Football finance expert Kieran Maguire has outlined how PSR rules will impact Sunderland’s spending
Sunderland’s return to the Premier League has opened up a world of opportunity – but also fresh financial constraints.
Maguire revealed that although Premier League status brings more income, promoted clubs are significantly more restricted in terms of the losses they’re allowed to post compared to long-established top-flight teams like Manchester United, Tottenham Hotspur and others.
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“The sides promoted, they're having to operate to a certain extent with one hand tied behind their back because the established Premier League teams can lose £105million, but Sunderland, for example, can only lose £61million because you're restricted if you've just been promoted,” Maguire explained.
“So it is more difficult. Sunderland can spend a lot of money. They could drop £200million, but that's assuming they've got it in their bank account to spend. Leeds are probably a wee bit less, £100million to £150million, and Burnley could certainly spend well in excess of £100million as well. So for PSR reasons, they can spend. That's one thing. It's a bit like having a credit card limit. It doesn't necessarily mean that spending to your limits is a good thing.”
Maguire then broke down exactly how the three-year PSR assessment system works – and why the newly promoted clubs Sunderland, Leeds United and Burnley are at a structural disadvantage compared to the likes of Wolves, Crystal Palace or Brighton.
“The way that the system works is that you're assessed over your last three years. So if your last three years have been in the Premier League, every year in the Premier League, you can lose £35million. So if you've got a club like Wolves or Palace or Brighton, they've been in the Premier League a few years, they can lose £105million.
“If you've just been promoted from the Championship, you get £35million allowable loss for your first season in the Premier League. But each season that you've been in the Championship, you can only lose £13million. So, if we take a look at Sunderland, they've been promoted from League One through to the Championship.
“Now they're in the Premier League, £35million plus two x £13million means that they've got a £61million, Leeds have got a £61 million and Burnley, because they've had two years in the Premier League, they can lose £83million.”
Is it worth newly-promoted teams spending loads of money in the Premier League?
“We've seen sort of two strategies in the last few years. If we look at when Burnley, Sheffield United and Luton were promoted a couple of seasons ago, they budgeted to get relegated. Luton were paying £25,000 a week, Sheffield United were paying less than £30,000,” Magure added.
“They had the three lowest wage bills. They had the three of the lowest spends on players. So they effectively said, we think we're going to go down. If we get 17th, it's a bonus. Then you contrast that with the strategy that we saw last season, both Ipswich and Southampton spent over £100million. And that sounds like a lot of money, but when the average spends in the Premier League was £140million, it's not as much as you think.
“And you've got to run to stand still in the Premier League. And I think the problem that the promoted clubs have had is that we've still got some giants in the Premier League who can spend unlimited amounts. You've then got sort of the cool kids, the smart kids on the block, the likes of Bournemouth and Brighton and Brentford and so on, who have now sort of established themselves as you don't really have them down for being relegation candidates.
“So you look at those clubs that have come up, even if they spend money, who are they trying to bring into the relegation dogfight? And it's difficult to name any of the existing 17 Premier League clubs. So you think, well, they've got a good chance of going down unless they really get their act together this summer.”
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