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Premier League clubs have agreed to implement new financial regulations starting next season that will prevent them from bypassing financial rules by transferring assets such as hotels or women’s teams to related companies they control. This move follows a close vote on a new Financial Fair Play system centered around squad costs, replacing the current Profit and Sustainability Rules (PSR). The decision was made during a club meeting in London, where three possible approaches were considered, with the Squad Cost Ratio (SCR) narrowly passing by 14 votes to six—the minimum required for the adoption of a new rule.
Under the new SCR framework, from the 2026-27 season onward, total squad expenditures—including player and manager salaries, transfer fees, and agent commissions—must not exceed 85% of a club’s revenue. However, teams competing in European tournaments will have to comply with the more stringent UEFA cap of 70%. This change notably closes previous loopholes, such as Chelsea’s sale of two hotels valued at £76.5 million to a sister company in April 2024, and Everton’s transfer of their women’s team to their parent company last July. Aston Villa is also reported to have engaged in a similar maneuver. The league’s new regulations emphasize financial transparency and aim to align more closely with UEFA’s SCR requirements while encouraging sustainable spending and investment off the pitch.
The SCR system differentiates itself from PSR by focusing specifically on team-related costs on an annual basis instead of overall revenues over a three-year period. While clubs involved in European competitions will meet UEFA’s 70% squad cost limit, the Premier League allows a higher 85% threshold plus a 30% rolling allowance for clubs to spend beyond their immediate revenue, providing flexibility for future investments or recovery from poor sporting performances. For example, a club can spend up to effectively 115% (85% plus 30% allowance) before facing potential sanctions. If spending exceeds this extended limit, points deductions will be applied, beginning with a six-point penalty and increasing incrementally as overspending grows. This structure will adjust for the 2027-28 season, tightening the allowed limits based on previous spending.
The new rules have drawn mixed reactions from clubs. Those with smaller stadiums and fewer financial resources, such as Bournemouth and Fulham, opposed the switch since linking wages directly to income may restrict their ability to compete financially. Meanwhile, larger clubs with robust commercial operations view SCR as less threatening. Clubs like Aston Villa and Newcastle United, which had found PSR limiting in terms of squad spending, must still adhere to UEFA’s lower limits due to their European participation. Another proposed measure, known as anchoring—which would set a spending cap based on a multiple of the lowest TV revenue club—failed to secure enough votes, with top clubs divided over its implications. Manchester City and Manchester United, wary of potential future restrictions as their revenues grow, opposed anchoring, while Arsenal and Liverpool supported it. The Professional Footballers’ Association also raised concerns that some financial restrictions might inadvertently act like wage caps, possibly leading to legal challenges. Meanwhile, sustainability rules aiming to enforce longer-term financial planning were approved unanimously, reflecting clubs’ readiness to conform to independent oversight and maintain responsible expenditure
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