The salary cap could be coming to the Premier League

Premier League clubs have agreed to move forward with plans to implement a salary cap as part of the “squad cost” rules that take effect in the 2025-26 season.

The decision, which aims to address spending inequality in the world’s most popular league, was discussed at a Premier League shareholders’ meeting at The Churchill hotel in London on Monday and is now set to be voted on at the league’s annual meeting next month.

Over watered-down cocktails and fingerling sandwiches, the shareholders discussed the introduction of an “anchoring” system tied to the television revenue of the club that finishes in last place.

This may come as news to some, but the Premier League implementing a spending cap has been a long time coming, and reeks of American influence. Here’s what you need to know about the new rules.

How will they work?

The salary cap will be calculated based on a 5x multiple of the TV revenue generated by the league’s poorest club. Squad costs, which comprise the first-team’s wage bill as well as amortized transfer fees and agent payments, can not exceed this amount. Since this season’s financials have yet to be released, let’s use last season’s as an example.

• Southampton, who finished dead-last in the league last season, earned $131 million in TV revenue.

• As the Premier League’s poorest club in terms of TV revenue, that’d make the salary cap $653 million this season – $131 million multiplied by five.

Chelsea would have been the only team to eclipse this threshold, with a total squad cost of $676 million.

While things wouldn’t change much in the short-term, teams further down the revenue table see the rule changes as a way to enhance parity in the league; This is a way to stop the league’s biggest earners from outspending them at an ever-expanding rate.

This means clubs benefitting from über-rich ownership will no longer be able to spend like a trust fund kid with daddy’s credit card (looking at you, Chelsea). The NFL is proof that the salary cap does make it so small market teams like the Green Bay Packers can compete with the big boys.

There’s a reason why Leicester City is the only club outside the Premier League “Big Six” to win a title over the last 25 years. 🤯 

What are the downsides?

While introducing a spending cap makes sense from a parity perspective, it’s not without its fair share of potential downsides. In its simplest form, a salary cap places a limit on player earnings.

Fans are concerned that this could dilute the Premier League’s talent pool and lead players to seek higher salaries abroad.

If Man City can’t meet Erling Haaland’s demands when his contract is up in 2027, then he’ll just go to a team like PSG, who have seemingly unlimited funds and don’t have to abide by the same salary cap limitation. After all, this move would effectively reverse the abolition of the maximum wage in English soccer in 1961, which significantly boosted the appeal of playing in the country.

Other fans have pointed out that the move means owners will only try to find more ways to maximize revenue…

… as if they needed another excuse to jack up ticket prices even more. 🤦‍♂️

If top players like Haaland do end up leaving England to play abroad, weakened Premier League teams will likely suffer in European competition, and miss out on significant prize money as a result.

Who is against it?

It’s for these reasons and more that Man United, Man City, and Aston Villa voted against the salary cap, with Chelsea abstaining from the vote.

Man United, specifically, pushed back against the proposal because of concerns that the rules changes would prevent new ownership from being able to adequately overhaul their squad in a timely manner.

Aston Villa owners V Sports, who purchased a majority stake in the club in 2018, voted against the salary cap for similar reasons, while Man City and Chelsea, with their gargantuan wage bills, have obvious motives for not ratifying the proposal. Unfortunately for them, however, only 14 clubs need to vote ‘Yes’ for a proposal to pass, meaning the consensus for it to proceed to the next stage was overwhelmingly in favor.

Any move to set a ceiling on how much players can earn is also going to raise alarm bells for the the Professional Footballer’s Association (PFA) – the players’ trade union – which must also approve the spending cap for it to be voted through.

The PFA may reserve judgement for now, but it’s only a matter of time before a salary cap is implemented one way or another because…

Americans have a strangle-hold on the PL

American investors have increasingly acquired equity stakes in Premier League clubs. Arsenal, Aston Villa, Bournemouth, Burnley, Chelsea, Crystal Palace, Fulham, Liverpool, Man United, and West Ham all have some level of American ownership. 🇺🇸 

With these owners seeing just how profitable North American sports are compared to their European counterparts – the NFL alone pulls in more annual revenue than Europe’s top five leagues combined – it makes sense that their revenue-generating strategies are following them across the pond.

The salary cap was always going to be the first step in the Americanization of the Premier League, and it’s certainly not the last. NBC, the Premier League’s American broadcast partner, is pushing for games to be played state-side on the opening weekend of the season in a renewed bid to take top-flight matches outside of England.

It’s just a matter of time before ticket prices become more expensive than a knee replacement, stadium beers cost $22, and games are stopped every 90 seconds for a Burger King commercial (🎶 Whopper, Whopper, Whopper, Whopper 🎶). How delightfully ‘Murican.