Premier League clubs agreed on Friday to introduce major changes to the league’s financial regulations, adopting a new system that concentrates exclusively on spending tied to performance on the field.
A majority vote of 14 to six approved the introduction of the squad cost ratio (SCR) system, which will restrict clubs’ “on-pitch spending” to 85 percent of their football income along with net gains or losses from player transfers.
Squad-related expenses covered by this system include salaries for players, agent commissions and transfer costs.
UEFA already uses a comparable framework that limits expenditure on wages for players and coaches, transfers and agent fees to 70 percent of club revenue.
According to a Premier League statement, clubs will receive a “multi-year allowance” of 30 percent, enabling them to exceed the 85 percent threshold, although tapping into this allowance will result in a levy, functioning as a type of luxury tax.
Once that allowance is exhausted, clubs exceeding the 85 percent limit will face competitive penalties, including potential points deductions.
The league also noted that the new model—set to take effect in the 2026/27 campaign—will be easier to administer due to its focus on “football costs.”
Under the revised regulations, teams will be barred from offloading assets like hotels or women’s teams to affiliated companies as a way to inflate the funds available for squad spending.
Chelsea, for instance, sold two hotels to an associated company in 2023 and transferred ownership of their women’s team to BlueCo, moves that strengthened their accounts under existing profitability and sustainability (PSR) rules.
On Friday, clubs also approved the introduction of sustainability and systemic resilience (SSR) rules, designed to evaluate the financial stability of clubs over short-, medium- and long-term horizons through multiple assessments.
However, clubs rejected a proposed financial rule that would have imposed a strict spending ceiling on player-related expenditure.
The rejected “anchoring” mechanism would have capped any team’s squad spending at no more than five times the central revenue allocated to the league’s lowest-earning club.
The Professional Footballers’ Association argued that this would effectively amount to a salary cap and signaled readiness for strike action.
Under current PSR rules, clubs are allowed a maximum loss of £105 million ($137 million) across three seasons.
Both Nottingham Forest and Everton received points deductions during the 2023/24 season for violating PSR regulations.