Premier League clubs have voted to overhaul financial rules, replacing the Profit & Sustainability Rules with a new Squad Cost Ratio system and resilience tests starting from the 2026/27 season.
A Major Financial Overhaul
In a landmark move, Premier League clubs have voted to introduce a new financial regulatory framework to take effect from the 2026/27 season. The club shareholders’ meeting approved two key measures: the Squad Cost Ratio (SCR) and Sustainability & Systemic Resilience (SSR) rules.
These changes mark the beginning of the end for the current Profitability & Sustainability Rules (PSR), which will remain in place only through the 2025/26 season.
Key Features of the New Rules
- Squad Cost Ratio (SCR)
- Clubs will be limited to spending 85% of their “football‑related revenue” (plus net gains/losses from player sales) on squad costs (wages, transfer amortization, agents, etc.).
- There is a multi-year allowance of up to 30% above that 85% threshold. But using that extra allowance comes with a levy, and once it’s exhausted, clubs must comply with the 85% limit or face sporting sanctions.
- This system brings the Premier League closer to UEFA’s own SCR rules, which cap spending at 70% for clubs in European competition.
- Sustainability & Systemic Resilience (SSR)
- These rules introduce three financial health tests:
- Working Capital Test
- Liquidity Test
- Positive Equity Test
- The goal is to ensure clubs remain financially stable over the short, medium, and long-term.
- These rules introduce three financial health tests:
- What Was Rejected: The Hard Cap Proposal
- A proposed “Top-to-Bottom Anchoring” (TBA) rule effectively a hard spending cap tied to the bottom club’s income — was rejected.
- Only 7 out of 20 clubs backed it; 12 opposed it, and 1 abstained.
- The Professional Footballers’ Association (PFA) had strongly opposed the anchoring system, arguing it resembled a salary cap.
- Closing Loopholes
- Under the new framework, clubs will no longer be allowed to sell non-football assets (like hotels or women’s teams) to related parties just to balance the books.
- This targets a loophole some clubs previously exploited under the PSR system.
Why This Matters
- Financial Discipline: The new system promotes more sustainable spending, making it harder for clubs to blow past their means recklessly.
- Competitive Balance: By tying spending to a percentage of revenue, smaller clubs might gain more predictability and stability, potentially narrowing the gap with elite sides.
- Transparency & Monitoring: With in-season checks and clearly defined tests, the Premier League will be better positioned to monitor club finances and enforce sanctions.
- Long-Term Stability: The SSR tests add a layer of resilience clubs will need to prove they can survive financial shocks, not just compete in the short term.
Potential Winners and Losers
- Winners: Mid‑tier and smaller clubs could benefit the most, as they might spend more confidently within their means without risking huge losses.
- Risk for Big Spenders: Clubs used to aggressive spending may feel constrained, particularly once the 30% allowance is used up.
- Youth & Infrastructure Investment: Clubs may shift more focus to long-term investments (academy, infrastructure) rather than just buying established players.
Challenges & Concerns
- Some critics argue the 85% limit is still too high, allowing for significant spending by top clubs.
- Ensuring consistent enforcement will be crucia rules are only as good as their implementation.
- There’s a risk that the multi-year allowance could be abused or create loopholes if not closely monitored.
Conclusion
The Premier League’s decision to adopt the Squad Cost Ratio and Systemic Resilience rules marks a major shift in how clubs will manage their finances from 2026/27. By balancing spending ambition with financial prudence, the league aims to foster long-term stability and more sustainable competition. Whether it succeeds will depend on rigorous enforcement and how clubs adapt but for now, the vote signals a new era in Premier League financial regulation.
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