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New York Times
11 hours ago
- Business
- New York Times
Will PSR always lead to the transfer merry-go-round we have seen over the past year?
As the clock ticked onward and football's pseudo-transfer deadline approached, Aston Villa executives were worried. It was late June last year and, needing a deal before their accounting period ended to stave off fears of a rules breach, the man they were resting their hopes on was over 5,000 miles away with a contract to sign. Advertisement Douglas Luiz, playing in the United States for Brazil in the Copa America, did eventually join Juventus in time for Villa to record the profit on the sale within their 2023-24 books. In turn, they managed to comply with the Premier League's profit and sustainability rules (PSR) last season; they would have failed without that sale. A year on, as The Athletic detailed recently, Villa approach the end of June in a similar state of regulatory concern. It is widely expected they will need to sell again before this month is out; it might be the only way they can bring losses under the level permitted by Premier League rules. Last year's worries about Douglas Luiz signing for Juventus in time only tell half the tale. As part of the deal — or rather, as two separate deals that looked conspicuously linked — Samuel Iling-Junior and Enzo Barrenechea moved to Birmingham from Turin. Villa received £42million ($56.5m) from Juventus for Douglas Luiz, much of it booked as immediate profit in 2023-24. They spent £18.3m on Iling-Junior and Barrenechea, deals which would hit the books in future years, including the 2024-25 financial period currently nearing an end. Such circuitous transactions became a theme this time last year. Villa engaged in a similar not-quite-a-swap deal with Everton, trading Tim Iroegbunam to Merseyside with Lewis Dobbin coming the other way. Villa banked £9m on Iroegbunam, Everton got £10m for Dobbin. Three other clubs joined that particular fray. Chelsea also traded with Villa, sending Ian Maatsen up the M40 for £37.5m, as Omari Kellyman moved south for £19m. Elsewhere, Elliot Anderson and Odysseas Vlachodimos passed one another on respective journeys between Newcastle United and Nottingham Forest. Anderson has become an integral part of Nuno Espírito Santo's Forest side; Vlachodimos 'cost' Newcastle £22.8m in all and has played just 45 minutes in the Carabao Cup since. Advertisement A year on, the need for a repeat of such deals looks lower. Villa might remain in trouble but most of their peers have no need to scramble around before we reach July. To that end, the merry-go-round feel of modern football has subsided a little. Even so, last year's events have helped raise a broader question: do the current rules mean clubs will always be left having to sell players to comply, even if they do not want to? The season before last was a bumper year for player profits in England's top division. Across the 20 Premier League teams, profits on selling players topped £1billion for the first time, with the £1.119bn generated in 2023-24 over £400m higher than a year earlier. Save for a Covid-related dip in 2020-21, combined player profits have increased in each of the past six seasons. That is indicative of a wider trend in football, whereby clubs have increasingly turned to player trading as an extra revenue source. It is a phenomenon far from exclusive to the Premier League. Yet last year's huge rise also reflects clubs trying ever harder to comply with financial rules. Of the six clubs with the largest improvements in player profits between 2022-23 and 2023-24, four of them partook in those swap-like deals. Linked to those deals is another occurrence which has reared its head more frequently in recent years, again with financial compliance often cited: the sale of youth players. The logic behind the strategy is simple. Excluding any agent fees incurred on contract renewals, players developed in academies have zero accounting value in their club's books because they cost nothing to buy. To that end, selling them is a profit-maximisation exercise. Where surpluses on other players arrive only once their existing book value has been subtracted, for those who have been at a club from a young age there is little or nothing to subtract. Hence: 'pure profit'. Advertisement In the age of PSR, selling academy stars has unique appeal. Linking all such sales to rule compliance would be silly, but there have been clear examples of clubs turning that way in order to avoid a PSR breach. Indeed, when Chelsea were in the process of selling academy graduate Conor Gallagher last year, head coach Enzo Maresca claimed: 'The clubs are compelled to sell players because of the rules… if we want to promote academy players — yes, change the rule.' Chelsea have found other ways to comply, so how much they were forced to sell the likes of Gallagher by the rules rather than their own previous choices in the transfer market is open to debate. But they are not an isolated example. In the instance of Anderson, few on Tyneside were happy to see the boyhood Newcastle fan go, but from a PSR and accounting perspective it made sense. His level of performance since joining Forest speaks to how his former club would much rather have kept him. Across the board, there is a perception clubs are having to get rid of players they do not wish to — or, in the case of at least one of those swap-like deals, buy players they are not too fussed about — as the only way of meeting financial rules, rules which would seem at odds with prioritising sporting decisions. Through those not-quite-swap-deals, the loss of academy stars and the simple selling of players they would rather keep hold of, there is a growing view that PSR is forcing clubs into actions the rules never originally intended. On an otherwise comfortably mild day in Westminster, Richard Scudamore was getting, if not a grilling, then at least some pointed questioning. With the riches of a bumper new TV deal for the Premier League on the horizon, Scudamore, then the Premier League's chief executive, was taking questions from a parliamentary select committee. Perhaps the most trenchant query came from John Whittingdale, MP for Maldon and East Chelmsford, and chair of the Culture, Media and Sport select committee. 