- 6 hours ago
The Premier League are bringing in new financial regulations. Out with the PSR and in with the SCR. But which teams look set to benefit from this change in ruling, and more importantly, how will it affect YOUR club? Adam Clery breaks down what exactly the changes will be and how SCR compares to PSR. Let us know your thoughts in the comments.
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00:00Right, hello everybody, welcome to the Adam Cleary Football Channel and after literally years of everybody saying
00:06oh, PSR seems quite bad actually, the Premier League are changing it.
00:12Never wants to shirk an honest acronym, it's being replaced with SCR or Squad Cost Ratio
00:19which yes, you're right, is a term you're going to be sick to death of hearing two weeks after the
00:24transfer window reopens.
00:26But what actually is it? How does it work? Is it going to be better or worse for your team
00:32specifically?
00:33Well, it's considered a pretty landmark change already and might well be the biggest change the Premier League has ever
00:41made to how it works.
00:42So, let's explore.
00:47Alright, now to start I'm going to give you a grotesque oversimplification of how the current system works
00:54so you can see precisely what it is they are changing and why they are doing that.
00:59So, PSR or Profit and Sustainability Rules as its mother calls it.
01:05This is a three-year rolling assessment of a football club's expenditure.
01:10Basically, a club cannot lose more than £105 million over three consecutive seasons
01:16which averages out to £35 million a season.
01:20If you were, for example, to lose £50 million in one season, that is absolutely fine.
01:26You would just have to make sure that in the seasons surrounding it
01:29at no point did it go over that £105 million in a three-season window.
01:35To try and help you out, you can make deductions to these losses by spending money
01:39in what the Premier League considers healthy expenditure.
01:43Women's football, developing your academy, certain community initiatives.
01:46If you've ever done self-assessment for your own tax, right?
01:51This is the footballing equivalent of putting all of your pub lunches down as business meetings.
01:57It's not going to bail you out of jail, but it will help knock a little bit off.
02:01But making it even more complicated, though, and this is where the arguments about it on Twitter
02:06tip into unbearable, is player amortization.
02:11Or amortization, I'm never quite sure.
02:13If you buy Julio Giordio here for £100 million,
02:17it does not give you a £100 million loss in that year's PSR total.
02:24Instead, because you've put him on a four-year contract,
02:28it spreads the fee out, so he counts as a £25 million loss every year.
02:34And yes, you're right, that is why Chelsea were handing out all of those eight-year contracts
02:40not so very long ago, just spreading it out as thinly as they possibly could.
02:46That was a loophole that they found, but they've closed that now.
02:50The most you can spread it out for, regardless of the length of the contract, is five years.
02:55But then, finally, you've got your academy players.
02:58And because they haven't arrived as part of a transfer,
03:02you've got no money to pay off when you sell them.
03:05When you do, all of that money is classed as pure profit.
03:09So if we were to then sell Julio Giordio for £75 million one year into his stay,
03:16there would still be a £25 million loss for the next three seasons.
03:21So after the transfer fee, you'd come out at zero.
03:24But, alternatively, if we sell the plucky 18-year-old Gavin Hansom from the academy
03:30for the same £75 million, that is £75 million of pure profit.
03:36And that would stack up on top of all the money you're allowed to lose.
03:40Elliot Anderson at Newcastle, Amari Kellyman at Aston Villa,
03:43Lewis Dobbin at Everton, Brennan Johnson at Forrest,
03:47even Mason Mount, Connor Gallagher and Lewis Hall at Chelsea,
03:50all done for PSR necessity because they represented way better value as a sale to those clubs
03:58than getting rid of somebody they were still paying money for.
04:02And that is, in my opinion, the worst part about PSR.
04:06The only workaround these teams have found is to sell these players
04:10who really desperately actually want to play for them.
04:14I think that's bad.
04:15But now, right, and most of that you probably already knew,
04:19OK, fair enough.
04:20The good news is you can forget pretty much all of it.
04:26SCR, squad cost ratio, is very, very different.
04:30It limits a club's spending to 85% of their revenue,
04:35which sounds a lot simpler, but how does it work in practice?
04:40Well, for a start, your spending is considered to be
04:43what you are spending on your players and your staff,
04:46their transfer fees, their wages, any agent fees, stuff like that.
04:50And again, amortized over the length of their contracts.
04:54And it's not all of your staff, I should stress.
04:57Certain types of coaches, the terrifying sports massage guy,
05:01Brenda, who does the tea in the cafe,
05:03they are considered non-footballing employees
05:06and are exempt from this calculation.
05:09And likewise, your academy players,
05:11they do not count and neither does your women's team.
05:15Which might sound a little bit weird at first, right,
05:18but I actually think is a total necessity,
05:22given the sort of soulless fucking ghouls
05:25who wind up running Premier League football teams.
