The Premier League’s new spending cap rules decoded: To be implemented from 25/26 if passed

In late April, the majority of Premier League clubs voted in favour of a spending cap to limit the amount a team could spend on building their squad. Manchester United, Manchester City, and Aston Villa reportedly voted against the idea, and Chelsea abstained.

As per the reports, the plan is for the spending cap to be five times the TV revenue of the lowest placed team in the league. Since all clubs don’t receive the same coverage in England, the 20th team in the table receives a significantly lower amount compared to those at the other end of the table.

Premier League clubs vote in favour of spending caps

The Premier League is heading towards another contentious vote on Monday with a majority of clubs keen to add a hard spending cap to the new “squad cost” rules that are being introduced for the 2025-26 season.

Based on the concept of “anchoring”, the de facto salary cap would… pic.twitter.com/KcnzA2TaJJ

— The Athletic | Football (@TheAthleticFC) April 24, 2024

This past season, Nottingham Forest and Everton received a points deduction, with Everton receiving two of them for not complying with the Premier League’s Profit and Sustainability Rules. As per the rules, a club can only incur a loss of £150 million in three seasons.

With their new stadium being built, Everton have spent a lot, which has been met with a deduction. However, the team has still managed to get results and avoid relegation.

The Premier League clubs will vote once again on the matter in June, once the season ends. And if there is a majority vote in favour, then the spending cap will be implemented.

🚨 Premier League clubs have unanimously voted in favour new provisional financial rules mirroring UEFA's squad cost control measures.

Final vote to ratify will take place in June and if introduced, new rules could allow clubs to spend up to 85% of club revenue on transfers,… pic.twitter.com/IXibsAnMZF

— Ben Jacobs (@JacobsBen) April 11, 2024

This would work alongside the squad cost rules, which limit the amount available to spend on transfers, wages and agent fees. The current limit is 70% of a team’s revenue for clubs that qualify for any of the three European competitions, and 85% for those that don’t.

The reason it’s not a salary cap, is because the new rules would limit the overall spending on a team. This includes wages, transfer fees, agent fees and any other expenses teams incur to build their squad.