The Premier League has introduced a new set of financial rules, which have replaced the Profitability and Sustainability Rules (PSR) from the beginning of the 2026/27 season.
Developed through extensive consultation with clubs and a wide range of stakeholders, these rules are designed to secure financial sustainability of clubs, while promoting long-term investment and protecting the competitive balance of the Premier League. They aim to achieve this in a way where compliance can be monitored and enforced "in season" to promote certainty and clarity for fans, clubs and stakeholders.
In developing the new financial system, the Premier League has sought to devise a framework that works effectively in parallel with UEFA’s rules and is consistent with the objectives of the Independent Football Regulator.
This page provides a simplified summary of the Premier League’s new financial system, outlining how it works and the key objectives that underpin it. The full set of rules can be found in Appendices 2 and 3 of the Premier League Handbook.
Squad Cost Ratio (SCR)
What is Squad Cost Ratio (SCR) in the Premier League?
Squad Cost Ratio is a financial regulation that limits Premier League clubs’ on-pitch spending to 85% of their football-related revenue and net profit/loss from player sales. Clubs have additional headroom available to exceed the 85% threshold under the SCR system, which is explained in more detail further down the page.
Why has the Premier League introduced the SCR system?
The Premier League has introduced the SCR system to promote the opportunity for all of its clubs to aspire to greater success, while protecting the competitive balance and compelling nature of the League. SCR focuses solely on spending that directly affects what happens on the pitch, allowing clubs greater commercial freedom to invest without restriction in off-pitch areas like stadium upgrades and fan experience.
The system brings the Premier League’s financial rules closer to UEFA’s, ensuring consistency for clubs competing in both domestic and European competitions. This alignment aims to simplify dual reporting as well as ensure clubs will have as smooth a transition as possible following unexpected qualification (or failure to qualify) for UEFA competitions. As such, clubs will be able to invest with confidence over multiple seasons even if they move in and out of UEFA competitions.
What is included in the squad-related costs?
Squad costs cover player and head coach wages, agents’ fees and amortisation or impairment of transfer fees. Amortisation in football is the process of spreading a player’s transfer cost over the length of their contract, while impairment in this context means if the value of a player’s registration is less than what was originally paid for them due to a range of factors, such as injury, performance or relegation.
What is covered under the SCR spending limit?
All contracted players and head coaches are included. Staff outside of the playing squad, such as administrative or commercial personnel, are excluded – as are assistant coaches and other coaching team members.
How is football-related revenue calculated?
In relation to SCR, football-related revenue relates to a club’s total earnings from football operations. It encompasses both the income that clubs generate themselves and the revenues distributed by the League and other football competitions.
For example, club-generated revenues come from sources including commercial revenues, matchday revenues and net profits from non-football events hosted at their stadiums, such as concerts.
Revenues generated by the League and other football competitions include central payments to clubs (merit money), facility fees and income from domestic, European and international cup tournaments like the FA Cup, EFL Cup, UEFA Club Competitions and the FIFA Club World Cup.
How does SCR differ from Profitability and Sustainability Rules (PSR)?
First and foremost, PSR and SCR differ in what they measure. PSR evaluates a club’s overall profit by including all revenues and costs, while SCR focuses specifically on on-pitch spending. By concentrating on squad costs, SCR gives clubs greater freedom to invest in other aspects of their operations.
Under PSR, clubs are assessed based on their financial performance over a rolling three-year period, whereas the SCR sets clear spending limits for each season, which only change as a result of player trading activity, which clubs must adhere to throughout that campaign. Compliance is monitored in-season as well as at the end of the season, allowing for earlier intervention if a club is breaching the rules. This shift enables more timely enforcement and encourages clubs to manage their finances responsibly in real time, rather than relying on longer-term financial balancing. Likewise, as clubs’ revenue inputs are agreed in advance of the season, clubs are given more certainty under SCR as they can’t be negatively impacted in a given season by an unforeseen fall in revenues (e.g. poor performance on the pitch, a reduction in matchday revenues, or a decrease in commercial revenues), unlike in PSR.
How does SCR align with UEFA’s financial regulations?
UEFA’s Squad Cost Ratio limits a club’s on-pitch spending to a maximum of 70% of its total revenue and so, under UEFA regulations, all Premier League clubs in European competitions will still have to adhere to this limit. Clubs not competing in Europe do not have to comply with UEFA regulations and so will only have to comply with the League’s SCR, which has a higher threshold of 85%. This is to allow clubs that do not regularly participate in European competitions to have sufficient headroom to compete for qualification for UEFA Club Competitions against incumbents who receive additional European revenues.
The additional 15% also helps support transition for clubs who fail to qualify in any given year for a UEFA Club Competition. This reduces the need for a club to take short-term cost action and allows a club to plan and invest over multiple seasons without being forced into sudden, destabilising cuts.
What period does SCR cover?
The Premier League’s SCR Rules run on a seasonal basis to align with how clubs currently prepare budgets, annual accounts and forecasts. This is different to UEFA’s regulations which run on a calendar year basis.
How frequently is SCR assessed?
