New FFP rules could hurt the Big Six but boost clubs like Newcastle

Premier League clubs will discuss potential “game-changing” Financial Fair Play proposals on Monday that could bring a strict salary cap (known as “anchoring”) to English football.

Team cost controls are being introduced as part of a reform of the league’s Financial Fair Play rules. But now there is news that Premier League clubs will discuss a system called “anchoring”. This would cap wages at the richest clubs at a multiple of the TV revenue earned by their bottom-tier clubs.

Critics believe this could damage the Premier League’s financial dominance, but supporters say it will ensure competitive balance.

Here’s what we know – and how it will affect an aspiring club like Newcastle United.

How did we get to this point?

The Premier League is currently overhauling its controversial Profit and Sustainability Rules (PSR), with clubs earlier this month agreeing to adopt squad cost controls in line with those introduced by UEFA.

Under these terms, European clubs can only spend 70% of their total revenue on wages, transfer fees and agent fees. Clubs outside Europe will be able to spend 85%.

But sources revealed I The Premier League wants their Financial Fair Play system to be “multi-tiered”, meaning clubs are discussing other ideas that could operate simultaneously.

A so-called luxury tax was proposed, with clubs paying hefty fines that could be distributed to other clubs that complied if FFP restrictions were breached. However, it did not receive enough support to advance to the discussion stage.

However, it is believed there is strong support for “anchoring” and the club will debate it at Monday’s meeting. The Premier League says it hopes to reach an agreement between clubs on new Financial Fair Play rules by June.

One caveat: none of this will come into effect this summer, when clubs will have to adhere to the existing PSR. It will operate as so-called shadow legislation next season, taking effect from the 2025-6 season.

Therefore, in the next transfer window, clubs approaching the PSR limit – and there are a number of clubs, among them Chelsea, Newcastle, Arsenal and Nottingham Forest are all rumored to be approaching the wind – will have to cut back accordingly, even with the new rules on the horizon. arrival.

What is anchoring?

The idea behind anchoring is to maintain the competitive balance of the Premier League, which is a huge selling point globally. The fact that any team can beat any team – such as Everton beating Liverpool on Wednesday night – is crucial to the league’s popularity.

If one of the biggest criticisms of the current PSR system is that it cements the dominance of the top six, then anchoring is one possible solution.

If anchoring is introduced, it means that no team in the league is likely to spend more on “team costs” than the club that earns the lowest revenue from centralized broadcasting and commercial deals. Team costs consist of first-team wages, amortized transfer fees and agent fees.

Last year’s cap was £518m, which no club other than Chelsea exceeded.

Football expert Kieran Maguire tells I: “Anchor seeks to limit the gap between the poorest and richest clubs in the Premier League.

“You take the budget of what is considered the smallest club – so this season it will be Burnley or Bournemouth – and you say the money that the richest club can spend will be tied to Burnley’s budget in a multiple.

“The multiple we have discussed so far is 4.5, so if Burnley spend £100m on player costs, the richest club will have a budget of £450m.”

What does this mean for a club as ambitious as Newcastle?

To be fair, PSR isn’t popular at St James’ Park.

It has hampered Newcastle’s progress so far, leading to a dry January in the transfer window and hampering the team’s progress. It is understood the club is close to the PSR cap and will likely need to sell before the end of the financial year on June 30.

So, for magpies, does anchoring bring more of the same potential pain? unnecessary.

Maguire said: “I don’t think a club like Newcastle would be hit like this.” I.

“In a way, this works to their advantage because if the club’s spending cap is fixed at the smallest clubs, it means that the existing elite teams – Liverpool and Manchester City etc. – can spend more than just £4.5 of Burnley’s budget. times, and allow an aspiring club like Newcastle the same level of payment.

“So you can see their benefits. The upper ceilings are more closely aligned.

Newcastle United's Swedish striker #14 Alexander Isak (second from left) during the Premier League football match between Newcastle United and Everton at St James' Park in Newcastle upon Tyne on April 2 Celebrating after scoring the team's first goal in the game. No unauthorized use of audio, video, data, fixture lists, club/league logos or
Newcastle’s ambitions limited by PSR (Photo: AFP/Getty)

“One of the criticisms of soft salary caps at the moment is that it’s tied to revenue, and if you have an existing revenue advantage over other clubs, then it’s reflected in the wages you can pay.

“So look at Manchester City – their revenue is £700m, 70% of that is £490m, which is your wages and amortization charge. Newcastle’s revenue is £250m, so their wages and amortization charge is £175 million.

“So, under the upcoming team control rules from UEFA and the Premier League, the current gaps remain. Under the anchor rules, they disappear. The bottom clubs – Forest, Villa, Newcastle United, West Ham United – The owners can do it if they want.

So, depending on which combination of rules ultimately gains traction, anchoring could end up being a good thing for the Premier League’s disruptors.

Who supports it and who opposes it?

The lower-placed clubs – who are likely to form a strong group in any future anchor voting – will understandably be more enthusiastic. Crystal Palace chairman Steve Parish said his club supported the move last year.

But Manchester United and Manchester City are understood to be strongly opposed to the idea, arguing that a maximum spending cap would put English clubs at a disadvantage compared with their European rivals and reduce their financial strength in the transfer market.

Less money, they argue, means fewer of the world’s best players, managers and coaching staff coming to England. This in turn would undermine the quality of the Premier League and potentially threaten the Premier League’s global dominance.

It requires a vote from two-thirds of the clubs – 14 in total – to pass.

Can it pass smoothly?

a source told I Most clubs are currently in favor of it, although the practicality of the idea is likely to be discussed at Monday’s meeting, when a decision is likely to be made by many.

Another senior executive pointed out I It probably won’t have much of an impact on most clubs. One of the multiples currently being discussed is five, which would mean the cap would be well over £500m. Even Manchester City and Manchester United spent only £501 million and £453 million respectively in the 2022-23 season.

Newcastle’s squad costs just £234m, giving them plenty of room for improvement under the anchor system.

As with many things in football, the specter of litigation hangs over any decision to adopt the rules, with some Premier League clubs claiming they could breach competition law. Whether that will be tested in court is another matter.

It is also important to note that the Professional Footballers’ Association (PFA) and agents may object to any form of anchoring as it reduces a client’s earning power. If clubs vote in favor of the Premier League, the Premier League will have to consult with England’s Professional Footballers’ Association (PFA) – although these feel like debates for the future.

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