The Premier League is planning to introduce a minimum sanction of a six-point deduction for serious breaches of the new spending regulations it wants in place next season.
Under draft proposals for the squad-cost ratio (SCR) system shared with clubs at their shareholders’ meeting this week, a fixed tariff for overspending would be introduced for the first time.
A club guilty of breaching SCR by 30% would be docked six points. Extra points could be deducted on a sliding scale for more serious breaches of the spending cap, which would restrict spending on transfers, player wages and agent fees to 85% of revenue. Smaller breaches would be punished by a financial levy tied to the percentage of the overspend. The Premier League declined to comment.
The clubs have been debating for 18 months replacing profitability and sustainability rules (PSR), which allow a maximum £105m loss over a rolling three-year period, and much of this week’s meeting was spent discussing potential sanctions. The league informed clubs there would be no fines for minor breaches during the first year of SCR to give them time to adjust but that the points deduction threat would be in place to guard against egregious overspending.
SCR would operate in real time rather than retrospectively, enabling the league to monitor spending during the season and apply sanctions if necessary. The retrospective application of PSR rules has created problems for the league and tension between clubs.
Everton were found guilty of breaching PSR rules for the period ending with the 2021-22 season but were not docked points until November 2023. Had the eventual six-point penalty been applied in the 2021-22 season, Everton would have been relegated and Burnley would have stayed up.
Burnley are involved in an arbitration hearing with Everton, having filed a claim for £50m in compensation. Everton have paid a much smaller amount in compensation to Leeds, who lost out on prize money after finishing one place behind them, in a dispute settled out of court.
Fixed tariffs would also bring greater clarity. Nottingham Forest were given a four-point penalty in March 2024 despite having overspent by more than Everton.
The clubs will discuss the issue again at their next shareholders’ meeting in November, when the league wants a vote. As a result of qualifying for Europe, nine clubs are committed to a system of SCR operated by Uefa, which caps player spending at 70% of revenue.
The league plans to reduce its limit to 70% over the next three years, and there is cautious optimism among the executive that it will be approved. A resolution in November would give clubs clarity before the January transfer window regarding which rules will be in place next season. If the vote is not carried, PSR will continue for 2026-27.
There remains less confidence at the league that a second set of new spending rules known as top-to-bottom anchoring, which would cap each club’s spending at about five times the bottom side’s central income from TV revenue, shared commercial payments and prize money, will get the 14 votes needed to be introduced.
No club currently exceed the five-times multiple, which if in operation this season would have been pegged to Southampton’s 2024-25 Premier League income of £109.2m, but many of the bigger teams would like the flexibility to do so.
