Summary of Premier League Cost Control Reforms


 
Below is a quick summary of my understanding of the Premier League’s (PL) cost control measures it will be adopting after the vote today:
 
1. Clubs can make £15 m loss over a three year rolling accounting period. This means that a £5m per season loss can be covered by owner loans.
 
2. Clubs can make a cumulative £35m loss over a three year rolling accounting period I.e. a total loss of £105m if:
  • owners guarantee the funding;
  • show financial forecasting projections to the PL; and 
  • (presumably) £90m of the loss is provided to the club as equity (shares).
3. The Soft Salary cap: Only a £4m increase in the wage bill for PL clubs (presumably for the life of the upcoming PL TV deal) will be permitted.  If a PL  club spends more than an additional £4m on wages from the previous season, the additional wage cost can only be funded by increased commercial revenues that the club has made during that season.
 
In the coming days, I will write in more detail on the above reforms and their consequences for the PL. At first glance, it is not yet clear when the regulations will come into force.

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