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Premier League set to introduce new financial rules: Tom Murray comments

Posted on 17 April 2024

The Premier League is considering a shift from the current profitability and sustainability rules (PSR) to a new financial framework that aligns more closely with UEFA's regulations. The proposed rules would allow clubs to allocate up to 85% of their revenue to squad costs, including transfer fees and wages, a move that could have significant implications for Premier League clubs.

Tom Murray, a sports lawyer in Mishcon de Reya's Innovation department, provided his analysis of the potential impact of these changes. He commented: "Interestingly, the Premier League have opted against adopting other measures introduced by UEFA, such as the 'net equity rule' which requires clubs to demonstrate that the difference between a club's assets and liabilities is either positive or has improved by at least 10% since the previous year.

"The idea behind squad cost rules is to restrict the amount of money that clubs can spend on items such as wages, transfer fees and agents' fees to a percentage of revenue. Critics of these rules will argue that they operate as a soft wage cap which reinforces the status quo and bakes in a system of inequality thereby making it harder for ‘new money’ clubs, such as Newcastle to compete with the likes of Chelsea, Manchester United and Manchester City. The Premier League's proposals, which will reportedly cap spending on these items at 85 per cent of a club's revenue are less stringent than UEFA's rules, which as of the 2025/26 season will cap spending at 70 per cent of club revenue. The Premier League's financial regulations have always been more lenient than UEFA – for example, Premier League clubs are permitted to lose £105m over three seasons, whereas clubs competing in UEFA competitions are limited to €70m.

"The introduction of additional financial hurdles will accelerate the trend of increased regulatory action taken by the Premier League as we have seen this season with Everton, Nottingham Forest and Leicester."

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