The Premier League is progressing with plans to develop an anchoring system, which would place a hard cap on a club’s spending regardless of the revenue they earn.
Here the PA news agency examines the detail and where this could all end up.
What has happened?
A majority of top-flight clubs voted on Monday to press ahead with the development of plans to anchor spending on things like player wages, transfer amortisation costs and agents’ fees as a multiple of the amount of central revenue received by the Premier League’s bottom club.
What would that mean in practice?
Last season’s bottom club, Southampton, received £103.6million in central revenue. If a ceiling of five times that amount was set on what clubs could spend on squad-related costs, that would limit clubs to spending £518million.
Why do those who backed the proposal support anchoring?
The idea of anchoring is to ensure a greater degree of competitive balance in the league by reining in the spending of the richest clubs.
What about its opponents?
Manchester United and Manchester City were among the clubs who voted against. There is a belief among opponents of anchoring that it penalises the top-earning clubs and will weaken the Premier League’s ability to attract the top stars and in turn make it less attractive to broadcasters.
There have also been warnings about the indirect impact to clubs outside the ‘Big Six’ who might initially see the attraction of the proposal. If approved, what is there to stop the EFL introducing something similar in the Championship, which would restrict a current Premier League side from spending big to return to the top flight in the event of relegation?
EFL chairman Rick Parry has long criticised the distorting impact of parachute payments on competitive balance in the Championship. An anchoring system similar to the one proposed in the Premier League could go a long way to limiting the impact of parachute payments, or wipe out that impact completely.
If it’s a spending cap, won’t the Professional Footballers’ Association object to it?
The PFA said on Monday it would oppose any measure which amounts to a hard cap on player wages. It is understood the union has yet to see the full detail, but if it determines the measure does amount to a cap it would be referred to the Professional Football Negotiating and Consultative Committee (PFNCC).
What is the PFNCC?
It is the forum in which any matter related to players’ employment terms and rules is discussed. It features representatives from the PFA, the Premier League, the Football Association and the EFL. If agreement is not reached at the PFNCC, then the matter would move on to independent arbitration, as was the case in the dispute between the PFA and the EFL when the latter introduced squad salary caps for Leagues One and Two in 2020.
What are the other considerations?
You would expect that any economic and legal analysis of anchoring must also take in whether it could withstand a challenge under competition law.
Is the intention that anchoring would replace the existing financial rules?
If approved, anchoring would be one of the key planks of a new financial system to replace the profitability and sustainability regulations (PSR) from 2025-26. The other would be to limit squad-related spending to 85 per cent of a club’s revenue.
When could these rules come in?
The target is for a vote on anchoring, and the 85 per cent of revenue limit, at the league’s annual general meeting on June 6. However, there are many hurdles for anchoring in particular to clear before then.
