In a decisive move that will reshape English football's financial landscape, Premier League clubs have rejected proposals for a controversial salary cap system while simultaneously approving a new set of financial regulations to govern club spending.
The End of Anchoring
The proposed 'anchoring' model, which would have limited any club's spending to five times the prize money and broadcast revenue earned by the bottom-placed team, was soundly defeated in a landmark vote on Friday. This radical cap received only seven votes in favour, with twelve clubs voting against and one abstaining.
The rejection came after significant opposition, including from the Professional Footballers' Association which threatened legal action. Furthermore, three of football's biggest agencies reportedly informed the Premier League they would challenge the framework in court if it was introduced.
A threshold of 14 votes from the 20 clubs was required to change the league's rules, meaning the anchoring proposal fell well short of the necessary support.
New Financial Era Begins
While saying no to the salary cap, clubs gave the green light to a new financial system set to take effect from the start of the 2025-26 season. This season will be the last under the current Profit and Sustainability Rules (PSR), which limit club losses to £105 million over a three-year period.
The new system introduces two key components: Squad Cost Ratio (SCR) and Systemic Resilience (SSR) rules. The SCR will regulate clubs' on-pitch spending to 85% of their football revenue and net profit from player sales.
Crucially, the framework includes a multi-year allowance giving clubs the flexibility to spend up to 30% above the 85% threshold, providing what the league describes as "an ability to spend ahead of revenues."
Alignment and Enforcement
The Premier League stated that the new SCR rules are designed to "promote opportunity for all clubs to aspire to greater success" while bringing the league's financial system closer to UEFA's existing regulations, which operate at a stricter 70% threshold.
However, unlike UEFA's annual assessment, the Premier League's version will run in line with the football season. The need for compliance is underscored by recent history – Chelsea and Aston Villa received combined fines of around £14.7 million from UEFA last summer for breaching SCR rules in 2024.
The complementary SSR rules will assess clubs' financial health through three tests: Working Capital, Liquidity, and Positive Equity. These measures are intended to ensure clubs have sufficient resources to handle outgoings and revenue fluctuations while maintaining long-term financial stability.
The league promises "transparent in-season monitoring and sanctions" as part of the new system, which aims to reduce complexity by focusing specifically on football costs while strengthening clubs' ability to invest in off-pitch infrastructure.
