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Premier League moves closer to introducing salary cap

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The English Premier League has taken a significant step towards introducing a strict salary cap for the first time. It is the latest move in a broader push across football to stop rising costs and improve club finances.

In a vote on Monday, a majority of England's top-tier clubs gave Premier League executives the go-ahead to finalize proposed spending limits linked to income for the league's poorest clubs.

A full economic and legal analysis of the new system, known as anchoring, will be presented to clubs in June, with a formal vote to approve the plans also likely.

The move to limit spending as a multiple of income for the poorest clubs is aimed at halting soaring wage and transfer costs that have outpaced income growth at many clubs and led to years of deficits for teams across European football. There is.

and More professional investors Currently involved in football at both club and league level, demand from broadcasters for live television rights has waned and gaming competition organizers are looking for measures to end the cycle of overspending. I've done it.

European football's governing body, UEFA, introduced new rules at the beginning of this season that prohibit clubs from spending more than 90% of their revenue on squads to take part in competitions. Next season, that number will drop to 80%, and the following year it will settle to 70%.

The Premier League is also considering a similar measure, known as the squad cost rule, which could be introduced alongside anchoring as part of a new financial regime from the 2025/26 season.

Under the current so-called Profit and Sustainability Rules, clubs will be penalized if they make losses of more than £105m over three years. Already this season, two clubs, Everton and Nottingham Forest, have been split on points due to excess losses.

The Premier League is the world's richest domestic club competition, with total revenue exceeding £7bn last year. According to Deloitte, six of Europe's top 10 clubs by revenue play in England.

But English football clubs have largely failed to translate increased revenue into profits, especially since the start of the pandemic. In the 2022/23 season, only three clubs in the Premier League recorded annual profits.

Many club owners have advocated spending caps as a way to stop clubs backed by sovereign wealth funds and billionaires from driving up costs.

But some executives fear that tying spending and income so tightly together could effectively lock in the financial advantage of big clubs and undermine their competitiveness on the pitch.

Players' unions have also warned that salary caps, a feature of some U.S. sports, could violate European competition law.

The Professional Footballers' Association said after Monday's vote: “We will of course await further details on these specific proposals, but we have always been clear that we oppose any measures that impose 'hard' caps on player salaries.”

Summarize this content to 100 words Unlock Editor's Digest for freeFT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.The English Premier League has taken a significant step towards introducing a strict salary cap for the first time. It is the latest move in a broader push across football to stop rising costs and improve club finances.In a vote on Monday, a majority of England's top-tier clubs gave Premier League executives the go-ahead to finalize proposed spending limits linked to income for the league's poorest clubs. A full economic and legal analysis of the new system, known as anchoring, will be presented to clubs in June, with a formal vote to approve the plans also likely.The move to limit spending as a multiple of income for the poorest clubs is aimed at halting soaring wage and transfer costs that have outpaced income growth at many clubs and led to years of deficits for teams across European football. There is.and More professional investors Currently involved in football at both club and league level, demand from broadcasters for live television rights has waned and gaming competition organizers are looking for measures to end the cycle of overspending. I've done it.European football's governing body, UEFA, introduced new rules at the beginning of this season that prohibit clubs from spending more than 90% of their revenue on squads to take part in competitions. Next season, that number will drop to 80%, and the following year it will settle to 70%.The Premier League is also considering a similar measure, known as the squad cost rule, which could be introduced alongside anchoring as part of a new financial regime from the 2025/26 season. Under the current so-called Profit and Sustainability Rules, clubs will be penalized if they make losses of more than £105m over three years. Already this season, two clubs, Everton and Nottingham Forest, have been split on points due to excess losses. The Premier League is the world's richest domestic club competition, with total revenue exceeding £7bn last year. According to Deloitte, six of Europe's top 10 clubs by revenue play in England.RecommendationBut English football clubs have largely failed to translate increased revenue into profits, especially since the start of the pandemic. In the 2022/23 season, only three clubs in the Premier League recorded annual profits. Many club owners have advocated spending caps as a way to stop clubs backed by sovereign wealth funds and billionaires from driving up costs. But some executives fear that tying spending and income so tightly together could effectively lock in the financial advantage of big clubs and undermine their competitiveness on the pitch.Players' unions have also warned that salary caps, a feature of some U.S. sports, could violate European competition law.The Professional Footballers' Association said after Monday's vote: “We will of course await further details on these specific proposals, but we have always been clear that we oppose any measures that impose 'hard' caps on player salaries.”
https://www.ft.com/content/87150b8d-27ad-47d9-a1c4-04b6bd49a2da Premier League moves closer to introducing salary cap

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