The days of Premier League clubs being limited by the Profit and Sustainability rules are over, but another set of restrictions takes its place, and Wolves will be affected.
On Friday, Premier League sides voted to replace PSR with a new system called Squad Cost Ratio (SCR), with Wolves being one of 14 to vote in favour.
The new rules mean that clubs’ spending allowance in the transfer market will be based on 85% of their total football revenue and the profit/loss they receive from selling players.
These rules also count the hiring of head coaches, and they come into effect from next season onwards.
The biggest difference is that SCR only looks at the cost of the squad, while PSR was an overall review of the football club’s finances, including any investment into your stadium or training ground.
While Wolves did vote in favour, they could also be one of the most limited by the new ruling.
Wolves will be heavily affected by new Squad Cost Ratio (SCR) rules
Fosun will have been paying close attention to Friday’s vote, as the outcome will affect Wolves from next season.
Financially, the club would likely have been in a good position heading into the next few windows, seeing as Wolves did make a net profit in the summer.
However, journalist Ben Jacobs has now said that Wolves will need to keep a close eye on the cost of their squad.
Jacobs says (via Highbury Squad), “So I think the biggest change will be at a Bournemouth, a Fulham, a Leeds, an Aston Villa, a Wolves, maybe a Newcastle United. These are the clubs that when the rules come in, they’re right on that percentage already of between 80 and 85. So they’re the ones that are going to have to navigate.”
According to The Athletic, Wolves would be sitting at around 81%, not too far off that limit set by the ruling.
But even if Fosun wanted to exceed that limit, they would still be able to, at least for a couple of seasons before any punishment is enacted.
Clubs are allowed to go 30% above their spending power.
The ruling says, “Each club is granted a multi-year allowance by which they can exceed the Green Threshold before becoming subject to a SCR sporting sanction.”
Fosun could invest in off-pitch upgrades for Wolves without affecting spending power
In 2019, Fosun issued an ambitious and exciting blueprint that would have seen Molineux’s capacity increase from 32,050 to 50,000, but those developments have never started.
The new ruling means that if Fosun do want to proceed with their previous plans, that would no longer affect the club’s ability to spend in the transfer market.
PSR meant that any investment into stadium or training ground facilities would be included in the assessment of a club’s finances.
However, after a recent couple of seasons with a clear lack of ambition in the market, there will not be much hope that Fosun will take advantage and invest in the off-pitch areas of the club.
Wolves fans do not have to look far to find true ambition in the football pyramid after supporters reacted to Birmingham City’s new stadium plans.