What’s next after PSR? New Premier League financial rules and what they mean for Aston Villa

Last week, the Premier League clubs voted in a new set of financial regulations to replace the profit and sustainability rules (PSR) system that has proved controversial and problematic.

Aston Villa have avoided a breach of PSR by the skin of their teeth on more than one occasion. Selling Aston Villa Women to parent company V Sports helped most recently, while prominent player sales like those of Moussa Diaby, Jacob Ramsey and Jhon Durán helped to keep the wolf from the door.

But Villa’s spending power has been restricted by PSR and the UEFA alternative, largely based on a squad cost ratio (SCR) calculation, and Unai Emery and the football department were unable to strengthen the squad in the summer transfer window despite qualifying for European football for the third season in a row – and, truthfully, because of it too.

Breaking down the new Premier League rules

PSR has been an unpopular solution to the problem of Premier League clubs sabotaging their own sustainability, not least because it doesn’t solve that problem at all.

Reform has been on the cards for some time and new rules will be introduced next season after a new framework was voted in last week. Top-to-Bottom Anchoring (TBA) did not pass the vote presumably because it’s not as sexy as it sounds. That’s a discussion for another day but Villa voted in favour.

“Following extensive consultation, clubs agreed to bring in Squad Cost Ratio (SCR) and Sustainability and Systematic Resilience (SSR) proposals,” said the Premier League in a statement.

“SCR will regulate clubs’ on-pitch spending to 85 per cent of their football revenue and net profit/loss on player sales. Clubs will have a multi-year allowance of 30 per cent that they can use to spend in excess of the 85 per cent.

“Utilising this allowance will incur a levy and once the allowance is exhausted, they will need to comply with 85 per cent or face a sporting sanction.”

Clubs will also be subject to a trio of tests with regard to their SSR, namely a working capital test, a liquidity test and a positive equity test.

The vote also closes the ‘loophole’ – I’m sure this was described as ‘not a loophole’ quite recently – that allowed clubs to “sell assets like hotels and women’s teams to themselves.”

Are new financial rules good or bad news for Villa?

Villa have already benefited from that loophole, of course, at least in the short term, and while these new rules don’t do much to improve the Premier League’s competitive balance there are reasons to be generally positive about their introduction.

There is a school of thought that football club owners should be allowed to spend whatever they want on their squads but I don’t agree. I’m in favour of rules that protect clubs from their owners by exercising some level of oversight over the actual health of the business.

PSR doesn’t do anything of the sort. SCR and SSR will be applied season-by-season instead of over a three-season time period and SSR, at least, governs meaningful business health measures.

SCR has been introduced specifically to bring the Premier League’s rules into closer step with those applied by UEFA to teams competing in the Champions League, Europa League and Conference League, albeit by season instead of by calendar year.

According to estimates from The Athletic, Villa are one of five teams who’d be expected to breach Premier League SCR if it were in place this season. At an estimated 86%, they’re the least at risk of those five teams. The other four are AFC Bournemouth, Fulham, Leeds United and Nottingham Forest.

There are obviously loads of details to get into over time, especially in terms of what’s included and what’s not, but, broadly speaking, it’s good for Villa that the two systems of regulation are better aligned even if the limits and specifics aren’t the same.

They’re working towards UEFA compliance by necessity anyway and fulfilling Premier League requirements should theoretically follow.

That’ll be why Villa voted in favour of the change, I assume, and if they (or anyone else) hadn’t, it wouldn’t have had the number of votes required to pass. It’s a bold strategy. Let’s see if it pays off for them.

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