'Is there any reason,' Whittingdale asked Scudamore, 'to believe that (the increased TV) money is not going to go, as it always has before, on astronomic salaries for a small number of players and transfer payments?' Advertisement That day in July 2012 was, if not the genesis of the PSR rules now in place in the Premier League, certainly one which ensured enhanced financial regulation would take root in English football. European football's governing body UEFA had announced the introduction of 'financial fair play' rules two years prior and, on the back of Portsmouth becoming the first (and so far only) Premier League club to enter administration while a part of the top tier, the incumbent government was concerned about how English football was being run. In response to Whittingdale, Scudamore replied the league was 'forming working groups' to discuss the issue, with a view to putting 'proposals in front of clubs probably in February, March next year'. Sure enough, by early February 2013 the 20 Premier League clubs had agreed upon a 'system of enhanced financial regulations'. The nub of the system agreed 12 years ago remains in place today. A light-touch effort to restrain wage growth, termed the 'short-term cost control measure', fell by the wayside ahead of the 2020-21 season, but the headline rule limiting clubs to a maximum of £105m in losses over a three-year cycle remains very much the order of the day. How exactly that level of allowable loss was arrived at remains unclear. The general view of the time was UEFA's own maximum loss limit of €45m (£38.5m, $51.9m) over three years (which was then planned to be reduced to €30m after two seasons) was too low and would solidify the 'Big Six', making it impossible for the Premier League's supposedly smaller clubs to compete. PSR losses of $105m — i.e. after 'good' costs on infrastructure, youth and community development and women's teams had been added back — was settled upon, though clubs would be limited to just £15m over three years if their owners did not provide 'secure funding' for any loss above that figure. It might seem quaint to think now but for most of the time PSR has been in place, clubs have had few compliance worries. The rules were introduced ahead of the 2013-14 season but clubs were not first assessed until 2015-16, that being the first year in which the league could pore over three years of figures. Pre-tax results are not synonymous with a club's PSR profit or loss, the latter usually being more positive because of those 'good' costs clubs can deduct, but even just considering pre-tax figures shows a stark shift in recent years. In the first four years of assessment, only one club exceeded £105m in rolling three-year losses. That was Aston Villa in 2015-16, and their £112.5m loss over the previous three seasons was sufficiently low that, after deductions, they easily came in under the maximum loss limit. Driven by an even bigger new TV deal in 2016, and with some financial constraints now in place, the Premier League as a whole was wildly profitable for a brief spell. In two seasons between 2016 and 2018 the league's clubs posted combined pre-tax profits of £1.036bn. Results were so positive that even when the pandemic arrived in 2020, only two clubs' rolling three-year loss exceeded £105m. Advertisement The Premier League waived PSR assessments that year, and allowed clubs to average losses across 2019-20 and 2020-21 in order to account for the impact Covid had on finances. Yet even that saw losses balloon; half of the division's pre-tax losses to the end of 2020-21 exceeded £105m over the assessment period, even after that averaging. Since then, over the past three seasons for which we have figures, 31 out of 60 clubs have generated pre-tax losses of greater than £105m across their respective PSR cycles. It is for that reason PSR has become so prominent. Where in the first half-decade of its presence clubs were routinely not touching the upper loss limit, now around half the league exceeds it before any deductions are taken into account. Plainly, the number then breaching after deductions remains pretty low — but it is quite clear clubs are having to find more ways to come in under the limit than previously. One of the key elements of the government's quizzing of Scudamore in 2012 was the continued growth of player wages. Initially, the new rules seemed to have the effect of stemming such growth. From 2012-13 to the season after, the first year where clubs needed to consider PSR restraints, combined wages as a percentage of turnover dropped dramatically, from 69.6 per cent to 58 per cent. What followed was indicative of a division not really departing from its past. Premier League wages to turnover did drop as low as 54.7 per cent in 2016-17, but that was the first year of a new TV deal, where revenue zoomed ahead before wages could catch up. Across the decade, club