00:00The Premier League have changed the rules for next season and it's going to affect everyone.
00:05That's right, they're making things fairer across the board.
00:08Nah, just kidding. The rich are getting richer and everyone else is screwed, or are they?
00:12I'm Matt Froelich and here's how the Premier League's new rules affect your club.
00:17For years, the Premier League's financial rules, PSR, were about one thing, losses.
00:22How much could you lose over a three-year period before finding yourself in hot water?
00:27That ruling is now gone, and in its place for next season, the powers that be have introduced the squad
00:33cost ratio, SCR for short,
00:35which dictates that a club can spend 85% of their revenue on player wages, agent fees and transfers.
00:42On paper, it sounds like a sort of American salary cap, which it is, but since the total revenue differs
00:48wildly from club to club,
00:49it's sort of like they've already picked the winners and losers.
00:52To bring this new ruling into the realms of understanding for you, I've divided the Premier League into three separate
00:59groups.
00:59First, let's look at the untouchables, the big boys, the ones who stand to benefit and further solidify their position
01:05at the top of the English game.
01:08Now, according to the Deloitte Football Money League, six out of the top 10 highest revenue earning teams worldwide are
01:16in the Premier League.
01:17No surprises here. Man City, Arsenal, Man United, Liverpool, Chelsea and Spurs.
01:21But let's take Man United from last year as an example for this, where they finish 15th in the Premier
01:27League.
01:2885% of their £689m power revenue leaves them with £585m to spend next year on their squad.
01:35If you take away their current wage bill of around £162m, you get a whopping £423m to improve their squad
01:43in the transfer window.
01:44And this is all because they've already got the money-generating stadium, worldwide fan base and global sponsorship deals.
01:52It's got very little to do with anything they've earned from finishing 15th.
01:56As long as they generate revenue, they are legally allowed to outspend everyone else. Forever.
02:03Unless they end up like Spurs in a sweat-inducing relegation battle that could see all of this fall apart.
02:07But that is a whole other topic and why I picked United as an example.
02:12Moving on, we have the second group, the dreamers, the overachievers, the ones who want to break the status quo.
02:19Aston Villa, Newcastle, even Everton.
02:21They're the ones who will fall into the trap that has been set, paying the price of ambition.
02:26Because if you only play in English football, your limit is 85%.
02:31But the moment you qualify for the Champions League, the limit drops to 70% to match UEFA rules.
02:38Think about how insane that is.
02:40To compete with the best in Europe, you need a bigger squad and better players.
02:45But the rules are now rewarding your success by slashing your spending power by 15%.
02:50Take Aston Villa, for example, with their revenue last year of £390m.
02:55Their spending limit at 85% is £331m.
02:59If they qualify for the Champions League, that drops to 70% around £273m.
03:05They've just lost £58m worth of spending power for the crime of being good at football.
03:11And that's the trap.
03:12You spend big, you reach the top, only to realise the rules have been designed to make sure you can't
03:18afford to stay there.
03:19They'll be forced to sell their best player just to meet the 70% cap,
03:23all whilst trying to stay competitive in order to earn more, in order to be able to spend more.
03:29If Villa managed to bring in millions of fans worldwide and build a new stadium after one season in the
03:34Champions League,
03:35that would solve it.
03:36But yes, I realise how utterly ridiculous and improbable that sounds.
03:39The reality of this second group is that teams can push for a successful season when the timing's right,
03:45and they are still well enough equipped to absorb a few poor seasons,
03:49maybe a lower to mid-table finish, without sliding into complete oblivion.
03:54The same can't be said though for our final group.
03:57The newly promoted clubs each season, or those slightly smaller sized clubs with 15,000 to 25,000 seater stadiums.
04:04For them, the 85% rule isn't just a beware of the dog sign, it's a no ball games allowed
04:10sign.
04:11Just don't even bother playing.
04:12This is because they simply do not have the infrastructure, fanbase or ultimately revenue
04:17to compete or consistently develop over the course of a few seasons.
04:21How many times have we seen a club punching well above their way,
04:24only to crumble under the pressures of having to build a squad for Europe the following season on a smaller
04:29budget?
04:30It always affects their league form.
04:33Wolves had it a few years ago, Burnley and Southampton a few years before that.
04:37Leicester, of course, look at them now.
04:39Even Nottingham Forest in this current campaign.
04:41It's tough.
04:42You need to go above and beyond in your recruitment to survive, or compete, whichever way you look at it.
04:47But if that happens and you overspend, then you enter dangerous territory,
04:52and the looming question of, what exactly is the punishment?
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05:12Well, on the 1st of March each year, assessments are done.
05:15It is a footballing judgment day, where if a club has failed to comply with the SCR rules,
05:20they find themselves in the Amber Zone, a 30% zone on top of their 85%, so up to 115.
05:26They will see the club fined according to how much they have overspent.
05:30It will also see their Amber Zone reduced by the same amount for the following season.
05:34So if they're 15 over, next year, they'll have 15 less to go over.
05:38For most clubs, even the smaller ones, fines are annoying,
05:42but realistically, they're manageable in the multi-million pound figures of the modern game.
05:46The annoying thing isn't only that they're being taxed or being ambitious,
05:50but the money they have to pay gets divided amongst the rest of the clubs that are within the rules.
