Premier League clubs voted on Friday to overhaul the competition’s financial rules, introducing a new system that focuses solely on spending directly related to on-pitch performance.
By a majority of 14 to 6, clubs approved the Squad Cost Ratio (SCR) model, which will limit “on-pitch spending” to 85% of football-related revenue plus net profit or loss from player sales. Squad-related costs include player wages, agent fees, and transfer fees.
UEFA operates a similar model, capping spending on player and coach wages, transfers, and agents to 70% of club revenue. The Premier League added a 30% multi-year allowance that lets clubs spend above the 85% limit, though exceeding it incurs a levy (effectively a luxury tax). Once the allowance is exhausted, teams face sporting sanctions such as points deductions. The new system comes into effect in the 2026/27 season and is designed to be simpler by focusing solely on “football costs.”
Under the new rules, clubs will no longer be able to sell assets such as hotels or women’s teams to related companies to free up money for squad spending. Chelsea, for example, sold two hotels to a sister company in 2023 and transferred their women’s team to parent company BlueCo to boost their balance sheet under existing Profitability and Sustainability (PSR) rules.
Clubs also voted to implement Sustainability and Systemic Resilience (SSR) rules, which will assess a club’s short, medium, and long-term financial health through various tests. However, they rejected a proposed hard cap on player-related costs, a measure that would have limited squad spending to five times the central income received by the league’s bottom club. The Professional Footballers’ Association warned this would effectively be a salary cap and threatened strike action.
Under PSR rules, clubs can lose a maximum of £105 million over a rolling three-season period. Nottingham Forest and Everton were both deducted points in the 2023/24 season for breaching these rules.