wages have steadily climbed, even as incomes fell during the pandemic and took time to recover. Obviously, the pandemic waylaid finances in a manner no one expected, but even in this post-Covid period the share of money spent on staff costs is higher than when PSR was first introduced. In 2022-23, Premier League clubs spent more than £4bn on wages, or 66.7 per cent of their collective revenues. Interestingly, staff costs stagnated last year, reducing wages to turnover to 63.8 per cent. Yet that still means Premier League clubs were spending around six per cent more of their turnover on wages in 2024 than in 2014. Correspondingly, losses have increased, and more clubs are at risk of breaching PSR limits. To combat those increased losses, and to do so quickly, clubs have a slim arsenal of weapons. It is why selling players has become the primary choice. Profits on sales are recognised at the point of sale. More traditional revenues have to be recognised over longer periods; for example, income from a new sponsor is recorded over the span of the commercial contract, rather than simply upon agreeing the deal. Advertisement Shifting a player at the end of June and recognising an immediate benefit is possible, whereas suddenly banking a huge slug of income — the ongoing FIFA Club World Cup notwithstanding — is rather harder to manufacture. Clubs have, perhaps naturally, linked their one avenue of recourse to the existing rules framework. As Maresca outlined last August, there is a feeling the rules leave them with no option but to sell players. That is certainly true by the time they get to their accounting deadlines, but it rather ignores how those losses built up in the first place. Had clubs displayed better cost control over the years, principally around player wages and transfer fees (which have themselves blown up over the past decade), they would likely not be in the position of having to reduce losses through selling players they would rather keep. The argument often put forward when wage constraints are mentioned is that it will put English clubs at a competitive disadvantage abroad. It is a bit of a flimsy one when you consider hardly any European clubs can afford to spend as much as English clubs do. In 2023-24, six of the 10 highest wage payers in Europe were from England, with only Paris Saint-Germain, Real Madrid, Barcelona (who you suspect would welcome an end to the wages arms race) and Bayern Munich interrupting proceedings. Of the top 20, nine clubs were English. A separate view is that PSR rules are now outdated. After all, the £105m upper loss limit introduced in 2013 has not budged since, despite the costs of buying and employing players skyrocketing. The logic employed here is a higher loss limit is only right, to bring rules into line with a much-changed financial landscape. Various commentators have suggested as much, and Aston Villa actually proposed a £30m rise in the loss limit at a Premier League meeting last year. It was not voted through, despite the feeling in some quarters that clubs should be allowed to lose more money because the twin costs of wages and transfer fees have increased far beyond where they sat in 2013. Advertisement Yet that rather ignores the fact inflation has occurred on the income side too. Premier League revenues have increased by 95 per cent between 2013-14 and 2023-24, with a further rise imminent. This coming season marks the first year of a new broadcast rights cycle in which TV income has once again soared to new heights, with the 2025-28 cycle generating an estimated 17 per cent more than 2022-25. Based on past evidence, there is little to suggest clubs would not simply push themselves right up against the upper limit, wherever it may fall. All of this also ignores the fact even allowing clubs to lose an 'acceptable' amount of money in the first place rather stands at odds with the very notion of 'profit and sustainability'. One area where clubs and proponents of a higher loss limit might have better supporting evidence is in how it is costing more and more to run a football club, or any business. The UK has experienced high inflation in recent years, so general running costs have increased. Indeed, when explaining the logic behind the proposed rise to The Telegraph, Villa's then-president of business operations, Chris Heck, said, 'When something doesn't evolve in 11 years and with the cost of living alone, you scratch your head." Clubs are largely left with little way to combat such rises, save for making unpopular decisions like raising ticket prices and shifting the costs onto fans. The ongoing transfer merry-go-round can, you could argue, be directly linked to wider inflation. Between the first season when clubs had to consider PSR rules in 2013 and the end of the decade, 'other' expenses hovered around 20 per cent of revenues. The proportion tumbled as grounds were shuttered during the pandemic, but has leapt since, reflective of the wider economic environment. Such costs comprised a shade under a quarter of club revenues last year. There is an argument to make that loss limits should be adjusted in line with those costs, but to suggest they are the primary driver of increased losses overall looks a limited reading of things. Those other expenses as a proportion of turnover went from 19.6 per cent to 24.3 per cent between 2014 and 2024, a rise of 4.7 per cent. That is still less than the rise in wages as a proportion of turnover (5.8 per cent), and well below the 10.5 per cent difference seen in transfer fee amortisation costs, which have grown from 16.9 per cent of revenues to 27.4 per cent