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The squad spending limit denotes the maximum amount that each club or public limited sports company (SAD) can spend during the course of the 2018/19 season, including costs related to players, the manager, assistant manager and fitness coach (registrable squad, as defined in Art. 38 of the Budget Preparation Rules). This limit includes spending on the reserves, the youth system and other areas (non-registrable squad, as defined in Art. 38 of the Budget Preparation Rules).
The items included in the registrable and non-registrable squad spending limit are: fixed and variable wages, social security contributions, collective bonuses, acquisition costs (including commission for agents) and amortisations (player transfer fees allocated annually based on the number of years that the player is under contract).
Each club or SAD puts forward their squad spending limit to LaLiga, in accordance with the Budget Preparation Rules for clubs, with LaLiga's Approval Body tasked with sanctioning the proposed limit or adjusting it to a figure that guarantees the club's financial stability where applicable.
A club or SAD's squad spending limit does not always correspond with their upper limit. A club or SAD can request a limit that they deem suitable to cater for their budget for sporting costs, provided that it does not exceed the upper cap. It should also be reiterated that a request for a squad spending limit does not mean that the sum will be used up in its entirety.
The squad spending limit can be increased if the conditions are met and procedures outlined in Title 3 of the Budget Preparation Rules for clubs and SADs are adhered to.