Club chiefs gather to discuss new rules around spending
NEWCASTLE United representatives are part of a Premier League meeting to discuss the scrapping of current top flight profit and sustainability rules [PSR].
Shareholders from all 20 top flights have been meeting yesterday and today to discuss proposals with league chiefs, after one of the quietest transfer windows on record, as proposals are put forward on how to change current restrictions around spending.
The new plans would see PSR scrapped in its current form, and replaced by a new model that resembles UEFA’s current ‘squad cost ratio’, which currently limit clubs’ spending on wages, transfers and agents’ fees to 70% of their revenue.
The Premier League could introduce similar proposals, although allow clubs to spend up to 85% of their turnover, rather than UEFA’s 70. Newcastle received an increased revenue of £250m for the 2022/23 campaign, which in theory would allow them to spend £175m on player costs.
No vote will be taken this week, with yesterday’s meeting between club chiefs set up to find common ground on the matter. However, not every club is expected to be in favour of the new scheme.
A club the size of Luton Town, for example, who have significantly less revenue compared to the league’s biggest sides, will likely feel aggrieved that the more established Premier League outfits will have more funds at their disposal.
However, the new regulations would continue to stop wealthy owners arriving in England and attempting to use their personal riches to buy success, which is one of the reasons Financial Fair Play (FFP) was introduced in the first place.
Speaking about the potential changes recently, Premier League chief Richard Masters admitted moving closer to a UEFA model made sense.
“We have some proposals out for consultation with our [Premier League] clubs about moving and aligning more with the UEFA system,” he told a select committee hearing in Westminster.
“UEFA have spent two years changing their financial regulations away from something called FFP (Financial Fair Play) to something called ‘squad cost ratio’, which is a different calculation, more a wage to turnover type calculation.
“Because over time we have historically aligned with UEFA. Because seven or eight of our clubs are in European competition [each season]. We need to consider whether that is an appropriate move for us, how we do that and when.”
Newcastle are expected to be in favour of the changes as it dramatically improves revenue streams off the pitch. The Magpies posted a loss of £73.4m for the 2022/23 season but increased its revenue to £250.3m, from £180m the previous year, as match day, commercial and media right revenues increased.
A lucrative partnership with kit manufacturer Adidas will vastly improve the club’s financial standing, while TV revenue and Champions League prize money will also add to the kitty. The club are also open to finding a training gear sponsor and have discussed the possibility of selling the naming rights to St James’ Park.
Moving away from PSR will also reduce the need to sell the club’s best players, as CEO Darren Eales recently explained would need to happen under current spending rules.