The Premier League is proposing a new spending cap for its clubs - but what would it actually achieve?

We already knew that the Premier League’s profit and sustainability rules (PSR) were on the way out – now, we know what might replace them. On Monday, Premier League clubs will vote on a proposed new spending cap system and if 14 of the current 20 sides vote yes, then the top flight’s financial future will be fixed. The problem is that the proposed new rules protect nobody and will achieve next to nothing.

The way the proposed rules will work is that every Premier League team will have an annual maximum spend on their squad – transfer fees, wages, signing bonuses and so on – which will stand at five times the amount of money received from centralised broadcast and commercial revenue streams by the lowest-earning club in the league.

For instance, in the 2022/23 season, the lowest amount earned by any of the 20 teams from those income streams was £103.6m, which went to Southampton. Any club in the league, therefore, would have been allowed to spend up to £518m without risking sanctions.

Because it’s based on centralised revenue, the amount should remain fairly stable and predictable year-on-year – clubs’ independent commercial revenue doesn’t factor in, so there won’t be large differences in the spending cap between years when much less wealthy side like Luton Town play in the Premier League compared to years in which the league is made up entirely of teams with large support bases. This is all about money earned by the Premier League itself and distributed to the clubs.

That, at least, makes it a little easier to plan and account for that PSR, but it’s also such an enormous amount of money that it doesn’t really achieve any of the objectives that spending rules are meant to achieve – it doesn’t create a more level playing field between teams in different financial brackets, and it certainly doesn’t prevent owners from endangering their teams’ futures by overspending recklessly.

To put it into context, only one team in the Premier League would have breached the spending rules last season (Chelsea, as you might have guessed) and even with their colossal outlays, they would only have crept over the upper limit by £21m. In other words, this new limit is sufficiently close to carte blanche that it makes little meaningful difference.

There have been far too many teams in recent years – in the Premier League, the EFL and overseas - who have found themselves in difficult financial situations because owners spent too much chasing success that never came. One of the benefits of the PSR was that each team’s spending limit was anchored to their own income, and it was impossible for clubs to spend more than £105m more than they earned in a three-year period without the risk of a points deduction or other sanctions. It clearly wasn’t a sufficient deterrent for Everton or Nottingham Forest, but now that the rules have been demonstrated to have teeth, it may have worked eventually.

Now, clubs can freely spend hundreds of millions more than they have earned. It may sound unlikely that any owners would ever do that, but there are plenty of people rich enough to own football clubs who are happy to throw cash around in extravagant fashion, especially given that it is often borrowed – and often borrowed against the clubs’ assets, such as their stadia, and not the owners’ own wealth.

There are some advantages to the system, but they’re mostly small and deal with some of the awkward procedural quirks of the PSR. For instance, under those rules, clubs were effectively encouraged to sell home-grown players because their sales qualified as pure profit on the balance sheets. Now, clubs go back to having no reason to sell an academy product unless they want to for sporting reasons.

It's also true that it allows noveau riche clubs – such as Newcastle United – to play catch up more expediently with the bigger sides. With the proposed rules, they would not be constrained so much by the club’s current income and can skip ahead a bit in the spending process. It’s arguable that in this hyper-capitalist era of football, when economic advancement is generally only possible through the pockets of an oil baron or an American investment billionaire, allowing sides taken over by such people to catch up more quickly represents a more level playing field.

It’s a depressing argument, perhaps, but not one without merit, and we’re surely a long way past the point at which a genuinely level playing field could be engineered via spending or salary caps that actually constrained clubs sufficiently to allow teams with less wealthy owners to keep touch.

And of course, that argument goes hand in hand with the risk that clubs will soon be more easily able to chase the dream of Champions League football or silverware by spending more than they earn – and if they get relegated or fail to meet their aims, then suddenly a community institution which has stood for a century or more is in existential danger when the bills come due. Any financial rules that fail to protect against that eventuality don’t do what they need to. It’s only a matter of time before the next Portsmouth, and these days the money being spent is far higher than that.

It also speaks volumes about the desire of the biggest clubs to spend as much as possible that The Athletic are reporting that several of the biggest teams are actually lobbying against these very laissez-faire regulations – Chelsea, who would have broken them, are unsurprisingly among them, as are Manchester City and Manchester United. Apparently they have expressed concerns that the proposed rules might contravene UK business laws concerning competition. Needless to say, they want as little as possible.

The PSR have proven convoluted and the process of applying sanctions for breaches has been a complete mess, but at least they put a reasonably tight lid on spending – the new spending laws would represent open season. And if financial regulations are instituted which barely control spending and don’t level the playing field, then what’s even the point in the first place?