PSR rules explained as deadline looms

With Aston Villa working frantically to raise funds in the early stages of this summer's transfer window, let's take a look at the rules in place that Villa and others need to follow.

The summer transfer window, for football fans, has always been an incredibly exciting time of the year. Many big money moves have been seen over the years and the period between June and August allows teams to boost their squads with new additions ahead of the next season. In years gone by many transfers happened late on in the transfer window and added to the excitement for fans. However, the introduction of Profit and Sustainability Rules (PSR) in 2013 and the increasing difficulty to spend freely since has meant many teams are conducting their transfer business early in the window prior to the PSR deadline each year.

PSR means that Premier League clubs are allowed a maximum financial loss of £105 million over a three-year period at an average of £35 million per year. This is on the proviso that £90 million is covered by secure funding from owners, such as buying up shares instead of giving their clubs a loan. The three-year losses allowed without such guarantees are £15 million. The losses do not account for spending outside of the transfer market such as the development of club infrastructure, women's teams or youth development. Clubs that exceed the spending limit are likely to be given a punishment which could be a transfer spending limit or if the £105 million upper threshold is exceeded then a points deduction could occur. Famously, last season saw both Nottingham Forest and Everton given points deductions by the Premier League for breaching Profit and Sustainability Rules.

30th June - The Deadline

The 30th June represents an important date in the calendar from Premier League sides as this is the deadline for submitting the accounts. This date represents the end of the financial year with 1st July representing the start of the next. This is the reason why Villa are working so hard to get deals completed quickly since the opening of this summer's transfer window on 14th June. Douglas Luiz is a player that has been key to Villa's success over the last couple of seasons but the club are having to sell the player due to his high value. Selling the player before the deadline would mean that the money would appear in that years accounts. So selling Luiz on 24th June 2024, for example, would mean the money raised would appear in the 2023/24 accounts. Villa will be aiming to raise as much as they can in order to cover last summer's costs.

If you look back at the transfer business Chelsea conducted last summer then it is a good example of how to comply with PSR. Chelsea managed to make a total of just over £200 million through the selling of Kai Havertz, Mason Mount, Edouard Mendy, Ruben Loftus-Cheek, Hakim Zyech and Kalidou Koulibaly before 30th June 2023. By completing these deals prior to the deadline the money raised would help to cover the losses accumulated over that financial year. In addition, Chelsea announced the signing of forward Christopher Nkunku on 20th June 2023 but wasn't registered until 1st July meaning his transfer fee would be included in the 2023/24 accounts.

Frustrating for Aston Villa, their situation represents a lot of what is wrong with the current system in place. Having qualified for the Champions League for next season, they are victims of their own success by having to sell valuable assets and important members of the squad to cover the costs of ambition over the past year. Villa have spent heavily in the past three years. Pau Torres (£35 million), Moussa Diaby (£50 million), Emiliano Buendia (£33 million), Leon Bailey (£30 million), Lucas Digne (£25 million), Danny Ings (£25 million), Diego Carlos (£25 million) are all examples of big money transfers that Villa have made to improve their squad. Of course initially much of that was covered by the sale of Jack Grealish for £100 million in August 2021. However, the money from that sale three years ago can't be used now to cover other losses.

What could happen to Villa if they don't raise the funds?

It has been reported that Aston Villa must raise £58 million in transfer fees to comply with the rules before the deadline at the end of June. The sale of Douglas Luiz to Juventus is likely to bring in a fee of £25 million alongside the addition of two players from the Italian club. Enzo Barrenechea and Samuel Iling-Junior have agreed to join the Villans as part of the deal and their inclusions means their transfer fee/valuation can be used for PSR purposes. So, if each of those players, for example, had a transfer valuation or fee of £15 million, then Villa would be bringing in the 25 for Luiz as well as 15 each for the two new players, making a total of £55 million from the deal.

Villa have also been working on deals with fellow Premier League clubs Chelsea and Everton. It is no coincidence that three of the clubs that are under scrutiny are completing deals that will help the clubs financially. Tim Iroegbunam is heading to Everton for a fee of £10 million whilst young winger Lewis Dobbin is heading the other way. Meanwhile, Aston Villa are close to the signing of Chelsea defender Ian Maatsen whilst players such as Jhon Duran and Omari Kellyman have been rumoured to be going to Stamford Bridge. By swapping players, the teams involved don't lose numbers in their squad and both receive financial benefits to comply with PSR.

Should these deals not occur for whatever reason and Villa fall short of the funds needed then they could be in serious danger of facing a points deduction ahead of next season. Last season, Everton were handed an initial ten point deduction before being reduced to six as a result of breaching the allowed losses by nearly £17 million. Nottingham Forest also were the victims of a points deduction having lost more than £30 million more than the limit. As a result, both clubs saw themselves fighting relegation and were fortunate to survive and remain in the Premier League.

The financial rules in place have come under intense criticism by key figures across the league as many have said the system is in place to prevent smaller clubs having ambition. Villa owner Nassef Sawiris said: "Some of the rules have actually resulted in cementing the status quo more than creating upward mobility and fluidity in the sport. The rules do not make sense and are not good for football". Meanwhile, Nottingham Forest chief executive Paul Faulkner has claimed the rules have "created chaos" and "damaged" the Premier League.

""Some of the rules have actually resulted in cementing the status quo more than creating upward mobility and fluidity in the sport. The rules do not make sense and are not good for football". "

- Nassef Sawiris

Potential sales for Villa

The table below shows the latest rumours and potential transfer business that could help Villa to raise their much needed funds.

As reported by Matt Law (The Daily Telegraph) in last hour, Chelsea are now in advanced talks to sign Villa academy product Omar Kellyman for a fee of nearly £20 million.

From 1st July, Villa fans will be able to get excited again as Unai Emery and Monchi will have more of a licence to spend freely in order to build a Champions League squad.

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