The pre-Profit and sustainability rules The age was a simpler time. Premier League clubs were largely free to spend. So free that occasionally a club would let their money disappear into oblivion (I’m looking at you, Leeds United and Portsmouth), but it was never expected that a club would have to sell a hotel to balance the books. Many supporters – and club officials for that matter – are still getting their heads around the Premier League’s PSR.
Major League Soccer fans know how they feel. Spending limits and complex roster rules have been part of the league’s DNA since its inception nearly 30 years ago. In MLS, it’s not just about what you can spend, but what you’re allowed to spend, often to the frustration of those who feel the league is holding itself back from reaching its full potential.
MLS may have been one step ahead. While there have been rumors for years that the league needs to relax its salary and transfer rules to align with European soccer, European soccer is now moving more toward the kind of model used in American sports. Has MLS been right all along?
The original intention of PSR was noble. It was introduced to control how much money clubs could lose in a given period, with Premier League teams being allowed to lose a maximum of £105m over three seasons. However, the creation of these rules opened up a number of loopholes that have distorted the transfer market.
Infrastructure costs can be deducted from the balance sheet, which is why Chelsea sold two hotels next to Stamford Bridge to a sister company of Todd Boehly and Clearlake Capital earlier this year. Academy and women’s football costs are also deductible, while money made from selling home-grown players can be counted as pure profit.
Fans find that last quirk particularly galling. Conor Gallagher was Chelsea through and through. He came through Cobham’s academy and was one of the club’s best players last season. Despite this, the midfielder was shipped to Atlético because Chelsea could make £35 million in pure profit. Worse still, Chelsea gave Atlético the money to buy Gallagher by signing João Félix for a fee of £45 million that could be spread over several seasons. PSR has made home-grown players less important by making them more valuable.
MLS, on the other hand, has a number of mechanisms in place to allow teams to use their best academy graduates. The Homegrown Player Rule allows clubs to quickly advance academy players into the first team without necessarily impacting the salary cap. The clubs with the most productive academies have a competitive advantage on the field. As they should.
Of course, MLS’s spending caps and roster rules are far from perfect. There’s growing pressure on the league from owners, including Inter Miami’s Jorge Mas, to turn on the money taps. MLS rosters have probably never been more lopsided—just look at how Inter Miami is paying Lionel Messi roughly the same ($20.4 million) this year as the rest of its roster. But at least there’s a level of transparency that outsiders can scrutinize. The MLS Players Association publishes salary information twice a year and while this often leads to another kind of ambiguity (is Luis Suárez really only paid $1.5 million a year?), there is information available to make some sense of MLS’s maze of rules and regulations.
Additionally, the MLS salary cap achieves one of its most important goals: parity. Not since 2012 and David Beckham’s days with the LA Galaxy has a team retained the MLS Cup. The Supporters’ Shield has also been won by four different teams in the last four years (FC Cincinnati, Los Angeles FC, New England Revolution and Philadelphia Union). Inter Miami will win five out of five this season.
after newsletter promotion
Meanwhile, the Premier League is increasingly a one-horse race, with Manchester City winning the trophy six times in the last seven seasons. Pep Guardiola may be the main reason for this dominance, but PSR has made it easier for the biggest clubs to keep rivals at bay. At what point does this start to damage the Premier League brand?
Whatever PSR was supposed to achieve, it is failing. Clubs are not being run more prudently. Everton’s debt now exceeds £550m. Chelsea’s net expenditure over the past three years is over £650m, while their squad has a combined contract life of 193 years, more than double that of any other Premier League team. Points deductions have been handed out – and more could be on the way.
Clubs have already voted to test a new framework that includes an anchor model tied to the bottom club’s revenues, but not without opposition from the big boys. For now, it will be implemented on a “non-binding basis” alongside the current PSR rules. If adopted permanently, however, the new model would act a lot like a salary cap. For decades, MLS was the maverick in world soccer. Now it could be a trendsetter.