Latest Aston Villa news from BirminghamLive as NSWE continue to find ways to stay compliant with Profit and Sustainbility regulations
A general view of Aston Villa's Villa Park stadium
Aston Villa's owners are looking to remain compliant with PSR
(Image: Getty Images Europe)
Following the sale of Chelsea Women’s team, effectively to themselves at a £200 million valuation, there had been the expectation that the Premier League would move to close that particular loophole for clubs, not the first time that they would have been forced into a reactionary move by the west London club.
But the Premier League’s 20 major shareholders are the 20 competing clubs each season, and in order to pass new regulation at least two thirds (14 clubs) must agree on a motion. When the proposals to stop the sale of assets such as the women’s team and real estate to related ownership vehicles in order to bypass PSR issues it did not garner anywhere near enough support, with the amount of clubs in favour in single digits.
It should be no surprise that Aston Villa have now gone down this route, selling the women's team to a related entity to generate profit. It is a completely legal move, it has a precedent which means that the club can benchmark the value of their own women’s team against that of Chelsea's, giving greater confidence over fair market value, and it is £55 million that they can book as profit in the 2024/25 accounting year, which came to a close on June 30 for Villa. They are able to do that because even if the deal had not gone through, having an agreement in place in time would have allowed for them to include it in the results up to the end of June.
It solved a problem for Villa, and while the near £100m they will have booked when all is said and done from their journey to the quarter finals of the Champions League last season, as well as the £53m profit made on the sale of Jhon Duran to Al Nassr, they want to give themselves as much room as they can. The 2025/26 financial year is now in effect, and it is one where they will have a hole financially given they are in the Europa League this coming campaign, where prize money is significantly diminished.
They have a need to add some quality to their squad before the start of the new season, but they also know that they do have the option of a Morgan Rogers and Jacob Ramsey sale should big enough offers come in. With Rogers valued between £80m and £100m, and Ramsey around the £30m mark, both would represent almost pure profit and solve some issues for this financial year, even if it transpires in June of 2026.
The potential sale of The Warehouse in a similar move to the women’s team, at a valuation that has been placed at £50m, also provides some breathing space for the club, and that makes it even more apparent as to why Villa, and likely plenty of other clubs with similar issues too, wanted to make the most of what they had at their disposal in the same way Chelsea did.
What isn’t as straightforward is compliance with UEFA’s squad cost ratio rules.
The Premier League currently has profit and sustainability rules (PSR) in place as a means of financial regulation, where club losses are capped at £105m over a three-year period before sanctions kick in, with allowable deductions for such things as investment in infrastructure, the academy, the women’s team and community initiatives.
The Premier League has plans to align itself with UEFA rules, with clubs who qualify for European competitions currently having to be mindful of two different sets of rules.
UEFA allows teams to lose a maximum of €200m (£170m) over a three-year period. Deductions can be made by the club for spending on youth and women's teams as well as on their stadium and facilities. They also have a squad cost ratio in place to assess how much clubs are spending on their squads, and if it is sustainable.
UEFA’s squad cost ratio works by using relevant wage costs (for playing staff and manager), amortisation costs (how transfer fees are accounted for by dividing the guaranteed fee over the length of the player’s deal), severance costs for sacked managers, and intermediary fees. Those costs are then calculated against a club’s operating revenue and player trading profit (the best performing of the last three years to allow for transfer market volatility) to give a squad cost ratio percentage.
Clubs were given time to comply, with the SCR sitting at 90 per cent for 2022/23, 80 per cent for 2023/24, and 70 per cent for 2024/25, with sanctions arriving via fines for first-time breaches, with additional punishments possible for repeat offenders.
Using figures presented by football finance expert Swiss Ramble, Villa won’t be compliant with the 80 per cent, likely at around 88 per cent for the 13-month financial period, after Villa extended their financial year for 2023/24, when Villa were semi-finalists in the Europa Conference League, and 81 per cent for if pro-rated over 12 months.
The Telegraph report on Monday stated that dialogue had been ongoing between the club and UEFA around coming to a spending agreement to drive down the current ratio ‘by under 10 per cent’ this summer, with the same agreement in place for next summer.
Competitive sanctions seem highly unlikely, and if UEFA do choose to act in this instance, given the dialogue on both sides, a financial penalty would be far more likely. It gives Villa time to get their house in order but also explains why they would want to look at ways that they could boost revenues for both 2024/25 and 2025/26 away from simply just cutting away at the squad, impacting its competitiveness and ability to achieve once more what was so valuable for 2024/25, the Champions League.
It will impact summer plans and even the huge boost that was the Champions League revenue and Duran’s won’t allow them to sidestep that. But they do have room to add, and the owners will be making the moves seen this week in order to provide the best chance of making sure the past couple of seasons aren’t outliers and they get access to the bountiful pots of European cash with regularity, because that is truly transformational.