Aston Villa is a club with ambition, one on the cusp of Champions League football in what would be the first time since the 1982/83 season that they had a seat at European football's top table.
The Villains' 3-1 home success over Bournemouth at the weekend strengthened the grip of Unai Emery's men on fourth spot, and with Villa having enjoyed European success days earlier by reaching the last four of the Europa Conference League, the good times are back at Villa Park.
Under the ownership of V Sports, the holding company for owners Wes Edens, Nassef Sawiris, and recent investors Atairos, Villa have among the most wealthy backers in the Premier League.
But like all clubs with wealth but finding themselves outside of the so-called 'big six', bridging that gap to success whilst remaining compliant with the Premier League's profit and sustainability rules (PSR) has been a challenge.
Villa posted its financial results for the 2022/23 period, with heavy investment into the playing side of the club impactful as the club made a pre-tax loss of just under PS120m.
Allowable deductions for such things as infrastructure investment, the impact of COVID-19, the academy, the women's game, and community projects meant that the club have been able to get under the PS105m in allowable losses over the PSR-assessed three-year period, but the club's PSR position will hamper just what they can do in the transfer market during the summer, even with Champions League revenue to look forward to.
PSR has become a hot topic this season, with Everton charged twice for PSR breaches (for 2021/22 and 2022/23), and Nottingham Forest also charged. Both teams have been hit with points deductions, while Leicester City, if promoted, are likely to come back to the Premier League with a points deficit after they were charged with a breach for the 2022/23 season, a campaign where they were relegated from English football's top tier.
Next season will be the final year of PSR, with the rules to be replaced by regulations more in line with UEFA's squad cost ratio rule.
Squad cost ratio works by using relevant wage costs (for playing staff and manager), amortisation costs (how transfer fees are accounted for by dividing the guaranteed fee over the length of the player's deal), severance costs for sacked managers, and intermediary fees. Those costs are then calculated against a club's operating revenue and player trading profit (the best performing of the last three years to allow for transfer market volatility, to give a squad cost ratio percentage.
The Premier League's widely reported plan is to have a 70% squad cost ratio limit for clubs that are competing in European football, and therefore the beneficiaries of higher revenue, while a ratio of 85% will exist for the rest of the clubs. Clubs currently competing in UEFA competitions are expected to comply with a 70% ratio by the time 2026 comes around.
Should Villa make the Champions League next season it would mark the next stage of the club's development under the ownership of V Sports. But having not been part of that elite group for so long, Villa haven't been able to call on those regular high revenues that the 'big six' have for so long, and that means that by the time 2025/26 comes around they may still have to find themselves cutting their cloth accordingly while the pre-existing advantage of the biggest clubs remains baked in.
"Rich people don't like the nouveau riche being let in, in any form of society," explained football finance expert Kieran Maguire, of the Price of Football Podcast, when speaking to BirminghamLive.
"Ambitious clubs who have got owners with significant wealth who want to put a portion of that wealth into the football club because they want to be the next Manchester City or the next Chelsea, the rules are designed to stop that.
"Now the Premier League said, 'Well, that's not what we were intending to do'. But this is the same Premier League that is shouting to anybody that's prepared to listen about the unintended consequences of having regulation.
"Well, the unintended consequences of the PSR rules, the FFP rules, the squad control rules, is that it locks in existing gaps between different levels of participation in terms of spending."
Maguire analysed the potential position of Premier League clubs from a squad cost ratio position, if it was in play now, based on the most recently published accounts, to give an idea about the work that some clubs may have to undertake.
Unsurprisingly, five of the big six clubs were well within the spending constraints under any new squad cost ratio, with Manchester City, Manchester United, Arsenal, Liverpool, and Tottenham Hotspur joined by Brighton & Hove Albion, a club buoyed by huge player trading profit in the past 12 months, in the top six. Chelsea had the worst position, according to Maguire's analysis, which had them at over the squad cost ratio by as much as PS71.5m, meaning plenty of work left to do ahead of new regulations arriving in 2025.
For Villa, using the 2022/23 figures, the squad cost ratio for the 85% threshold was PS19.7m over, while the 70% threshold was estimated to be around PS61.3m.
Should Villa make the Champions League next season then they would unlock significant revenue-generating potential, but also likely additional cost through bonus payments, bigger wages and the need to add and improve the squad to compete. That makes chipping away at that 70% limit incredibly difficult, especially when they haven't had the benefit of several years worth of repeated qualification that has allowed revenue to grow to the levels of the big six.
That means that for Villa it will be a case of trying to compete while having to be more mindful of the regulations than those they are seeking to compete against for a top-four spot, which is the ultimate ambition of the club owners.
Whether the deficit is made up through improved commercial deals, prize money, or player trading, Villa and other clubs who sit in that position of wanting to disrupt the established elite will likely find that the new squad cost ratio regulation does little to make that battle any easier, or the playing field any more level.
"They all will be looking at the rules," Maguire added. "There's savings that will have to be made. I think clubs will be looking at this with a degree of caution. 'How does it affect us?'. It won't really change things."
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