Premier League clubs have approved a new alternative to the Profit and Sustainability Rules (PSR), known as the Squad Cost Ratio (SCR). However, they voted against a proposal that could have introduced a salary cap from the 2026/27 season.
The 20 Premier League clubs voted on three main issues: SCR, Sustainability and Systematic Resilience Proposal (SSR), and Top to Bottom Anchoring (TBA) proposal. The SCR and SSR rules were approved, with fourteen out of twenty clubs voting in favour of SCR. However, TBA regulations did not receive sufficient support.
Before the vote on TBA, which could have introduced a salary cap as part of its rules, both the Professional Footballers' Association (PFA) and some of UK's biggest player agencies prepared for legal action. They argued that it was effectively imposing a salary cap on players. After successfully stopping EFL from introducing a salary cap in 2021 through legal challenge, they warned that any rules including such would be challenged in court.
Understanding SCR
From the 2026-27 season onwards, Premier League clubs will be allowed to spend up to 85% of their revenue on squad costs - covering player wages, amortised transfers and agents' fees. This is an increase from UEFA's current limit of spending at 70% for nine Premier League clubs playing in Europe this season.
A shadow form of SCR has been trialled alongside PSR since last season. Each club will now be set two thresholds - 'green' at 85% revenues and 'red', an absolute spending limit up to 30% over green threshold.
Assessments will take place annually after January transfer window with monitoring in October. Penalties include fines and point deductions, with clubs having the right to appeal both.
SCR vs PSR
SCR differs from PSR in what they measure. While PSR evaluates a club's overall profit by including all revenues and costs, SCR focuses specifically on on-pitch spending. This gives clubs greater freedom to invest in other aspects of their operations.
Under SCR, clear spending limits are set for each season which must be adhered to throughout that campaign. Compliance is monitored during the season as well as at its end, allowing for earlier intervention if rules are breached. The Premier League is introducing three SSR tests aimed at improving clubs' financial sustainability over short, medium and long-term periods. These include Working Capital Test, Liquidity Test and Positive Equity Test - all designed to ensure financial health of clubs under various conditions.
Clubs may also face a 'Call-In Event' where further assessments would be made on their compliance with rules. Non-compliance could lead to sanctions such as voluntary spending limitations or even points deduction. The Premier League is also closing a loophole that allowed clubs to sell assets to associated parties in order to comply with financial regulations. From next season onwards, the SCR calculation will solely be based on football revenues eliminating any regulatory benefits arising from asset sales.