05:55So the smaller clubs are overspending to reach the bigger teams,
05:58and then they'll have to pay them a tax for doing so.
06:01But that is not the end of the world.
06:04What is the end of the world is entering the red zone.
06:08This is when on March 1st, a club is deemed to have spent more than 115% of their revenue,
06:14and an immediate sporting sanction is handed down in the form of a fixed six-point deduction,
06:21which increases by one point for every 6.5 million spent over the red threshold.
06:27And like I said, this is in real time.
06:30This will apply to the league table immediately,
06:31potentially throwing the title race or relegation battle into absolute mayhem.
06:38Now, at this point, you may think it sounds all very doom and gloom.
06:41How on earth could everyone agree to this?
06:43Well, the truth is, they didn't.
06:45Well, not everyone.
06:46During the meeting in November 2025 that confirmed these rule changes,
06:50each Premier League team had to vote on them, yes or no,
06:53with a minimum of 14 votes needed to see the rule passed.
06:56How many did it get?
06:57Yep, you guessed it.
06:5814 votes, which meant that six Premier League sides said no,
07:02and it is them who I have categorised into a bonus fourth group.
07:06They aren't the favourites to go down each year, actually far from it,
07:09but they also aren't really expected to consistently push the top eight for a European spot.
07:14The six in question, Bournemouth, Brighton, Brentford, Crystal Palace, Fulham and Leeds.
07:20Similar sized clubs these days, although historically and stadium-wise,
07:23I think Leeds can count themselves a little bit bigger than the rest of those names.
07:26But why did they say no?
07:29Well, although clubs haven't and aren't required to come out and explain themselves,
07:33you can piece together bits of the puzzle.
07:36Firstly, these clubs are often cited as the most financially efficient in the league
07:40and are praised for achievements on a modest shoestring budget.
07:43Their side of it is that SCR rewards size over efficiency,
07:47where a poorly run club with a huge stadium can still outspend a well-run club with a small stadium.
07:53That's fair enough.
07:54Secondly, the old PSR rules allowed these clubs to have peak spending years.
07:58Maybe they wanted to go on a big shopping spree after selling a star player.
08:02Maybe their form in the first half of the season means January reinforcements are needed
08:06to push for Europe or pull away from the relegation zone.
08:09They could spend big and then allow for a few leaner years to follow.
08:13But it was always about sporting success,
08:17pushing them to the next level to achieve big things on the pitch.
08:20SCR, however, is a ridded year-by-year ratio,
08:23which is way more restrictive for these clubs with fluctuating income.
08:27Thirdly, they were worried, and rightly so, about the threshold being exploited
08:31and the big clubs just absorbing the fine or even a points deduction because, well, they can.
08:36Also, if one of those teams overspends, the fine gets paid to everyone else,
08:41so they'd be giving their rivals more money, like we mentioned.
08:44What's interesting, though, is that they're not the only ones against it either,
08:48as UEFA themselves have been showing concern that those Premier League clubs not in Europe
08:52with 85% to spend will hoover up all the talent from around Europe
08:57and leave other leagues miles behind in terms of being able to attract top players.
09:01And to be fair, it's already kind of happening, and the results are clear to see.
09:06This season, for the first time ever, a record nine English clubs took part in European competition,
09:11and all of them have qualified for the last 16 of their respective tournaments,
09:16six in the Champions League.
09:18So, with that being said, it can't all be bad, can it?
09:22The Premier League are obviously hoping that these rules are a deterrent for overspending,
09:25meaning the math needs to be mathing, and that clubs don't go bankrupt due to,
09:29in the words of former Leeds owner Peter Rysdale,
09:32spending so much and living the dream.
09:34But they're also aiming to put emphasis on clubs acting sustainably
09:38and putting growth at the top of their priority list.
09:42So, they can't just turn to a ludicrously rich owner to bail them out of financial trouble
09:46and spend their way to success.
09:48For instance, if a relatively low-revenue team like Brentford
09:52were bought by the richest person on the planet,
09:55they still couldn't spend two billion on a squad of superstars.
09:58They'd have to earn it first.
09:59And from that point of view, it's fair, and it kind of makes sense.
10:03But let's be honest here.
10:04In an ideal world, we'd all want the success of our football teams
10:08to be based around their capability to prove it on the pitch
10:11to see all the hard work of the coaches, staff, and players at training
10:15come to fruition on a match day, both individually and as a collective.
10:18Not because one team has an ultra-mega-super store
10:21inside their ultra-mega-super stadium.
10:24But look at the groupings.
10:26The top level get a shield, the ambitious get a ceiling,
10:28and the small get a tax bill.
10:31As for how this will play out next year and in the years to come,
10:34your guess is as good as mine.
10:35But right now, it feels like the Premier League have mapped out a running race
10:39where not everybody starts on the same line.
10:41The 85% trap hasn't made football more competitive on the ground level.
10:45It's just made the hierarchy legal,
10:47where the future won't be decided by who has the best manager or players,
10:50but by who was already rich before the bank closed.
10:53That's all from me for today.
10:55Make sure you buy the latest copy of 442 in-store right now,
10:59where you can catch up of loads of cool stories from the footballing world.
11:02As for squad cost ratio, let me know what you think in the comments.
11:06Are we going to be better off than PSR, worse off,
11:08or is the game completely and utterly gone?
11:11That's all from me, though.
11:12I'll see you in the next one.
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