Cherries swerve PSR breach penalty

AFC Bournemouth have avoided breaching the Premier League’s Profitability and Sustainability Rules (PSR) after a £71.4m shareholder loan write-off, linked to the club’s sale, was approved by the league.

The write-off occurred in December 2022 when Maxim Demin sold the club to American businessman Bill Foley’s Black Knight Football Club group. At the time of sale, the club owed Demin’s company £161.2m. While £89.8m was repaid via a new loan from the incoming owners, the remaining £71.4m was written off and recorded as exceptional operating income in Bournemouth’s 2022-23 accounts.

Ordinarily, shareholder loan write-offs are excluded from PSR calculations. However, the Premier League permitted its inclusion in this case because it formed part of the takeover transaction, was deemed an ‘arm’s length’ deal at fair market value, and occurred post-sale, effectively classifying it as third-party income for PSR purposes.

Without this allowance, Bournemouth’s pre-tax losses for the three-year cycle ending 2023-24 would have reached £148.6m, far exceeding their adjusted PSR limit of £83m (accounting for one season in the Championship). This would likely have resulted in a points deduction, similar to those imposed on Everton and Nottingham Forest.

The financial headroom created allowed Bournemouth significant investment in players, with a net spend of £266m across the 2022-23 and 2023-24 seasons.