across the same period. The status quo will remain for at least another year. A mooted shift to mirroring UEFA's updated financial rules, namely a 'squad-cost ratio' that seeks to limit football-related spending, is still to be agreed upon, so the Premier League's existing PSR rules will operate across 2025-26. A 'shadow' squad-cost regime will remain in the background, without fear of non-compliance. Advertisement The likelihood is the Premier League's PSR rules will change, and it is probable they will do so in a way that shifts clubs away from having to sell players as a primary tool in the fight to comply. UEFA's squad-cost rule is assessed annually and, while player profits are included in the calculation, they are taken over the past three seasons and pro-rated to 12 months, lessening the impact of big, one-off sales. What's more, UEFA looks askance at clubs engaging in swap-like deals, further limiting the appeal of selling to comply. When PSR was introduced in England over a decade ago, it was unlikely the rules' framers intended the events of recent years. Left up against their loss limits, an increasing number of clubs have turned to selling players, even if there is no sporting desire to do so. To that end, it is easy to argue PSR will always encourage the horse-trading we are becoming increasingly accustomed to. Yet to blame the rules on their own is short-sighted. Premier League clubs over the past 12 years have enjoyed greater riches than ever before yet continue to lose huge sums, principally because of their refusal to reduce spending on player wages and transfers. Last year's wage stagnation might actually be evidence of PSR rules, and what happens when you break them, having the effect of constraining wage growth, though time will tell. The rules, based as they are on limiting losses, encourage player sales for those in fear of a breach. But a deeper issue lies in how clubs arrived at that point in the first place. (Top photos: Getty Images)
The Sun
09-06-2025
- Sport
- The Sun
‘There's always someone watching' – Samuel Iling-Junior out to gatecrash England's World Cup squad by starring for U21s
SAMUEL ILING-JUNIOR hopes a successful European Championship can springboard him into Aston Villa's first-team - and World Cup contention. The versatile wing-back, 21, arrived at Villa Park from Juventus last summer as part of the deal that took Douglas Luiz in the opposite direction. 3 3 However, he stayed put in Italy to spend the first half of the campaign on loan at Bologna in Serie A and even scored for them in the Champions League. Weeks later Iling-Junior, who originally departed Chelsea for Juve in 2020, was back in England and heading to Middlesbrough. And it was while playing for the Championship club that he decided he wants his future to be at left-back. Iling-Junior, who is battling with Tino Livramento to start there for England U21s in Thursday's Euros opening against Czech Republic, said: 'I definitely settled into the left-back role and going up and down the pitch [at Boro]. I enjoyed that, bringing my parts into the team with assists, tricks and being creative. 'It's an honour to be one of the players that the manager has chosen and I want to repay that on the pitch. 'Tino has obviously had that great season with Newcastle. The competition is always healthy. If I can bring out the best of him and he brings out the best of me and we go and win the tournament then it's happy days.' Iling-Junior has represented England at every level bar the seniors and has seen several of his team-mates graduate into the Three Lions first-team. And he knows this month's tournament in Slovakia could lead to a huge season ahead for him at both club and international level as he revealed his ambitions for the coming 12 months. He said: 'You have to put the World Cup in your sights and knock on that door or at least put myself in a position to be knocking on that door. 'There's a pathway and there's always someone watching. All the boys that have made their debut from the U21s and are now in that squad, that just goes to show that if you keep putting your mind to it and work with the coaches then you'll get repaid for your hard work. England's biggest divers of the season crowned... as shocking record revealed 'And definitely get back into Villa after this tournament and have some conversations and make an impact there as well. 'Unai Emery has always had conversations with me, so that helps. and he's kept track of my loans. So that's definitely a good relationship and once we get back after the tournament then we'll have those conversations. 'But, for now, it's definitely just focusing on the Euros and we'll see when I get back to Villa.' Iling-Junior has already tasted Euro joy with England at U19 level and was part of the Juventus side alongside the likes of Dusan Vlahovic and Adrien Rabiot that beat Atalanta to lift the Coppa Italia last season. 3 He added: 'Winning the Coppa Italia, winning a trophy, is one of the best feelings I've had. 'Juventus is a big, big club and I learned what winning actually meant there, and not just winning, dominating and that's a really nice feeling knowing that you're part of history. 'I enjoyed the pressure there. That gave me motivation each game to go out with a bit of pressure and do what I enjoy. Winning the Euros would definitely be up there with that.' England kick-off their Euro campaign against the Czech Republic on Thursday. They then face Slovenia three days later and finish the group stage against Germany on Wednesday 18 June with all of the Young Lions' matches being broadcast on Channel 4.
