Premier League 'luxury tax' explained as Arsenal, Chelsea and Tottenham brace for FFP decision

Premier League clubs are considering introducing a luxury tax amid potential changes to how breaches of Profitability and Sustainability Rules (PSR) are punished.

Arsenal, Chelsea and Tottenham Hotspur have been watching on this season as two clubs have been charged with (PSR) this campaign, Nottingham Forest and Everton. Both clubs were handed points deductions by independent commissions after being found guilty of breaching their allowed limit of losses over three years.

Forest were docked four points while Everton have been deducted six points, cut from an initial ten on appeal. Championship outfit Leicester City have also been charged with an alleged breach and face a hearing in front of an independent commission where they could face possible points deduction at the start of next season if they earn promotion back to the Premier League.

Manchester City, who have 115 charges hanging over their head, are also being investigated. In a new report by the Daily Mail, it is claimed that Premier League clubs are 'considering' getting rid of the points deduction punishment amid plans for a 'luxury tax'.

With that said, the 'radical reform' could be voted in at the end of the season meeting in June. It is said that as many as 17 clubs are in favour. One of the options being discussed would be to have clubs that overspend given a financial punishment, that will increase the more they spend.

The fees collected could be distributed to those clubs who complied with the rules or go into an 'emergency fund' to help EFL teams in financial danger. Another option is said to be 'anchoring', where a form of salary cap related directly to the wage bill of the team who finished bottom of the Premier League is applied.

On the cards too could be