On Friday, Premier League clubs will vote on what critics call a "hard salary cap" -- something its proponents more lovingly call "anchoring." (Or maybe they won't: The Premier League has a habit of suddenly withdrawing proposals from the agenda for "further discussion" if it becomes apparent they won't get the necessary 14 of 20 clubs to agree, and as of Thursday morning, several clubs remain on the fence.)
"Anchoring" essentially boils down to capping the amount of money a club can spend on its squad -- in the form of player and staff salaries, payments to agents and amortization, the transfer fee spent on a player divided by the number of contract years -- to five-and-a-half times the amount in prize money and broadcast revenue paid to the club who finished bottom the previous year. As a practical example, in 2023-24, Sheffield United earned £109.5 million ($143 million) in prize money and media rights, so the maximum spend from any club in 2024-25 would have been around £550 million ($718 million). There would be punishments for those who breach the cap, from fines to points penalties (six or more for repeat offenders).
Is £550 million a reasonable cap? Well, we don't have complete data for the 2024-25 campaign, but by most estimates, only Manchester City and Chelsea appeared to be at risk of coming close to breaking the £550 million ceiling. So on the surface, you'd be tempted to think it's not really a big deal.
The arguments against this appear to be twofold. Several leading agencies and the Professional Footballers' Association (the players' union) have threatened legal action if the measure passes. You can see their logic. If clubs have a hard spending cap, players' earning potential -- and agent fees -- will be diminished.
There's also a very real "slippery slope" argument. If it's introduced in the Premier League, it's more likely to be rolled out -- obviously with far lower ceilings -- across the lower divisions, where many pros earn nowhere near seven figure salaries.
The other line of argument is that a hard cap would hurt the Premier League's biggest clubs on the world stage, because it would make it harder for them to compete with Europe's big spenders, who have no such limits. All they have to contend with are some domestic rules -- mostly around liquidity -- and UEFA's own "squad cost ratio" guidelines, which stipulate you can't spend more than 70% of your revenue on players. So hypothetically, if Real Madrid have revenues of a billion pounds, they could spend £700 million on "squad costs," giving them a hefty advantage over Liverpool, Arsenal, City and other Premier League giants, who would be limited to £550 million (assuming they too comply with the 70% squad cost ratio rule, which would mean they'd need to earn at least £785 million).
This line of reasoning feels a bit Chicken Little. For a start, there are only four clubs -- Real Madrid, Bayern Munich, Barcelona and Paris Saint-Germain, the latter at a real stretch -- that can compete with the Premier Leagues' Big Six in terms of revenue and therefore squad cost potential. And in case you hadn't noticed, PSG have retrenched and cut costs, possibly because the endless supply of Qatari sponsorships isn't quite endless and they earn a pittance from their domestic TV deals, while Barcelona, reeling under enormous debt, have to thread the needle every year to satisfy LaLiga's spending limits, let alone UEFA's.
To suggest the Premier League's primacy is somehow threatened because Real Madrid or Bayern might be able to outbid Tottenham or Chelsea denote some Grade A insecurity. Not least because the Premier League's success isn't driven by Ballon d'Or winners, bling or European silverware, but by the product they deliver every weekend.
Still, if the Premier League is such a hit, why are these restrictions even being proposed? There's a short answer and a longer one.
The short one is simple: money. As successful as the league is commercially, the vast majority of clubs record losses year after year. Most owners, no matter how deep their pockets are, like to break even from time to time, and player costs -- both wages and transfer fees -- represent the biggest slice of their expenses.
The longer answer is that this is being done in conjunction with the Premier League's own Squad Cost Rules (SCR), which are expected to replace Profit and Sustainability Rules (PSR). While the latter capped losses at £105 million ($137 million) over a rolling three-year cycle, the former are similar to UEFA's guidelines, except they limit clubs' spending on players to no more than 85% of revenue. (In that sense, they're more generous than UEFA's rules.)
The problem with implementing SCR on its own is that it cements the status quo. No matter how hard a team like Brentford tries, its revenue -- and, therefore, the amount it can spend on its squad -- will always be dwarfed by Manchester United, which have a bigger stadium, more fans, a legacy brand, etc. So if you introduce SCR, there's a risk the gap between the biggest clubs and everybody else (which is already notable) will only continue to increase, and over time, we'll get even less competitive balance than we have now.
Anchoring is a way to ensure that the gap in resources doesn't turn into an abyss. That's why some clubs will only accept SCR if it's accompanied by anchoring. Without it, clubs might say, it will be nearly impossible to compete on the pitch.
They have a point, though. Deep down, you suspect they care just as much about their bottom line -- especially those clubs that are owned by private equity, particularly of the highly leveraged sort -- as they do competitive balance. In theory, both goals can align nicely and both measures should pass on Friday. Especially since, like all regulations, if they end up being counterproductive, they can be fixed.
But, of course, this is the Premier League we're talking about, which is essentially 20 different owners in vastly different circumstances. Some club owners aren't necessarily running their club as if it was a business or, at least, are willing to sustain losses for longer periods. Others, perhaps at newly promoted clubs, might legitimately fear that SCR will stop them from consolidating their status in the Premier League. Others still might have a business model that relies on player trading, and being able to shift players to bigger clubs for vast fees of the sort they may not get if a hard cap is in place.
What we can be (relatively) sure of are two things. One is that this issue isn't going away. You can only sustain losses for so long; at some point reality bites, and if SCR and "anchoring" aren't the solution, they'll need to find something else. The other is that if the Premier League isn't sure they have the necessary 14 clubs on board to pass the measure, it won't even come to a vote.