Newcastle United, Everton & rivals discuss major Premier League rule change after points deduction bombshell

Shareholders at Premier League clubs will be meeting in London this week to discuss potential changes to profitability and sustainability rules.

The two-day meeting starts on Tuesday, February 6 with changes to PSR set to be a significant talking point. It comes after Nottingham Forest and Everton were charged for breaching PSR, which limits clubs to losses of no more than £105million over a three-year period.

It is the second time Everton have been charged this season, with the first charge seeing the club handed a 10-point deduction in November. The punishment for The Toffees' second charge as well as Forest's charge is yet to be confirmed but could result in a fine or potential points deduction.

The rules have been subject to some criticism as they prevent clubs from spending money and encourage them to sell their brightest prospects and best players in order to remain compliant with PSR. Newcastle United, for example, didn't spend any money during the January transfer window amid the threat of PSR punishment.

Premier League chief Masters said last month: "We are considering moving to the squad cost ratio model that UEFA has adopted.

“On the first day [of the meeting], we will be talking about financial regulation. I don't know whether that's known but the current system we have at the moment, the PSR system, we are contemplating making some changes to that over time.

“We have some proposals out for consultation with our clubs about moving and aligning more with the UEFA system. UEFA have spent two years changing its financial regulations away from something called FFP to something called squad cost ratio, which is a different calculation, more a wage to turnover type calculation.

“Because over time we have historically aligned with UEFA, because seven or eight of our clubs are in European competition, we need to consider whether that is an appropriate move for us, how we do that and when. That's a large chunk of day one. Day two is a normal shareholders' meeting."

UEFA's Financial Fair Play system limits a club's spending on wages, transfers and agents' fees to 70% of their total revenue by the start of the 2025-26 season. UEFA's rules set a 90% limit for the current 2023-24 season and an 80% limit for the 2024-25 campaign before dropping to 70%.

Newcastle have had to adhere to both sets of financial rules this season. The club's staff cost-to-turnover ratio revealed in the latest club accounts stood at 74.1% for the 2022-23 campaign.

Newcastle's total losses for the last three seasons total £155million, but many expenditures are not included in the Premier League's PSR assessment such as academy, training ground and women's football investments. As a result, Newcastle's relevant losses are below the £105million threshold as things stand.

While Newcastle United have been compliant with the rules, they have shackled the club when it comes to transfer spending, as Newcastle chief executive Darren Eales discussed last month.

"There is always that challenge of how you have a regime that protects football clubs from going bust and having the ability for clubs to invest and be upwardly mobile," Eales said.

"There will be dialogue from all the clubs in terms of, 'have we got that tension right, in allowing clubs to be competitive and protecting clubs against going bust or overspending?'”