Premier League Teams Navigate UEFA’s Financial Regulations
The UEFA Champions League returns, offering a staggering €2.437 billion (£2.1 billion) in prize money to participating clubs this season. Among the 36 teams vying for glory, six are from the Premier League, showcasing the league’s increasing dominance in European football. Alongside these clubs, two more will compete in the Europa League, while one will participate in the Conference League, bringing the total of English clubs involved in European competitions this season to nine.
This involvement means that these clubs—Arsenal, Aston Villa, Chelsea, Crystal Palace, Liverpool, Manchester City, Newcastle United, Nottingham Forest, and Tottenham Hotspur—must adhere to UEFA’s financial regulations, which differ from those governing their domestic counterparts. The Athletic recently provided insights into UEFA’s two primary financial regulations: the football earnings rule and the squad cost rule.
The football earnings rule allows clubs to incur losses of up to €60 million (£51.9 million) over a three-year period, with conditions that can increase this limit to €90 million if specific financial health criteria are met. These criteria include maintaining positive equity, achieving a quick ratio of one or above, sustaining a manageable debt ratio, and being classified as a ‘going concern.’
Most English clubs meet three of these criteria; however, the second condition concerning the quick ratio poses challenges. High transfer debts have resulted in current liabilities surpassing current assets for eight of the nine clubs during the previous two seasons. Only Manchester City managed to meet the quick ratio requirement in the 2023-24 season, allowing them a higher loss limit of €70 million, while the others remain capped at €60 million.
Financial projections regarding club losses are complicated. The Athletic notes that these figures are merely estimates, as the clubs’ 2024-25 accounts are not yet available, and deductions for acceptable expenditures are not always transparent. The squad cost ratio (SCR) is particularly challenging to ascertain due to its annual nature and the clubs’ tendency to report total wage figures rather than breakdowns for the playing squad.
Individual Club Financial Assessments
Arsenal recorded a loss of £69.8 million (€80.5 million) over the first two years of the current assessment cycle. However, considering deductions for infrastructure and youth development, the club is expected to turn a profit in 2024-25. Increased revenues from the Champions League and a more stable transfer window should support this positive trend. Arsenal’s SCR is projected at around 68 percent, just under the 70 percent limit, leaving them at risk if significant sales do not occur.
Aston Villa experienced a notable loss of £206 million (€238 million) across the same period, yet player sales have improved their financial outlook. Villa’s compliance with UEFA’s rules is aided by a Settlement Agreement, which allows more leniency regarding loss limits and SCR. The club is expected to avoid significant penalties, though they exceeded the previous squad cost limit of 80 percent.
Chelsea’s financial situation is complex due to their substantial operating losses exceeding £200 million in recent seasons. Following a Settlement Agreement with UEFA, the club must keep losses below €60 million in 2025-26. Their SCR was previously above 80 percent, but improved financial performance from player sales and increased TV revenues may help them comply with the new 70 percent limit.
Crystal Palace reported a pre-tax loss of £65.3 million (€75.6 million) across the last two seasons. Nevertheless, profitable player sales have improved their financial standing, and they are projected to comply with UEFA’s financial regulations, having kept their SCR below the 70 percent threshold.
Liverpool recorded a club record loss of £57.1 million in 2023-24, yet they are expected to turn a profit in 2024-25, thanks to increased revenues from European competitions. The club’s financial management, especially regarding player wages, positions them well under UEFA’s SCR limit.
Manchester City stands out as a financially robust club, reporting a combined pre-tax profit of £154 million (€178 million) over the past two seasons. Their financial strategy, including player sales and controlled expenditures, places them comfortably within UEFA’s financial regulations.
Newcastle United’s financial health is more precarious, with a reported pre-tax loss of £38.1 million. The club must navigate stringent UEFA requirements as they seek to avoid penalties. Their SCR is aided by recent profitable player sales, but uncertainties remain regarding their compliance.
Nottingham Forest, despite increased revenues from a strong league finish, continues to face financial challenges. They recorded significant operating losses and are projected to breach UEFA’s financial regulations based on their current SCR.
Tottenham Hotspur faces a potential loss due to depreciation costs associated with their new stadium. However, after adjusting for these costs, they appear to be financially compliant with UEFA’s regulations.
As the Premier League clubs engage in the lucrative world of European football, navigating UEFA’s financial landscape remains a critical task. Each club’s unique financial situation will dictate their strategies moving forward, as they strive to balance competitive performance with fiscal responsibility.
