Major Premier League ruling on spending cap stuns Aston Villa, Man Utd and Man City
The Premier League has tentatively agreed to implement a spending cap, despite reports that three clubs, including Manchester City, opposed the idea.Â
During a shareholders meeting in London today (Monday, April 29), club chiefs discussed the potential introduction of a salary cap.
Over the past 18 months, financial controls in the Premier League have faced significant scrutiny, with clubs like Everton, Nottingham Forest, and Leicester City facing charges and sanctions related to the league’s profit and sustainability rules (PSR).
Manchester City’s situation, involving alleged breaches of Premier League rules over a 10-year period, is still unresolved.
With PSR rules set to be replaced by a model similar to UEFA’s squad cost ratio rule from 2025, the new plans have faced criticism for not adequately addressing the competitive imbalance in English football’s top tier.
The proposed cap, dubbed “anchoring”, limits the spending of top teams to a certain proportion of the broadcast revenue received by the league’s lowest-earning club. This multiple, suggested to be five, would mean that if the lowest-earning club receives £100 million in broadcast revenue, no team in the league could spend more than £500 million on wages, transfer fees, and payments to agents.
Last season, Southampton, the bottom club, earned £103.6 million from TV and commercial revenues, making it a significant figure.
For the first time in Premier League history, a cap is being considered. The proposal will be voted on at the Annual General Meeting (AGM) in June, with the possibility of it being passed.
According to The Daily Mail, three Premier League teams—Manchester City, Manchester United, and Aston Villa—voted against the proposal, while Chelsea abstained. For the proposal to pass, at least 14 out of the 20 clubs need to agree.
Dave Powell, the business of football writer for the Manchester Evening News, believes that Manchester City opposes the plan because they are focused on global growth and want to avoid any hindrances to their continued expansion and success.
He stated that according to sources, Manchester City would oppose the implementation of a salary cap, aligning themselves with Manchester United, albeit for different reasons.
While Liverpool, Arsenal, and Tottenham Hotspur are reportedly in favor of implementing some form of salary cap, tying wage expenditure to a multiple of the TV revenue received by the bottom club, estimated to be around four-and-a-half to five times, City would be unlikely to fully support something that primarily benefits others.
Recent financial reports highlight the significant financial strength of Manchester City. The club’s unprecedented success on the pitch has resulted in substantial financial gains, with a nearly £100m increase in turnover to £712.8m for 2022/23. Despite a wage bill of £423m, £91.5m higher than Manchester United’s and by far the highest in the Premier League, the club still posted an £80m profit, while their ‘big six’ rivals all suffered financial losses.
City has the financial capability to invest in talent acquisition, and sometimes this investment is tied to on-field success, such as bonus payments for winning the Champions League. A salary cap would limit their ability to do so, preventing them from maintaining the gap between themselves and their rivals, which no business owner would support willingly.
Furthermore, a salary cap could affect their ability to compete internationally, both in Europe and the Middle East.
If La Liga adopts more flexible rules, allowing clubs to offer big contracts within agreed-upon squad cost regulations before the season starts, and if Saudi Arabia continues to attract talent by offering high salaries without such restrictions, it could impede City’s plans for continued growth at a time when the globalization of football is accelerating.
Major Premier League ruling on spending cap stuns Aston Villa, Man Utd and Man City