages, amortized transfer fees and payments to agents. , with Manchester City not far behind.
Unsurprisingly, the idea is much more popular with clubs further down the revenue table. They see it as a way to keep the league’s top earners from spending more of their earnings at an ever-expanding rate. Without it, they fear the league’s already fragile competitive balance would be further eroded.
The move could be seen as a boost for other leagues looking to close the gap with the Premier League, although rivals such as La Liga in Spain already employ their own bespoke spending cap regime.
This model, however, is the first that ties one club’s spending to another club’s revenue under other iterations of financial fair play (FFP) rules based on a club’s revenue.
Who will be against it?
The pegging debate will not only be a repeat of the have-versus-have-not disputes that have dogged football for years, but will also involve the stakeholder group perhaps most affected by the proposal: the players.
Any move to cap the amount of money an employer can pay its employees – especially a move not based on the employer’s ability or desire to pay its staff – will always attract the interest of Professional Footballers’ Association (PFA), the players’ union.
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For example, when the English Football League attempted to implement a soft salary cap in the Championship at the start of the pandemic, the PFA successfully blocked it.
However, this was because the EFL had not consulted properly with the union before proposing the cap. For pegging – or the squad cost rule, for that matter – to have any chance of being introduced, the league knows it needs to be approved by the Professional Football Advisory and Negotiating Committee, the union’s umbrella body, the EFL , the FA and the Premier League together to discuss matters relating to player recruitment.
This is all about the future, though, as the first hurdle to overcome is finding sufficient support within the Premier League, where a two-thirds majority (14-6) of clubs is needed to change the rules.
Recent controversies over the league’s financial distribution offer to the rest of the pyramid and its rules on associated party transactions have demonstrated how difficult it can be to overcome this obstacle, with the 20 clubs less united on a range of issues than at any other moment. time over the last 30 years.
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