The Premier League is proposing changes to its financial rules (known as FFP). A financial expert has predicted how Liverpool, Everton, and others will do.
Liverpool has never had an issue with Financial Fair Play (FFP) in any of its numerous forms. Owners FSG have always been committed to running the Anfield enterprise in a sustainable manner, and the Reds have never broken any financial restrictions.
Liverpool, like the rest of the division, will be watching with interest as the Premier League considers yet another tweak to its laws.
The current Profitability and Sustainability (PSR) laws have undoubtedly had an impact this season, the full degree of which is unknown (Everton is awaiting the ruling on a second charge, while Nottingham Forest was only docked four points, a whole new system might be in place as early as 2024/25.
This new method, like PSR, will most certainly continue to be known colloquially as FFP, as the word has stayed. The new measures are essentially soft spending caps, with transfer and labour expenditures connected to a club’s earnings.
According to Sky Sports, the Premier League could still have new rules in place before the start of the season, having decided to ‘prioritise the quick development and implementation’ of the new strategy. In essence, it will bring the division into compliance with UEFA‘s existing regulations.
The one variation is a suggested ‘two-tier’ model, in which clubs within UEFA competition are limited to spending 70% of their revenue, while those outside can spend up to 85%. In theory, this mitigates the danger of entrenching the competitive advantage of existing teams in Europe (and hence accessing greater income sources).
However, renowned football finance blog Swiss Ramble has run the statistics, and there is still a clear edge for the best clubs. Based on accessible financial numbers from 2022/23, it was determined that Liverpool, Manchester United, Manchester City, and Tottenham would all have been within the spending cap.
Interestingly, Swiss Ramble believes that Liverpool would have only just made the cap based on those calculations, spent 68% of its earnings on transfers, wages, agent fees, and other expenses. Manchester United is similarly close, with a 3% margin, while Manchester City and Tottenham are 10% and 14% within the limit, respectively.
It’s worth noting that these are not official data, nor are the Premier League‘s new cost-cutting initiatives confirmed. Furthermore, the estimates are based on last season’s data, and clubs would undoubtedly be able to enhance income or lower expenditures in accordance with the new laws once they went into effect. Swiss Ramble is not claiming that any club is doomed to violate the new rules.
Having said that, it appears that Everton may face additional challenges in the future. According to the figures used, it would have fallen 2% short of the ‘non-UEFA‘ spending limit of 85% of revenue in 2022/23 — though that appears to be a simpler solution than Wolves’ 10% deficit, or Newcastle and Chelsea’s 12% and 17% overspends (the latter measured against the UEFA cap of 70%).
Arsenal would also have a minor issue to overcome, with the finance expert estimating that the Gunners would have overspent their budget by 4%. Brentford & Brighton would have the maximum leeway.
According to Liverpool.com, these Swiss Ramble data demonstrate that Liverpool could not simply assume all will be great under the new ‘FFP’ standards. After all, it is one of the division’s top pay spenders.
However, the data show that Liverpool would have already been in compliance with the proposed new criteria in 2022/23, implying that significant adjustments are unnecessary. The same cannot be true for Chelsea, and Everton may be concerned about more issues, considering that it appeared to have violated both the proposed new rules and the existing PSR laws last season.
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