What new Premier League financial rules could mean for Man Utd and Man City

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The Premier League are set to introduce a new set of financial rules to replace the profitability and sustainability rules (PSR).

PSR could be replaced by a similar system to the one used by UEFA in their club competitions if the motion is passed at the Premier League's next annual general meeting in June. Instead of Premier League sides being allowed losses of up to £105million over three years under PSR, the new rules would allow teams to spend up to 85 per cent of their revenue on squad costs, such as transfer fees and wages. This is slightly more lenient than UEFA, with their cap set at 70 per cent.

The new rules could be in place by the summer and the change has been discussed during a season that has seen Everton and Nottingham Forest hit with points deductions. Tom Murray, a Sports Lawyer at Mishcon de Reya, has given his verdict on how the new financial rules could benefit Manchester City and Manchester United.

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"Interestingly, the Premier League have opted against adopting other measures introduced by UEFA, such as the 'net equity rule' which requires clubs to demonstrate that the difference between a club's assets and liabilities is either positive or has improved by at least 10% since the previous year,” Murray said.

"The idea behind squad cost rules is to restrict the amount of money that clubs can spend on items such as wages, transfer fees and agents' fees to a percentage of revenue. Critics of these rules will argue that they operate as a soft wage cap which reinforces the status quo and bakes in a system of inequality thereby making it harder for ‘new money’ clubs, such as Newcastle to compete with the likes of Chelsea, Manchester United and Manchester City.

"The Premier League's proposals, which will reportedly cap spending on these items at 85 per cent of a club's revenue are less stringent than UEFA's rules, which as of the 2025/26 season will cap spending at 70 per cent of club revenue. The Premier League's financial regulations have always been more lenient than UEFA – for example, Premier League clubs are permitted to lose £105m over three seasons, whereas clubs competing in UEFA competitions are limited to €70m.

"The introduction of additional financial hurdles will accelerate the trend of increased regulatory action taken by the Premier League as we have seen this season with Everton, Nottingham Forest and Leicester."

United were constrained by PSR concerns during the January transfer window but did announce a £20.4million net profit in their latest set of quarterly accounts, ending 31 December 2023. The club’s revenue stood at £225.8million - a year-on-year increase of 34.9 per cent - due to the team’s participation in the Champions League, though United’s total debts stand at £773.3million.

Meanwhile, City set a new British record by earning £712.8million in revenue for last season’s treble-winning campaign, with profits almost doubling to £80.4m. These totals are expected to rise again in next year’s accounts after renegotiating sponsorship deals.

City are awaiting a hearing over their 115 alleged breaches of the Premier League's financial rules, which the club have vehemently denied. If the Premier League clubs do vote to bring in a new financial ruleset, it will have no impact on City's ongoing case.

Under the Premier League’s new financial rules, City and United would be allowed to spend up to 85 per cent of their respective revenues on squad coasts. In theory, this should benefit both sides as they have larger earnings than most other Premier League clubs.