Premier League Financial Rules According the Premier League’s official website, the league’s financial rules state that clubs must pay transfer fees, salaries and tax bills on time. They must also submit accounts annually, and disclose payments made to agents. Moreover, clubs cannot make a loss that exceeds 105 million Pounds across three seasons otherwise, they would face severe punishments (according to the BBC) and even point deduction. However, if the the loss is in-between £15 and £105 million, then the deficit must be covered by the club’s owners. These rules appear to be a slight tap on the wrist compared to the ones implemented by UEFA’s Financial Fair Play, where the clubs would face far stricter punishments (as we’ll see below) for even smaller economical losses. According to UEFA’s official website, the clubs can only spend 5 million Euros more than what they earned during an assessment period of three years. However, the limit can reach €30 million if it’s completely covered by club owners or third parties during the assessment period of 2015/16, 2016/17 and 2017/18. UEFA’s view was to further lower the numbers and prevent the clubs from overspending, but the Covid-19 pandemic delayed these proceedings, with the European governing body taking a lighter stance, allowing the clubs to recover from the severe financial consequences of the worldwide virus. How Much Can Premier League Teams Spend? In the absence of Salary Cap rules, Premier League clubs are free to spend as much as they like, as long as they don’t cross the red lines set by the English FA’s financial rules, and more importantly, UEFA’s Financial Fair Play. While all financial limitations implemented in the sport are mainly intended to force the clubs to break even (AKA spend as much as they earn), reaching a perfect balance might be an almost impossible task from an economical point of view. Therefore, clubs will continue to push the envelope as much as they can in their attempt to enhance the level of their squads, which should theoretically put them in better positions in the table, subsequently earning bigger financial rewards. However, it should also be noted that the spending limit mentioned is only related to transfer fees, players and staff wages, and other similar expenditures. However, other expenses that a related to investment in stadiums, training facilities, youth development and women’s football are exempt from the financial limits according to UEFA, as the clubs are encouraged to invest in these departments, rather than splashing their money on astronomical salaries and transfer fees. Premier League FFP Punishment As mentioned above, the Premier League’s financial policy states that any club failing to meet the financial requirements set by the league could face severe penalties as well as point deduction. However, theses punishments are less strict than those adopted by UEFA’s Financial Fair Play rules, who have a much more detailed system in this regard. The governing body of European football implemented nine types of punishments within its rules, beginning with the leanest all the way to the most severe. Level Punishment 1 Warning 2 Reprimand 3 Fine 4 Deduction of points 5 Withholding of revenues from a UEFA competition 6 Prohibition on registering new players in UEFA competitions 7 Restriction on the number of players that a club may register for participation in UEFA competitions 8 Disqualification from competitions in progress and/or exclusion from future competitions 9 Withdrawal of a title or award List of punishments that can be implemented by UEFA’s FFP rules Conclusion Based on the rules and their practices, it’s safe to say that the Premier League’s Financial Fair Play rules remain a shy figure, as the English FA doesn’t intend on shaking the landscape that allowed the league to evolve into the biggest juggernaut in European football, even if some of the EPL clubs found themselves in delicate financial situations. So for the top EPL clubs, the domestic financial regulations are the least of their concerns, but their true bogeyman remains UEFA’s FFP rules which had threatened to exempt some of them from the Champions League in the past, with Manchester City being the most famous example.
So PIF can pick up the tab if it's less than £105m over 3 years. Is that £105m an amortized figure? Think we're ok. Spend more???
We can lose £5m a year without owner funding. With owner funding to offset the loss, we can lose £35m a year. £35m x 3 is the £105m allowable loss over the 3 year accounting window.
A bit from Swi$$ R@mble on the "Big 6" Over the last 5 years... Individual Club Analysis Let’s now look at each of the Big Six clubs separately to zoom in on where they have sourced their funds and how they have used their money. Arsenal In the 5 years up to the 2021/22 season Arsenal had the lowest revenue of the Big Six. As a result, their wages and player purchases lagged behind, being only ahead of Tottenham. They still had to use £150m of the cash reserve that they had built up in better times. External loans were replaced by an owner loan. This will reduce annual interest payments going forward, though this transaction did incur a once-off £32m, refinancing fee.
