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The English Premier League has taken a significant step towards introducing a hard salary cap for the first time, the latest move in a broader push across football to halt rising costs and improve club finances.
At a vote on Monday, the majority of English top tier clubs gave Premier League executives the green light to finalise proposals for a limit on spending that would be linked to the revenue of the league’s poorest club.
A full economic and legal analysis of the new system, known as anchoring, will be presented to clubs in June, when a formal vote to approve the plans could also take place.
The push to cap spending as a multiple of the poorest club’s income is designed to halt spiralling wage and transfer costs that have outstripped rising income at many clubs and led to years of losses at teams across European football.
With more professional investors now involved in football — both at a club and league level — and weakening demand from broadcasters for live TV rights, the game’s competition organisers have been exploring measures designed to end the cycle of overspending.
Uefa, European football’s governing body, introduced new rules at the start of this season that barred clubs from spending more than 90 per cent of their revenue on the playing squad in order to participate in its competitions. Next season that figure will drop to 80 per cent, before settling at 70 per cent the year after.
The Premier League is also exploring a similar measure, known as the squad cost rule, that could be brought in alongside anchoring as part of a new financial regime from the 2025/26 season.
Under the current so-called Profit and Sustainability Rules, clubs are punished if they lose more than £105mn over three years. Already this season, two clubs — Everton and Nottingham Forest — have been docked points for excess losses.
The Premier League is the richest domestic club contest in the world, with combined revenue last year of more than £7bn. Of the top 10 clubs in Europe by income, six of them play in England, according to Deloitte.
Yet English football clubs have largely failed to translate increased revenue into profits, especially since the onset of the pandemic. In the 2022/23 season, only three clubs in the Premier League recorded an annual profit.
Many club owners have been advocating the introduction of spending caps as a way to stop clubs backed by sovereign wealth funds and billionaires from pushing up costs.
However, some executives fear that tightly linking spending to income will in effect lock in the financial advantages of the biggest clubs and could harm competitiveness on the pitch.
Player unions have also warned that salary caps, which are a feature of some US sports, could go against European competition law.
The Professional Footballers’ Association said after the vote on Monday: “We will obviously wait to see further details of these specific proposals, but we have always been clear that we would oppose any measure that would place a ‘hard’ cap on player wages.”
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