Salary Cap to Face Legal Challenges from Premier League Clubs

Legal Concerns about Salary Cap

The proposal for a controversial salary cap in the Premier League is poised to be legally contested by various clubs, according to the leader of the Professional Footballers’ Association (PFA). Maheta Molango emphasized that such a cap “cannot be imposed unilaterally.”

Next week, clubs in England’s top flight will convene to vote on the possibility of replacing the current profit and sustainability regulations, which restrict financial losses.

A proposed model, known as the top-to-bottom anchoring (TBA) system, would limit what a club can spend on player salaries, agent fees, and transfer expenditures to five times the financial earnings from broadcasting and prize money of the league’s lowest-ranked team.

Should this measure be enacted, a salary cap would limit spending by clubs regardless of their individual income levels.

Molango pointed out the opposition from the players’ union, stating that such a cap “would not survive any legal scrutiny.”

Response from the Premier League

In a statement to the BBC’s Radio 4 Today program, Molango remarked, “In football, we often act as though we are above the law, yet football is subject to legal constraints, and it is untenable to artificially restrict someone’s earning potential.”

He further noted, “The league itself recognizes that there would be clubs within its group that would legally challenge this policy, and the only victors in this scenario would be the lawyers.”

The Premier League responded by disagreeing with the PFA’s stance on the financial proposals and highlighted the thorough consultation process that has taken place. The league remarked, “The PFA has had multiple opportunities to contribute to and influence these proposals… We have taken feedback seriously and incorporated it into the rule framework where applicable.”

Current Status of Financial Regulations

Trial of TBA System

The TBA model is currently being tested by the Premier League, alongside a squad cost ratio (SCR) that permits clubs to allocate a certain percentage of their total revenues to squad-related expenses.

On November 21, clubs will decide whether to adopt this new framework, which would replace existing regulations permitting losses of up to £105 million over a three-year span.

Despite previous votes favoring the retention of the current regulations, some clubs have criticized the limitations they impose on investment.

Of the 20 Premier League clubs, nine must adhere to UEFA’s SCR rules due to their participation in European competitions, raising discussions about harmonizing the regulatory frameworks.

UEFA allows clubs to spend as much as 70% of their income on squad costs, while the Premier League proposes an 85% threshold.

Reports indicate that some clubs will back the SCR model only if it includes anchoring measures to maintain competitive equity.

In the last election, 16 clubs supported further analysis of the TBA system, with only Manchester United, Manchester City, and Aston Villa opposing, due to concerns about how it might disadvantage them compared to their European counterparts.

Concerns from High-Profile Clubs

Sir Jim Ratcliffe, co-owner of Manchester United, voiced concerns that anchoring could “restrict the leading teams in the Premier League.” He stated, “We shouldn’t inhibit our top clubs from competing with European giants like Real Madrid or Bayern Munich.”

For instance, Sheffield United, who finished last in the previous season, generated revenues around £110 million. This implies that, under TBA, no Premier League club could spend more than £550 million on salaries, transfer fees, and agent costs.

Conversely, a European team with £1 billion in revenue could allocate £700 million for similar expenses while complying with UEFA regulations.

Manchester City spent £413 million solely on wages last year, earning total revenues of £715 million. If the TBA model had been in effect, City might have approached a violation of the proposed financial limits.

Many clubs that oppose the TBA system believe it could jeopardize the Premier League’s future and risk putting clubs in immediate violation of regulations, consequently stifling their growth.

Under the current proposals, clubs that fail to adhere to the spending cap could face severe penalties, including point deductions.

PFA’s Position on Legal Challenges

The PFA has raised “legal concerns” with the Premier League regarding the potential impact of anchoring on player contracts, advocating for a more collaborative approach to financial sustainability.

In a separate instance, the PFA previously challenged a salary cap set by the EFL for lower leagues, arguing that it was “unlawful and unenforceable,” a claim that was validated by an arbitration panel.