UEFA’s PSR regulations are a fair bit stricter than the Premier League, as the allowable losses are much smaller, even though these have been increased over the years, while clubs also have to contend with the new squad cost control ratio.
Aston Villa
In contrast to Arsenal who appear to meet the criteria, the authoritative Swiss Ramble thinks that Villa have missed UEFA’s PSR target by a country mile. By his reckoning, their adjusted PSR loss for the 2-year monitoring period was a hefty £140m, using figures provided by the club itself for allowable deductions. That would mean a €161m PSR loss, which would be a cool €100m over the allowable target, even though this was boosted by the €55m allowance for an equity contribution.
It very much looks like Villa have also breached the new squad cost control limit, though the magnitude of the over-run depends on how the 13th month in their accounts is treated.
This has been tacitly admitted by the club, as Villa basically ignored the UEFA rules in the accounts, while acknowledging the Premier League’s PSR.
It also seems clear that Chelsea will breach UEFA’s financial sustainability rules, as these do not allow a club to benefit from asset sales to other group companies.
This means that they have to exclude the exceptional £275m gain they made from such transactions. In this way, their accounts included £77m in 2022/23 from selling hotel buildings, followed up with £198m profit the next season after selling their women’s football team.
Chelsea
Chelsea have effectively admitted a breach, stating that they have “entered into discussions with UEFA regarding mitigating factors affecting the regulatory submissions”.
The assessment for the 2025/26 season will be boosted by returning to European competition, especially as they won the Conference League, plus their participation in the money spinning FIFA Club World Cup.
Given their huge operating losses and UEFA’s unwillingness to accept asset sales, it’s difficult to see Chelsea quickly complying with their financial regulations, notwithstanding the club’s tried and trusted ability to make a lot of money from player sales.
Liverpool
One club that has absolutely no problems with UEFA’s financial regulations is Liverpool. For example, their £66m loss for the 2-year monitoring period up to 2023/24 turned into a £20m profit after allowable deductions. In fact, their 62% squad cost control ratio was not only comfortably within the 80% target, but also a fair way below this season’s 70% limit.
Manchester City
Somewhat ironically, given Manchester City’s numerous issues with UEFA in the past, the Swiss Ramble reckons that they are now miles better than target. They already posted a £154m profit for the 2-years up to 2023/24, which was boosted by £88m allowable deductions, giving a staggering £242m PSR profit. That is equivalent to €280m, which was a massive €305m better than the €25m acceptable loss.
Newcastle United
As Newcastle did not play in Europe last season, their 2023/24 figures were academic, but the accounts did include an interesting table listing the differences between the club’s figures and those to be used in UEFA’s calculation.
The club said that it would have needed to increase reported losses by £12m in 2022/23 and £27m in 2023/24, mainly to apply fair value to player sales and to increase player amortisation so that registrations are written-off over a maximum of five years.
Last season was adversely impacted by the absence of European competition, though the club said that there would be significant growth in commercial income, including the much more lucrative Adidas kit supplier deal. Nevertheless, the expectation is that Newcastle will overall struggle to comply with UEFA’s regulations.
Nottingham Forest
Forest are in a similar situation to Newcastle, as they did not need to submit an assessment to UEFA for 2023/24, but the Swiss Ramble’s model suggests that they would have been within the limit by €11m.
Tottenham Hotspur
Although Tottenham only qualified for Europe after making the most of their opportunity in the last chance saloon, aka the Europa League final, they will absolutely cruise past UEFA’s financial regulations. Their reported loss for the 2023/24 two-year monitoring period was a hefty £121m, but they benefited from enormous allowable deductions of £187m, driven by £141m depreciation, giving them a £66m PSR profit.
Football earnings rule
In summary, the Zurich-based guru thinks that the vast majority of English qualifiers were fine for UEFA’s football earnings rule. However, it seems clear that both Chelsea and Aston Villa missed the 2023/24 target by a long way.
Manchester United should have been OK for the 2023/24 assessment, though it would have been a close run thing.
Crystal Palace should be OK, so long as they can answer the multi-club ownership question to UEFA’s satisfaction. However, Nottingham Forest might have a few problems in complying, given the steep reduction in player trading profits last season.
Make me pure, but not yet
The most likely outcome is that Chelsea and Villa will end up making a deal with UEFA, as many other clubs have done in the past, with a 3-year or 4-year settlement agreement. This would effectively buy them some time, so long as they are fully compliant at the end of the agreement.
Of course, they would also have to pay a fine, but looking at the UEFA penalties announced in September 2022, the payments are not overly onerous, even for clubs that were far above the maximum allowed loss, especially as only a small amount of the settlement is paid immediately with the remainder conditional on future compliance with targets.
As an example, Paris Saint-Germain were fined €65m, but only had to pay €10m immediately with the remaining €55m conditional, depending on future compliance with targets.
Chelsea and Aston Villa, who are both backed by very wealthy owners, might consider such a penalty to simply be another cost of doing business and very much worth paying if it allows them to build a squad capable of challenging at the highest levels.
Looking at the differences between the financial regulations operated by UEFA and the Premier League, the stylised facts as is said in economics are:
The Premier League’s regulations are weak (as they allow all sorts of creative accounting), but the punishment is tough (as they have applied some points deductions).
UEFA’s regulations are the exact opposite, as their regulations are tough (smaller allowable losses and exclusion of inflated profits), but the punishment is weak (very largely in the form of settlement agreements and small fines).
The focus of the many discussions about PSR has understandably been on the Premier League’s regulations, but leading clubs also have to consider UEFA’s financial sustainability framework.
This has become increasingly important with almost half of England’s top flight competing in Europe next season.
UEFA’s regulations are similar to those applied in the Premier League, but they are far from identical, so there will be even more work for the accountants to balance the various requirements (cue the world’s smallest violin).
Our estimates suggest that most English qualifiers should be fine, but it seems reasonably clear that a few clubs will have problems.
We will know for sure very shortly, but the smart money is on Chelsea and Aston Villa breaching the 2023/24 test, while Newcastle United and Nottingham Forest will probably face challenges in the next assessment.
Labels
Aston Villa Chelsea Fifa.Manchester City financial fair play Liverpool FC Newcastle United Nottingham Forest Premier League PSR Tottenham Hotspur Uefa
West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...
Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to ...
After lengthy delays, Fulham’s shiny, new Riverside Stand has finally opened, creating “a unique Thameside destination with first class facilities for supporters and partners on match days, as well as for the wider community year-round”. This ambitious project has increased Craven Cottage’s capacity by around 4,000 to 29,600, while it has also taken advantage of the club’s fantastic location and wealthy catchment area by including two Michelin star restaurants, a rooftop swimming pool, corporate hospitality and event space, all benefiting from views of the Thames. Chief executive Alistair Mackintosh observed, “Fulham is the sort of club that can have a business class or first class and have fans that turn left on a plane.” Indeed, there is also an exclusive members club – with a football season ticket as an optional extra. It’s fair to say that “the times they are a-changing”, as this is a long way from the traditional pie and a pint. However, in a world where clubs face the tw...