Aston Villa and Newcastle United will face serious financial challenges as they battle Premier League spending rules.
The current profit and sustainability rules (PSR) allow clubs to incur losses of up to £105 million over three years. In recent seasons, both clubs have struggled with compliance.
In previous seasons, both sides were forced to sell players before the 30 June deadline. They had to avoid breaching PSR rules. Consequently, these adjustments came as clubs tried to manage their large wage bills.
The PSR rules remain in force for the 2025–26 season. This decision followed a legal challenge regarding the associated party transaction rules. As a result, clubs must now plan carefully for the upcoming campaign.
Aston Villa’s wage bill jumped from £194 million to £252 million last season. Moreover, their revenue increased from £218 million to a record £265 million. This surge has put extra pressure on the club’s finances.
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Newcastle’s wage bill rose from £187 million to £215 million for 2023–24. Additionally, their revenue climbed from £250 million to £316 million. These figures underscore the financial challenges the club faces.
There were hopes that a new squad cost ratio (SCR) system would replace the PSR. However, due to complications and legal disputes, the PSR remains in place. Furthermore, clubs with hefty wage bills will struggle under any system.
The SCR system was expected to mirror European rules. For example, a standard cap might be set at 85 per cent. However, adjustments for European competitions could reduce the cap to 70 per cent, which creates additional challenges.
Aston Villa recently added over £11 million to their wage bill with January loan deals for Marcus Rashford, Marco Asensio, and Axel Disasi. In contrast, Newcastle did not secure any new signings. Villa now sit ninth in the league and have reached the last 16 of the Champions League, while Newcastle sit seventh after winning only one of their last four league games.