Premier League clubs to be banned from selling assets to themselves

After agreeing to new rules for the following season, Premier League clubs will no longer be able to sell to themselves assets like hotels and women’s teams to circumvent financial regulations.

Following a narrowly contested vote on Friday, clubs voted in favor of a new Financial Fair Play (FFP) system based on squad costs.

The clubs’ proposals for replacing Profit and Sustainability Rules (PSR) were discussed at a meeting in London.

The minimum number needed to enact a rule change was 14 votes in favor and six against, according to Squad Cost Ratio (SCR).

Teams competing in Europe will have to adhere to Uefa’s maximum of 70% while overall squad costs from the 2026-27 campaign will only be able to contribute 85% of the club’s revenue.

Players and managers’ wages are included in squad costs, as are agent and transfer costs.

Most significantly, it will close the sale of capital assets like hotels and women’s soccer teams.

To maintain compliance with PSR, Chelsea sold two hotels to a sister company last year.

Everton sold their women’s team to the parent company in July, according to reports that Aston Villa has also agreed to do the same.

Only a club’s overall revenue from football operations will be considered when making the assessment.

The club’s financial spending plans over the medium and long term were unanimously approved as sustainability rules.

However, anchoring failed to gain the necessary support in order to establish a top spending cap based on the money made by the bottom club. Seventy-eight people cast ballots against it, with one abstaining.

A Premier League statement read, “The new SCR rules are intended to promote opportunity for all clubs to aspire to greater success and bring the league’s financial system to Uefa’s existing SCR rules.”

SCR focuses solely on team costs on a seasonal basis, while PSR focused on a club’s balance sheet of all revenues over a three-year period.

Clubs in European competition must adhere to Uefa’s SCR limit of 70%, which will result in a dual system under the new regulations. This means that they could be sanctioned by Uefa but still be compliant in the Premier League.

Given the higher revenue received by those clubs competing in Europe, the higher cap is intended to safeguard the Premier League’s competitive balance.

Uefa fined both Chelsea and Aston Villa for violating the 2024-2020 campaign, when the maximum allowed in Europe was 80%.

With a 30-percent multi-year rolling allowance that allows clubs to spend more than the cap, the Premier League also offers some wiggle room. It enables clubs to make an investment before revenue, variance, or underperformance in sports.

Every March, a review is conducted, and the allowance is crucial to figuring out potential sporting sanctions for the same season.

The Green Threshold refers to the 85% mark. If you spend more than that, you pay a financial penalty, which will be much less harsh than Uefa.

The allowance is added to the Red Threshold’s 85%. If you go beyond that, you get a fixed six-point deduction that rises by one point for every £6.5 million spent above the Red Threshold.

Consider this: Every club will begin the following season with an 85% plus 30%, or 115%.

Any clubs that spend more than 85% will be fined, but they must also have lost more than 115%.

However, in 2027-28, those figures will change.

A club’s maximum spend before potential sporting sanction is 95% if they spend 10% of their budget on their squad for the following season. This means they have used 20% of their available funds.

Numerous clubs, with good financial standings, were content with PSR and wished to maintain the status quo.

The biggest clubs with the best commercial operations won’t be worried about SCR.

Clubs with less financial resources, however, find it difficult to link the wage bill to income.

Bournemouth, Brentford, Brighton, Crystal Palace, Fulham, and Leeds all cast ballots against because of this.

The ground at Bournemouth has just over 11, 000 seats, but Fulham is also in a similar situation. They also need to pay Premier League wages.

These clubs will need savvy transfer deals, since Bournemouth would not face problems this season as a result of their transfer activity last summer.

Every club has some headroom and time to adjust, but 85%, with an additional 30% buffer.

Even though there were only seven votes in favor, the top clubs were divided over it.

Arsenal and Liverpool voted in favor of it despite fears that Manchester City and Manchester United might eventually exceed the anchoring cap as their revenues increase.

Top-to-bottom anchoring (TBA) requires top clubs to pay five times the total amount of TV money received from the Premier League.

The team that finishes 20th this year is anticipated to make around £120 million, which would result in a £600 million upper anchoring cap.

However, no club’s spending cap will increase to £600 million once the SCR regulations are in place.

The top clubs’ spending was intended to stop them from spending more money as their revenues grow.

Some feared that the cap might eventually make them less able to compete for players like Real Madrid.

Meanwhile, the Professional Footballers’ Association (PFA) had previously warned about a wage cap that could be brought up because clubs would pay lower player salaries.

The Premier League clubs already need to produce financial forecasts for the short, medium, and long-term, so this was a straightforward decision.

The Independent Football Regulator (IFR), which will begin operations later this year, will have to meet that requirement.

Clubs will be required to provide projections regarding their financial plans and ability to finance club operations.

Monitoring and the implementation of measures that bring a club back to compliance with any violations are the priorities.