Football News: PSR Regulations

Profit and Sustainability rules (PSR) were:

By 31st March, Premier League clubs must submit their estimated profit and loss account and balance sheet for the current year and their annual accounts for the previous year. They will have already submitted their accounts for the year before that in the previous March.

If the aggregation of the two previous years results in a loss, they must submit the calculation of pre-tax earnings for this year and the two previous years. They can exclude costs relating to:

1. The depreciation of fixed assets.
2. Women’s football expenditure.
3. Youth development expenditure.
4. Community development expenditure.
5. In the seasons 2019/20, 2020/21 and 2021/22 clubs were also permitted to exclude covid related costs.

The aggregation of the adjusted pre-tax earnings is their PSR calculation. The idea is not to have losses but if you do make losses this is the “degree of latitude” that is allowed under the regs:

1. Losses of up to £15m – if the losses are less than £15m then the Premier League just looks to check that the club will be able to pay its liabilities for the next year.
2. Losses in excess of £15m – if the losses are in excess of £15m then clubs need to provide projected accounts up until the end of 2 years in the future and provide evidence of secure funding, which cannot be in the form of a loan. If they fail to provide the evidence, the Premier League has the power to force the club to submit, agree and adhere to a set budget.
3. Losses in excess of £105m – the club is treated as being in breach of PSR and the Premier League refers the breach to an independent commission.
However, clubs that were promoted during the period in question will have a reduction of £22m per year outside of the Premier League. So a team that got promoted two seasons ago has £83m losses before being termed in breach. A team that got promoted this season has £61m losses before being termed in breach.

When a club is referred to the independent commission, the Premier League sends in a written complaint, to which the club has 14 days to respond, either with an admissal or denial.

If the club admits a breach, they may include the details of mitigating circumstances to be considered by the Commission.

If the club denies the breach, it must explain its reasons for denial and attach copies of any documentation upon which it relies.

The Premier League has the burden of proving the complaint to the independent commission on the balance of…