The Premier League is considering eliminating points deductions and introducing an NBA-like ‘luxury tax’ system amid concerns that top players may seek other leagues if salary restrictions are too stringent. This comes after Everton and Nottingham Forest incurred point deductions.
According to Mail Sport, Premier League teams are thinking about doing away with point deductions and enacting a “luxury tax.”
The Profit and Sustainability Rules (PSR) of the league have been deemed unsuitable by numerous officials due to the severe point deductions imposed on Everton and Nottingham Forest, as well as the lack of activity during the January transfer window as clubs were afraid to overspend and face penalties.
Serious concerns also exist that, in its current form, PSR will cause the Premier League to lose its lucrative standing as the greatest league in the world since it will no longer be able to pay the top players the highest fees.
Everton suffered a six-point deduction this term for breaking Profit and Sustainability Rules
Radical reform has been discussed among the clubs and an entirely new system could be voted in at the end of the season meeting in June. As many as 17 of the 20 clubs are thought to be leaning towards significant change. Fourteen clubs need to be in agreement to get a rule change through.
Some feel that the eventual six-point penalty dished out to Everton and the four handed to Forest were draconian and not reflective of why PSR was brought in.
Points deductions for financial breaches could be scrapped in the Premier League next season
They believe that should clubs wish to ‘have a go’ and have the money to do so, they should not face a punishment that could plunge them into the Championship.
A ‘luxury tax’ has been considered, where those clubs who overspend will have a financial punishment which would increase the more they splash the cash. But clubs can choose to press on regardless if they wish.
Nottingham Forest were hit with a four-points deduction this season too for the same sanction
The Premier League players who followed the regulations would then get a share of the money, which might total in the tens of millions. A ’emergency fund’ to support financially vulnerable EFL clubs has been proposed as a possible use for part of the fines.
These days, the National Basketball Association and Major League Baseball in America have taxes based on how much is paid for the players’ salary.
The National Hockey League and the NFL, America’s other two major sports leagues, have “hard” salary limitations that clubs are not permitted to go over.
Additionally, they are in favor of UEFA’s new rule, which caps expenditure on player and coach salaries, transfers, and agent fees at 70% of club income.
A system of ‘anchoring’ has also been discussed. It is a form of salary cap where the amount any club can spend is directly related to the wage bill spent by the bottom club. So if Sheffield United, for example, finish bottom with an annual wage bill of £50m, every club would have a set multiple of that figure to spend for the following season. Again, if a club breaks that cap, they pay the fine.
It’s feared by clubs they won’t be able to attract the best players in future due to the PSR rules (pictured Premier League CEO Richard Masters during Man City’s 2022-23 trophy ceremony)
There are other financial points up for debate at the end of season meeting. A ‘growing number’ – according to a source – want to change financial rules so that only spend on players (buying and salaries) and coaching staff is taken into account over the three-year reporting period.
Currently, only money spent on new stadia, infrastructure, youth development and community projects is exempt from being calculated as part of the £105m clubs are permitted to lose over three seasons. But those pushing for only players and staff to be included believe that it would free up clubs to invest in the likes of content, digital and marketing to grow their global fanbases.
And in another shock development, a vote to reverse the February ruling on related-party transactions – deals within multi-club networks or with sponsors who have the same owners as a club – could also be on the cards.
In February, an amendment to these rules was approved by the narrowest of margins. With seven votes needed to block a proposal, there were 12 in favour, two abstentions and six against. But some feel that the change, and the knock-on impact it has on ownership of other clubs overseas, is harmful with one, thought to be Manchester City, considering legal action.
The Premier League are looking to replicate the NBA model of a luxury tax moving forward
The option to send a young prospect to gain experience overseas at a club in their network, which would then increase their market value, is thought to be attractive to many.
The situation is complex. Traditionally the ‘Big Six’ both Manchester clubs, Arsenal, Tottenham, Liverpool and Chelsea, have tended to vote together. However, it is understood that there has been a ‘seismic shift’ in relationships, with Saudi-owned Newcastle now included in a ‘Big Seven’.
Some feel that a rules to encourage investment would result in a more competitive league which would increase interest levels and safeguard against the future. The Premier League has been contacted for comment.