05:28Because if you think about it,
05:29if they're right up against the threshold
05:31and they want to keep Alphonso turkey teeth
05:33on 250 grand a week,
05:36they can't now make a saving
05:37by slashing the kids or the lasses
05:40or any of the normal people
05:42who actually run a football club.
05:45They are mercifully all protected from this.
05:47Anyway though, so all of this, that is your spending.
05:50And then your revenue is everything
05:52you're making from player sales,
05:54obviously minus the amortization you still owe,
05:58your match day income,
05:59the money you get from broadcasters,
06:01and all of the commercial deals you manage to get.
06:03So not much has really changed in that regard.
06:07That is still how football clubs make all their money.
06:10You are though allowed to include
06:12some non-footballing income.
06:14So if that big reef reunion happens this summer
06:16and they play your stadium,
06:18all that money goes into your pockets
06:21for the purposes of SCR.
06:23However, and yes, this is another
06:25Chelsea ruined it for everyone bit,
06:28you can't just sell some hotels you literally own
06:32to another company that literally owns you
06:34and then say they were probably worth about 75 million
06:37and do it as a write-off.
06:40They've got rid of that.
06:41Sale of assets like your training ground,
06:43your women's team,
06:44your charitable foundation,
06:45your stadium,
06:46they cannot just be hawked off anymore
06:48and counted as income.
06:50And so to put it very simply,
06:52all of that revenue per season
06:54gives you a total
06:55and your spending must not come in
06:58at 85% of that.
07:02Except, that's not true.
07:04The Premier League, you see,
07:06in an effort to avoid handing out
07:08loads of points deductions,
07:10which they thought was a really, really bad look
07:13under PSR,
07:14has introduced thresholds.
07:17That 85% figure is known as
07:20the green threshold,
07:21which basically is just,
07:23well done,
07:24you stuck to the rules,
07:26would you like a medal?
07:27But there's also
07:27an additional 30% headroom
07:30known as the red threshold,
07:32which is basically just,
07:34uh-oh,
07:34guess someone's getting a little bit carried away there,
07:37but don't worry, champ,
07:38I'm sure we can work something out.
07:40Clubs that spend into this margin for error
07:43will incur a levy,
07:45and no, not him,
07:46but a system of fines
07:47related to the amount you've overspent by.
07:50And the way you basically need to think of this,
07:53right,
07:53is that spending over that 85% cap
07:56is like taxed by the Premier League.
07:59Like, you can do it if you really want to,
08:01but you're going to have to pay them for the privilege.
08:04Now, they claim the reason for this
08:06is to allow teams to overspend a bit
08:09if they know they're going to get a big bump in revenue
08:12at some point in the near future.
08:14Like, they open a new stadium,
08:16there's a commercial deal in the pipeline,
08:17something like that.
08:18Or, if they catastrophically underperform on the pitch
08:23and lose out on a load of competition money,
08:25then they just get, like, a fine for that
08:28rather than a points deduction.
08:30But, what it actually is, though,
08:33I'm sure you've got your own opinions on.
08:37I certainly do.
08:39Either way, though,
08:39whatever percentage you are over by in one season,
08:43your threshold will be reduced by that the next.
08:46And from there, this red threshold of 115% of revenue
08:51is the breaking point.
08:53You go over that,
08:54and you get a six-point penalty
08:56immediately slapped on your season.
08:59And, um, just to make things even slightly more complicated,
09:03if you are competing in Europe that season,
09:07your green threshold is actually only 70%.
09:11So, it is technically all a lot simpler.
09:14Yes, but people are going to get very mad online about it,
09:19I think.
09:20All right, so now exactly what you're thinking.
09:22There's no way you're any good with your money, Adam.
09:25You've not even ironed that shirt correctly,
09:28but you'd be wrong.
09:28Because I'm now a bona fide Trading212 customer,
09:32and well on my way to owning this yacht.
09:36Yes, Trading212 currently has an exclusive cash ISA for ACFC viewers,
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09:46in the current tax year.
09:48But what is a cash ISA?
09:50Great question, I have to ask my mom.
09:52It is a simple, tax-free way to save money.
09:56It's often used for short-term savings,
09:58like an emergency fund or money for holidays,
10:01because you can usually access it when you need it.
10:03You'll also typically earn more interest
10:05than just leaving it sitting in a current account,
10:07and you don't pay tax on the interest you earn.
10:10Ooh.
10:11The Trading212 cash ISA offers flexible access,
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10:18New customers can register through the exclusive link
10:20in the description,
10:21or use the promo code ACFC,
10:24eh,
10:25to access the offer.
10:26And just to read you a direct quote
10:29from Mother Cleary here,
10:31your money's doing nothing for you
10:32if it's just sitting in the same current account
10:34you've had since you were 16.
10:37You useless...
10:38Yes.
10:39Can personally say,
10:41good idea, this.
10:42Back to the video.