Chelsea This review covered the last five years of the Abramovich era, when Chelsea benefited the most in the Big Six from owner funding with £416m, which was made up of share capital £211m and loans £205m. As part of the sale of the club to Todd Boehly’s consortium, the debt owed to the owner has reportedly been written-off. However, the Blues were hit by £132m adverse working capital movements. Chelsea generated the most cash from player sales with an impressive £541m, nearly £100m more than the closest challenger. They had the second highest player purchases of £917m, only just behind Manchester City.
Liverpool There has been zero owner funding for the Reds in the last five years. In fact, Liverpool were the only one of the Big Six to make a repayment of owner loans of £35m, while taking out an additional £14m bank loan. In fairness, as outlined earlier, FSG had put in £171m in the preceding seven years, so the recent repayments are by no means the whole story. Three appears to be the magic number for Liverpool, as they had the third highest revenue, player sales and wages, though supporters would point out the relatively low player purchases (around £300m less than Manchester City and Chelsea). Just over £100m of capital expenditure, primarily to fund Anfield expansion.
Manchester City Manchester City spent the most on wages (£1.6 bln) and player purchases (£942m) in the last five years. They had the second highest revenue (behind United) and player sales (behind Chelsea) in this period. The owners injected £81m capital, while they also benefited from £116m working capital movements, which helped drive the largest increase in the cash balance of the Big Six of £59m (from £19m to £78m). Interestingly, both City and United had almost exactly the same amount of cash available with around £3.3 bln. Note: as City’s football club has not published a cash flow statement since 2018, some figures have been taken from the accounts of City Football Group Limited.
Manchester United Manchester United had the highest revenue of the Big Six, but in stark contrast the lowest player sales in the last five years. Wages were almost identical to Manchester City, but player purchases (in cash terms) were a fair bit lower than both City and Chelsea. United had the highest “cost of ownership”, as they made interest payments of £94m and they were the only club to pay dividends (£113m). They took out £91m additional external debt, only surpassed by Tottenham’s funding for their new stadium. They also had to dip into their reserves by reducing the cash balance by £186m.
Tottenham Hotspur Tottenham’s cash flow has been dominated by their new stadium, which has led to the highest capital expenditure of £1.0 bln, requiring the highest bank loan of £664m and growing interest payments (£94m). This probably also impacted the low £377m player purchases, while their £922m wages were by some distance the lowest of the Big Six. Their smallish spend was not helped by having the second lowest revenue and player sales.
Four of the Big Six spent between £1.5 bln and £1.6 bln on wages in the last five years. Manchester City led the way with £1,635m, very slightly ahead of Manchester United £1,619m, closely followed by Liverpool £1,580m and then Chelsea £1,486m. There is then a sizeable gap to Arsenal £1,130m and particularly Tottenham £922m. Manchester United’s wage bill has been higher than Manchester City in six of the last ten years, including 2021/22, when their £384m was £30m higher than City’s £354m. Much of Liverpool’s money has been spent on wages, so they had the largest growth in the last five years of £158m (76%), rising from £208m to £366m, the second highest in England. Arsenal’s wages were essentially flat, while others have surged ahead. The Gunners were even just about caught by their North London rivals Tottenham, who have traditionally lagged far behind.
Player Purchases Three of the Big Six account for nearly two-thirds of player purchases in the last five years, namely Manchester City £942m, Chelsea £917m and Manchester United £807m. There is then a fairly steep drop down to Liverpool £637m, Arsenal £585m and especially Tottenham £377m. Reminder: these are cash payments, so the amounts are impacted by the timing of transfer instalments and do not represent the full commitment made by clubs. As an example, if a club had bought a player for £60m in 2021/22, but agreed to pay this in three annual (even) instalments, this would only show as £20m in our analysis.
Net Spend Net transfer spend (in cash terms) for the Big Six was £2.3 bln in the last five years (purchases £4.3 bln less £2.0 bln). The highest by some distance was Manchester United £612m, followed by Manchester City £497m and Chelsea £376m. Arsenal’s activity in the transfer market has really ramped up recently, so much so that their £336m net spend was actually higher than Liverpool £318m. Tottenham were miles below the others at just £179m.
Revenue Manchester United generated the most revenue in the last five years with £2.8 bln. They were just ahead of Manchester City £2.7 bln, even though they were overtaken by their rivals in the last two seasons. Four clubs increased their revenue by more than £100m in the last five years with the largest growth at Liverpool, whose income rose £230m (nearly two-thirds) from £364m to £594m. Manchester United’s revenue was basically flat, while Arsenal’s fell £54m (13%) from £423m to £369m.
