Last night I was reading an article about the new English Premier League spending rules for 2026/27 season with account to sustainability. The current Profitability and Sustainability Rules will be replaced by a Squad Cost Ratio which will allow clubs to spend up to 85% of revenue.
This is utter madness knowing that most clubs never make any profit and all they do is negotiate new terms on debt. Last season the Premier League generated close to £7 billion in revenue whilst generating a £1 billion loss. The Profitability and Sustainability rules were in place to curb club spending not allowing clubs to post 3 consecutive years of debt. This is now replaced with a maximum spend of 85% of revenue on playing squads which includes all wages plus managers.
For example a team that generated £1 billion in revenue could play by the rules and assemble a squad that cost £850 million per season whilst racking up hundreds of million in debt. How is this good for the sport because they have now moved the sustainability goal posts and tossed them away. The losses we saw last season and most likely this season will be nothing compared to what is coming in the future.
If we take a closer look at team squad costs versus the revenue we shall see there is going to be a problem. Teams did get around the large spending on players as these costs are amortized over the length of the contract which also includes agents fees.
Liverpool last season had a cracking year and generated €836.1 million and the total cost of the squad the club spent is €709m even though it is valued at €1.02 billion. Liverpool falls just below the 85% by a mere €1 million so they are maxed out for next season depending on this years revenue which will be down this season due to not winning the Premier League. They have to hope their commercial deals bring in more revenue or they will need to sell a few players.
Manchester City had revenue of €829.3 million and the clubs squad cost over €1 billion so they are well over the 85% mark by a large sum of €240 million. This is something the club has to work on by generating more revenue or selling a few players.
Arsenal had revenue of €821 million with a squad cost of €955 million are well over the 85% ratio. Arsenal are looking strong because they have generated more revenue this season reaching the Champions League Final which earns an extra €120 million to the books. Arsenal will still have to sell players in order to add to their squad due to how much the squad costs already.
The problem does not lie with the top clubs however and is more of a problem for the smaller clubs. How can the smaller clubs match the bigger teams knowing they have less revenue. I guess the smaller clubs have to become more creative or they will never be able to compete at the same levels against clubs who can spend triple the budget on players.
Bournemouth earned a record €210 million in revenue last season, but the squad cost €382 million so they need to be at around €180 million and are more than double where they need to be in squad costs.
Brentford FC recorded a €200 million revenue with a squad costing €346 million so again it shows the smaller clubs cannot compete at the same levels due to having smaller revenue which will impede their squad next season.
The change in the profitability and sustainability rules will create a big divide between the bigger established clubs and the mid table to lower table clubs. Revenue relating to squad value is not a fair playing field and this gap will only increase along with debt for the bigger established clubs.