10:45But, my friends,
10:46here is the real question.
10:48Is it good for your club specifically?
10:52Because I'm not stupid,
10:53I know that's all any of us are really asked about.
10:56Well, very helpfully,
10:57the Athletic have already produced this,
11:00and that is the current squad costs
11:02as a percentage of revenue
11:04of all the teams in the Premier League.
11:07Now, an obvious caveat to this
11:08is that all these clubs are operating
11:10under the old rules here,
11:12because those still apply.
11:14So, if your team is somewhere
11:15near the bottom of this graph,
11:17don't worry,
11:18they'll know about that,
11:20they'll be planning to make the necessary changes,
11:22but it does just show you
11:23who is already well-positioned
11:26under this system,
11:27and who isn't.
11:28Now, Tottenham, for example,
11:29have an extraordinarily healthy income,
11:33thanks, Beyonce,
11:34so they'll be thrilled about all of this,
11:36but Bournemouth here
11:37show you just how hard it is
11:39to compete in a league
11:40when you've got an 11,000-seater stadium.
11:42However, do not fear, Cherries,
11:44you've made an absolute killing
11:46on Kerkhez and Hoyssen and Semenyo,
11:49and you can't even rule out
11:50getting into Europe next season,
11:51so I think when that all updates,
11:53you'll be absolutely sound.
11:55And if you want to know
11:55who the real winners and losers
11:57on this graph are,
11:58then you need only scan a BDI
12:01over who voted for its introduction
12:04and who didn't.
12:06SCR passed in the Premier League
12:08with 14 votes to six,
12:10which is just,
12:11just the mandatory two-thirds required
12:15to get something through.
12:16Against it were, unsurprisingly,
12:18Bournemouth, Brighton, Brentford,
12:20Crystal Palace, Fulham, and Leeds,
12:22and what do all of those clubs
12:25have in common?
12:26They do not have owners
12:28with access to bottomless pits of money
12:30and genuinely tend to be
12:33sell-to-buy in the transfer market.
12:36Brighton, for example,
12:37they shop across Europe,
12:38they develop players,
12:39and then they absolutely have
12:40Chelsea's eyes out
12:41when they move them on
12:43and Crystal Palace try and do
12:44a similar thing,
12:45but they shop in the championship.
12:47They all quite rightly see this
12:48as making life even harder for them
12:50in regards to consistently
12:52getting nearer the top of the league
12:54because they won't have the luxury
12:55of just doing a big overspend one year
12:58and paying the fine.
12:59Most vocal in pushing for it, though,
13:02were Arsenal, Liverpool,
13:03Man United, Man City,
13:05Chelsea, Spurs,
13:06Aston Villa,
13:07and Newcastle.
13:08Or in other words,
13:09all the teams who expect
13:10to qualify for Europe,
13:12who regularly host other events
13:13at their stadium
13:14and who have owners
13:15who would chuck eye-watering
13:17sums of money at their club
13:19if they were allowed to.
13:22And Spurs.
13:23And don't get me wrong,
13:23they can't now just spend
13:25whatever they want,
13:26but in the long run,
13:27these thresholds now give them
13:29way more freedom
13:30in the transfer market.
13:31And as for everybody else,
13:33it's much of a muchness, really.
13:35Like, right now,
13:36Forrest, Burnley,
13:37West Ham and Wolves
13:38don't even know
13:39if they're going to be
13:40in the division again next season
13:42or when they might
13:43likely return.
13:44And even if they are,
13:45it doesn't really change
13:47anything they're planning
13:48to do for it.
13:49So, yeah.
13:50So, yes,
13:51that is how
13:52SCR,
13:53or squad cost ratio,
13:56works for the Premier League
13:57and indeed works
13:59for your team.
14:00I really hope
14:01you found that enlightening
14:03because let me tell you,
14:05doing the research
14:06and reading up on it
14:07and learning about it
14:08in here
14:10was not a fun afternoon.
14:12But Adam,
14:13perchance,
14:13what can I give you
14:14for your hard work?
14:15How doth one toss a coin
14:16to the football witcher?
14:18Well,
14:19you can subscribe to the channel
14:20if you haven't done it already
14:20because
14:21there's a lot of things
14:22I want in life
14:23but 200,000 subs
14:24is pretty much the main one
14:25at the minute
14:25and you can get me across
14:26all the social medias
14:27at Adam Cleary
14:32and become a channel member
14:33because this was a video
14:35that the channel members
14:35gave us an idea for
14:36because we did a stream
14:38and we mentioned SCR
14:39and loads of them went,
14:40what the fuck is that?
14:42So,
14:42that's where this came from.
14:44That's all I've got to say.
14:46I hope you enjoyed yourself.
14:47Maybe your club's
14:48going to spend more money now
14:49and maybe it's not.
14:51That's life.
14:52Goodbye.
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