The nine English clubs involved in European competition — Arsenal, Aston Villa, Chelsea, Crystal Palace, Liverpool, Manchester City, Newcastle United, Nottingham Forest and Tottenham Hotspur — must each abide by a different set of financial strictures to their remaining 11 domestic peers this season.
Some fans see these rules as a mechanism to protect existing
top clubs from challengers. Financial
penalties can be treated as a cost of business by wealthy clubs. Only points deductions or exclusion from a
competition would really hit them.
UEFA’s football earnings rule limits clubs to €60million
(£51.9m at today’s rate) in losses over a three-year period, albeit that limit
can be upped by €10m per year (to a maximum total of €90m across a given
assessment period) if clubs meet each of four conditions UEFA deem
representative of good financial health. They are: positive equity; a quick
ratio — current assets, less stock, divided by current liabilities — of one or
above; a sustainable debt ratio, relative to income; and the club is a ‘going
concern’ (i.e. not imminently going out of business).
English clubs are mostly fine on three of those but it’s
condition two, the quick ratio, where they all fall down. Principally due to
high transfer debt, current liabilities exceeded current assets at eight of the
nine clubs in both 2022-23 and 2023-24. The one exception was Manchester City
in 2023-24.
Arsenal
The Athletic projects a small profit for Arsenal
for 2024-25 which, combined with those deductions turning previous losses into
an estimated football earnings profit, leaves the North London side firmly in
the black for the three-year cycle. They should be far from any trouble with
the football earnings rule.
The Athletic’s current projection has Arsenal’s
SCR at around 68 per cent. That is under the 70 per cent limit but leaves
little room for error in our assumptions. It is easy to see why the matter was
a live one this summer. Their
inability to net any sizeable sales over the summer has left their SCR position
on a knife edge.
Aston Villa
The Athletic projects Villa’s loss dropped
significantly in 2024-25; a small profit might even have been made. That on its
own wouldn’t be sufficient to offset the big losses of two years prior but, as
a result of entering into that Settlement Agreement, it doesn’t need to. Villa were nowhere near their high level of
loss in 2024-25, ensuring compliance with the football earnings rule under the
terms of their Settlement Agreement.
Villa also breached the squad cost rule in 2024, exceeding
UEFA’s 80 per cent limit. The lowering to 70 per cent is a good reason for
Villa’s lack of summer splurging; they were the lowest spending Premier League
club on a gross basis.
The more positive thing for Villa is their Settlement
Agreement makes no reference of extra punishment for another breach of SCR;
breaching the football earnings rule would have been far more of a risk for
them. To that end, if they are in breach they can expect another fine to go
alongside the ones already agreed.
Chelsea
The expectation is that Chelsea will not exceed the loss
limit detailed in the Settlement Agreement for 2025-26, in large part because
of business already done. FIFA’s Club
World Cup was already a boon to finances; going on to win it banked them around
£85m which can be applied in full to their current SCR calculation. Chelsea’s Settlement Agreement with UEFA
spans the next four years rather than the three of Villa’s, with the financial
penalty meted out to Stamford Bridge notably higher than Villa’s too. Chelsea
paid a fine of €31m (£26.8m), which could rise by a further €60m (£51.8m) if
conditions within the agreement are breached.
Crystal Palace will comply with both sets of rules. Liverpool are thought to be out of trouble.
Manchester City
City had no trouble complying with the football earnings
rule, and were significantly profitable across the three-year assessment
period. City have one of the
highest wage bills in world football, and one of the most expensively assembled
squads. Yet they were also the second highest earning club in the world in
2023-24, and have for years been formidable sellers of players. The
Athletic projects little trouble from a squad cost ratio perspective;
we put City’s figure in the range of 60 to 65 per cent for 2025.
Newcastle United
Newcastle’s position in terms of UEFA’s loss limits looks
precarious, not least as they were only able to avoid a breach of Premier
League rules in 2023-24 by undertaking transactions which UEFA made the club
discount from its continental submissions. Even with growing matchday and commercial
income, and a potentially static wage bill as a result of no Champions League
football, it is unlikely Newcastle’s 2024-25 result was sufficiently improved
to avoid another notable loss. The
Athletic projects Newcastle have comfortably breached the €60m
three-year loss limit to the end of June 2025, and will, as Aston Villa and
Chelsea did before them, likely now face a financial penalty.
The Athletic projects Newcastle to be on the
right side of the 70 per cent marker for UEFA’s squad cost rule, though the
number of assumptions involved makes it far from certain.
Nottingham Forest
Even with revenue up, and some conservative judgements on
the cost of player trading undertaken over the past year, Forest lost a chunk
of money last season. Combined with minimal deductions for ‘good’ expenditure,
that leaves them a fair way shy of the three-year €60m loss limit. The
Athletic projects their football earnings loss could be closer to double
that. As with Newcastle, the New York Times projection is that a financial
penalty looms.
Similarly, meeting the squad cost rule in 2025 looks a big
ask for Forest. Forest’s notable
turnover bump last season means they’re on the right track, but they had a long
journey to make. At least in the sense of rule compliance, their leap into
European competition has come too soon to change that; revenue growth hasn’t
yet matched up to the big investments made in the squad since promotion. A breach on both of UEFA’s financial
rules looks likely at the City Ground this season.
Tottenham Hotspur
Spurs’ loss figures include the huge costs of depreciating
the club’s new stadium. The Athletic projects
Spurs to be well below UEFA’s 70 per cent limit, with an estimated squad cost
ratio of in the 50 to 55 per cent range for 2025, and probably at the low end
too.
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