The Premier League will implement a spending cap on all teams with the changes being ratified in the summer according to reports. Overall, the spending cap will be in the range of five times the TV revenue of the bottom club.
The salary cap approval comes on the heels of growing concerns over the rich getting richer and the poor failing to keep up. Also, various Premier League clubs have been investigated or are under investigation for dubious spending methods.
Of the Premier League clubs, Manchester City and Manchester United as well as Aston Villa voted against the notion of a salary cap while big spenders Chelsea abstained.
How does the Premier League spending cup break down?
According to the Daily Mail, the Premier League would “anchor” clubs at a cap that is tied to what the “lowest earners receive from the Premier League’s centralized broadcast and commercial deals”.
In the case of a club like Southampton who earned in the range of £103.6million based on their TV and commercial income, that amount would be multiplied by 5 and would be around £518m in regard to total spend for all teams.
That would mean that all clubs must meet that £518m ceiling on their rosters to be roster compliant. Under these rules only Chelsea who has spent over 1 billion pounds on players would be over the cap by 12 million. Manchester City would just fall below the cap limit at the moment.
The salary cap would include wages, transfer fees, and agents’ fees and the term being used for the new salary cap is “anchoring”. The move by the Premier League comes on the heels of investigations into clubs that have broken financial fair play rules, overspending, and dubious spending practices.
It is a league wide effort to balance out the teams and make the Premier League competitive for all.
