New Premier League Cost Control Measure Could Compromise New Aston Villa Owner’s Plans

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The Little Known New Premier League Soft Wage Cap

 

It’s not widespread knowledge that the Premier League’s latest handbook includes a significant cost control provision which could provide any prospective owner of Aston Villa with a difficult challenge when it comes to funding the drastically needed squad improvements given the struggles on and off the pitch in recent seasons. In many ways, the cost control provision acts as a form of soft wage cap and could check spending or sizeable warchests for the Villa manager under the new regime.

Short Term Cost Control

Rule E.18 states:

“If in any of Contract Years 2013/14, 2014/15 and 2015/16 a Club’s aggregated Player Services Costs and Image Contract Payments:

E.18.1. exceed £52m, £56m, or £60m respectively; and

E.18.2. have increased by more than £4m when compared with the previous Contract Year or by more than £4m, £8m or £12m respectively when compared with Season 2012/13;

then the Club must satisfy the Board that such excess increase as is referred to in E.18.2 arises as a result of contractual commitments entered into on or before 31 January 2013, and/or that it has been funded only by Club Own Revenue Uplift and/or profit from player trading as disclosed in the Club’s Annual Accounts for that Contract Year.

A.1.32: Club Own Revenue Uplift” means any increase in a Club’s revenue in a Contract Year (1st July-30th June following year) when compared with its revenue in Contract Year 2012/13 (excluding Central Funds…)”

N.B. Central Funds include PL distributed monies such as UK and overseas broadcasting payments

The following table summarises the outlined amounts before the Club must justify any excess increases to the PL board of directors.

 

Season

Amount total PL wage bill must not exceed

Extra amount of PL Central Funds club is permitted each year to fund player wage costs (cumulative)

2013/2014

£52m

£4m

2014/2015

£56m

£8m

2015/2016

£60m

£12m

 

The effect of this is that a Premier League club’s yearly wage bill can only increase by a maximum of £4m. Should it exceed this amount the excess must be met by increased commercial revenues that the club has made in the same season.

Using Aston Villa as an example, if their wage bill for the 2012/2013 season was £100m and for the 2013/2014 season it was £104.5m, the club would have spent £500k more than was permitted under Rule E.18. Villa would then have to show the PL board that, in the same season, the additional £500k had arisen from either:

  •  Contracts entered into on or before 31 January 2013.
  •   Club Own Revenue Uplift in the same season
  •   Profit from player transfers.

New owners always dream big as they look to stamp their authority on a club by providing funds for new signings to please supporters. The introduction of Rule E.18 will provide a headache for Villa’s next owner who wants to give his manager license to buy the best players available to the club at whatever cost to kick-start the club’s revival.

With no extra revenue, such as that from European competitions, the potential new owner and manager will again find themselves working profusely to manage the wage bill as they look at different ways to boost their club revenue. Villa’s PL rivals competing in European competition should benefit given the extra commercial revenue. This makes the task of bringing European football back to Villa Park and collecting domestic honours more difficult.

Bleak Conclusion

E.18 will keep those clubs who struggle to raise club revenue, excluding PL distribution monies, facing a battle to remain as competitive. For the Champions League clubs the extra commercial revenue should maintain the status quo causing further division between the top four to six clubs and the rest of the pack.

For the next owner of Aston Villa the already formidable task of returning the club to the upper echelons of the Premier League has become even more difficult.

Follow Matt Rogers on Twitter

 

 

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