Is £105m high enough?
Extract from The Athletic 17th January 2024.
Kieran Maguire, a football finance expert and host of The Price of Football podcast, suggests there is an argument for the £105million to be increased in line with football inflation.
“The inflation issue for PSR is that there’s a case for saying that the original allowable loss of £105m should take into account changing circumstances concerning clubs’ buying power and acceptable losses,” Maguire told The Athletic.
Since the three-year figure was set in 2013, football-related prices have gone up, whether that is player wages or transfer fees.
“Inflation eats away at buying power and in taxation, this is addressed by increasing the personal allowance (the amount you can earn before you start paying tax),” Maguire adds. “Failure to do this creates ‘fiscal drag’ where more and more people are captured by tax and higher tax rates.
“I applied the same principle to Premier League PSR and took the 2013 wages and compared them to 2022 (and a few clubs for 2023). If £105m was deemed fair in 2013, then adjusted for current wages, £218m would be ‘fair’ now.”
If the allowable losses had risen in line with football inflation to £218m, then Everton, Nottingham Forest, Leicester (maybe Chelsea) would have been well within the limit and Newcastle would have been able to spend more freely.
The main reason for the current mess appears to be the PL failure to include an allowance for inflation in their 3 year threshold calculations.
