Premier League clubs are considering abolishing points deductions and introducing a “luxury tax”, Mail Sport can reveal.
The heavy point deduction penalties for Everton and Nottingham Forest, coupled with a quiet January transfer window as clubs dared not spend too much and risk being penalized, have led many officials to consider that the Rules of The league’s Sustainability and Profitability Report (PSR) are not fit for purpose.
There are also serious fears that, in its current form, the PSR will see the Premier League fall from its lucrative position as the best league in the world because it will no longer be able to afford the best players on the best salaries.
Clubs have debated a radical reform and a completely new system could be voted on at the end-of-season meeting in June. As many as 17 of the 20 clubs are believed to be leaning towards a significant change. Fourteen clubs need to agree to get a rule change approved.
Some feel the eventual six-point penalty imposed on Everton and the four on Forest were draconian and do not reflect why he joined the PSR.
Point deductions for financial breaches could be eliminated in the Premier League next season
Everton suffered a six-point deduction this term for violating profitability and sustainability standards
Nottingham Forest also received a four-point deduction this season for the same penalty.
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They believe that if clubs want to “prove it” and have the money to do so, they should not face a punishment that could sink them into the Championship.
It has been considered a ‘luxury tax’, where those clubs that spend more will have an economic punishment that would increase the more they spend money. But clubs can choose to move forward regardless if they wish.
The money raised, which could run into the tens of millions, would then be redistributed to those in the Premier League who complied with the rules. It has been discussed that some of the fines could even go into an “emergency fund” to help EFL clubs in financial distress.
Currently, this tax applies to Major League Baseball and the National Basketball Association in the United States and is related to the amount spent on playing team salaries.
Meanwhile, America’s two other major sports leagues, the NFL and the National Hockey League, have “hard” salary caps that clubs cannot exceed.
UEFA’s new rule, which limits spending on player and coach salaries, transfers and agent fees to 70 percent of club income, is also viewed favorably by some.
An “anchoring” system has also been discussed. It is a form of salary cap in which the amount any club can spend is directly related to the wage bill spent by the last club. So if Sheffield United, for example, finish bottom with an annual wage bill of £50m, each club would have a fixed multiple of that figure to spend in the following season. Again, if a club violates that limit, it pays the fine.
Clubs fear they will not be able to attract top players in the future due to PSR rules (pictured Premier League CEO Richard Masters during the Manchester City 2022-23 trophy ceremony)
There are other financial points that will be discussed at the end-of-season meeting. An “increasing number” – according to one source – want to change the financial rules so that during the three-year reporting period only expenses on players (purchases and salaries) and coaching staff are taken into account.
Currently, only money spent on new stadiums, infrastructure, youth development and community projects is exempt from being calculated as part of the £105 million clubs stand to lose over three seasons. But those pushing for only players and staff to be included believe this would free up clubs to invest in content, digital and marketing to grow their global fan base.
And in another shocking development, a vote to overturn February’s ruling on related party transactions (deals within networks of multiple clubs or with sponsors that have the same ownership as a club) could also be on the cards.
In February, a change to these rules was narrowly approved. Of the seven votes necessary to block a proposal, there were 12 in favor, two abstentions and six against. But some feel the change, and the knock-on impact it has on the ownership of other clubs abroad, is damaging and one, believed to be Manchester City, is considering legal action.
Premier League seeks to replicate NBA model of luxury tax in future
The option of sending a young prospect to gain experience abroad at a club in their network is believed to be attractive to many, which would then increase their market value.
The situation is complex. Traditionally, the “big six”, both Manchester clubs (Arsenal, Tottenham, Liverpool and Chelsea), have tended to vote together. However, there is understood to have been a “seismic shift” in relations, with Saudi-owned Newcastle now included in one of the “Big Seven”.
Some believe rules encouraging investment would result in a more competitive league that would increase interest levels and protect against the future.