Aston Villa’s owners, led by Nassef Sawiris, recently proposed an increase in the Premier League’s Profitability and Sustainability Regulations (PSR) losses limit, which has remained unchanged for over a decade. The current cap restricts clubs to losses of £105 million over a rolling three-year period. However, financial expert Kieran Maguire has highlighted that if inflation had been considered, clubs could potentially lose up to £218 million over the same period. Despite the compelling argument, the proposal was ultimately blocked.
Kieran Maguire said: “It (Villa’s request) seems fair yet it was rejected. Now why it was rejected was because all decisions being made are being made on a self-interest short-term basis. It makes sense from Villa’s perspective. The Aston Villa owners have invested heavily in players, in coaching staff and so on. So I got out my trusted spreadsheet and what I did is I said, ‘Right, why was this figure of £105m introduced in the first place?’ I’ve done a lot of research and it just appears to be a number plucked from nowhere so I said, ‘If it was deemed to be sustainable then let’s look at it in terms of metrics’. The losses of £105m based on the revenues of a club in 2013 were 29.4%. So what the Premier League said is if you are able to be sustainable, you are allowed to lose 29.4% of the total money that you bring in but if we move that forward to the most recent set of financials, that 29.4% drops to 14.1%. If the Premier League was saying that 29.4% was a valid figure, let’s work that out based on current revenues and, according to my figures, clubs should be allowed to lose £218m over three years and they would be in exactly the same position as they were in 2013.”
The debate over the PSR losses limit has sparked discussions about the financial sustainability of Premier League clubs. Aston Villa, under the ownership of Nassef Sawiris, has made significant investments in both players and coaching staff, aiming to elevate the club’s performance and standing in the league. The club’s argument, supported by guidance from the Bank of England, suggested that the losses limit should be adjusted to £143 million to account for general inflation. However, Maguire’s analysis indicates that the figure should be even higher, at £218 million, to maintain the same financial position as in 2013.
The rejection of Villa’s proposal underscores the complexities of financial regulations in football, where clubs must balance investment with sustainability. The Premier League’s decision to maintain the current cap reflects a cautious approach to financial management, prioritizing long-term stability over immediate financial flexibility. This decision, however, may not align with the growth ambitions of clubs like Aston Villa, who seek to leverage financial investments to achieve competitive success.
As the conversation around financial regulations continues, it remains to be seen whether the Premier League will revisit the PSR losses limit in light of evolving economic conditions and club needs.
