English top-flight football is set for a significant financial overhaul after Premier League clubs voted to introduce a new regulatory system, marking the end of the current Profit and Sustainability Rules (PSR).
At a pivotal shareholders' meeting in London, the 20 clubs voted 14-6 in favour of adopting Squad Cost Ratio (SCR), which will officially replace PSR from the 2026/27 season.
What Are The New SCR Rules?
The core principle of the new system is straightforward: clubs will be permitted to spend up to 85% of their turnover on squad-related costs. This comprehensive figure encompasses player transfers, wages, manager salaries, and agent fees.
Unlike the outgoing PSR, which focused on overall profitability, SCR directly targets on-pitch expenditure. This shift provides clubs with greater freedom to invest in infrastructure projects like stadium upgrades, as these costs are excluded from the calculation. Commercial, administrative staff, and even assistant coaches' salaries also fall outside the SCR remit.
Why The Change Was Necessary
The move away from PSR follows criticism that the previous rules were overly complex and potentially hindered clubs' competitiveness in the global transfer market. PSR allowed clubs a maximum net loss of £115 million over a three-year period, a system that recently ensnared Everton and Nottingham Forest.
Proponents of SCR believe it offers a more transparent and flexible framework. However, the six clubs who voted against the change – Brighton, Bournemouth, Leeds United, Brentford, Crystal Palace, and Fulham – evidently disagree, potentially concerned it reduces their ability to compete with wealthier rivals.
The fundamental purpose of financial regulations remains: to prevent owners from bankrolling excessive spending that could distort competition and to avoid catastrophic club failures, such as the near-collapse of Portsmouth in the past.
Penalties, UEFA Alignment, and The Anchoring Alternative
The new system includes a clear penalty structure. While there is some wriggle room with a multi-year rolling allowance, any club that breaches the designated 'Red Threshold' will face an automatic six-point deduction. This penalty increases by one point for every £6.5m spent beyond the threshold, though clubs retain the right to appeal.
The SCR rules bring the Premier League more in line with UEFA's financial regulations, though with a key difference. UEFA's cap is set at 70% of turnover, while the Premier League's is 85%. This could theoretically give clubs not in European competition more spending power to challenge for qualification.
The vote also saw the rejection of an alternative system known as 'anchoring'. This proposal faced a significant backlash, with clubs fearing it would effectively impose a rigid wage cap and larger clubs opposing further restrictions on their spending potential.
The SCR framework will run in 'shadow form' alongside the existing PSR rules for the remainder of the season before coming into full effect for the 2026/27 campaign.