A club’s SCR is assessed once a year in March following the Winter Transfer Window (1 March), with monitoring also undertaken in October of each year. Clubs who are above the 85% threshold following the test in March are then assessed post-season in June and October (the ‘Accounts Confirmation Test’ and ‘Accounts Confirmation Test True Up’).
How does this assessment work?
At the start of each season, clubs and the League agree on estimated football revenues, based on past seasons and formulas. These figures help set each club’s Green Threshold (85% revenue) and Red Threshold (an absolute spending limit up to 30% above the Green Threshold) for monitoring and compliance.
The SCR Compliance Test will then take place during the season on 1 March.
If squad cost is equal to or less than the Green Threshold, a club is compliant and no further action is needed.
If squad cost is above the Green Threshold but below the Red Threshold, a club will be subject to the Accounts Confirmation Test. This will be carried out at the end of the season in June to verify whether a club’s actual revenue and costs reflect the estimated revenue and costs used in season. If a club is still above the 85% threshold using actual squad cost ratio, it will be subject to the Accounts Confirmation Test True-Up in October. If the club is still above the 85% threshold at this point then, subject to the operation of a mechanism at SCR Rules E.7 to E.9 that allows reduction or removal of the offset in certain circumstances (the ‘levy offset mechanism’) as described further below, it will be liable for a levy (but will not incur a SCR sporting sanction).
If squad cost is above the Red Threshold on 1 March, a club will face a sporting sanction.
Why are clubs allowed to go above the 85% limit?
Each club is granted a multi-year allowance by which they can exceed the Green Threshold before becoming subject to a SCR sporting sanction. This allows for clubs to invest ahead of revenue and reasonable variance or genuine sporting underperformance throughout the season. The additional headroom can be a maximum of 30% above the Green Threshold but not lower than 0%.
How is the allowance percentage determined?
The allowance is initially set at 30% for all clubs and for any promoted club. This means a club’s Red Threshold will start at 115%.
Where a club breaches 85% in its Accounts Confirmation Test, its 30% allowance is decreased for the following season by the same percentage as the breach, until the 30% allowance is exhausted. This is known as the ‘Feedback Loop’.
For example, should a club’s SCR for season 1 be 100%, in season 2 its allowance will be 15% and its Red Threshold will be 100%. If the club’s SCR for season 2 was 101%, it would have exhausted its allowance and breach the Red Threshold, thereby becoming subject to sporting sanctions.
Can a club increase its allowance in the following season(s) if it’s been reduced?
Yes. If a club which was previously subject to a Negative Feedback Loop is compliant with the Green Threshold or Accounts Confirmation Test in subsequent seasons, then they are subject to the Positive Feedback Loop, which increases their Red Threshold by 10%, up to a maximum of 30%.
Can clubs carry forward unused spending capacity to future seasons?
No. Compliant clubs can only build back up their allowance by 10% if it has been reduced in prior seasons.
What happens if a club’s revenue drops mid-season - do they have to adjust spending immediately?
The SCR Compliance Test takes place in-season and is based on pre-agreed revenues and figures either agreed with or supplied by the Premier League, so there will be no impact on this test if a club’s revenue drops mid-season. If a club’s SCR is above 85%, a material drop in revenue may result in a fine at the end of the season when the calculation is done on actual revenue and costs as part of the Accounts Confirmation Test.
How does SCR apply to clubs promoted from the Championship?
In the same way as it does for existing Premier League clubs, with some adjustments made to increase their football-related revenues to take into account greater revenue opportunities in the Premier League compared to their audited accounts while in the EFL.
Does SCR apply to women’s teams or youth academies?
Income relating to women’s teams and youth academies are included within the calculation, but costs are not, which should provide clubs with freedom to invest in these areas.
What sanctions will clubs face if they breach the SCR limits?
If a club’s SCR exceeds the Green Threshold (but is below the Red Threshold) in the Compliance Test, the Accounts Confirmation Test and the Accounts Confirmation Test True-Up, it may (subject to operation of the levy offset mechanism) become liable for a financial sanction in the form of levies (but no sporting sanctions). The levies are calculated using the smaller of two figures:
- the Green Threshold overspend (measured in-season, based on projected spending), or
- the Accounts Confirmation Test overspend (measured post-season, based on actual spending)
The lower figure is then multiplied by the percentage overspend in excess of 85%. For example, if a club overspent by £250,000 and its ratio was 89%, the fine would be £10,000 (£250,000 x 4%).
A Club may reduce or remove a levy that it is subject to in a given season if it can demonstrate sustained financial discipline across the previous two seasons, in accordance with the levy offset mechanism described below.
If a club’s SCR exceeds the Red Threshold, it will face a sporting sanction in the form of a points deduction. The quantum of the points deduction will be calculated in accordance with the defined sanctioning formula set out in the SCR Rules, but in summary, this will be a fixed six-point deduction, which increases by one point for every £6.5m spent over the Red Threshold.
How does the levy offset mechanism operate?
If a club has complied with the 85% threshold in the previous two seasons, but exceeds it in the current season, it may reduce or remove the levy which would otherwise be payable by the aggregate percentage amount it was under 85% in the two previous seasons. The maximum aggregate reduction is 10%.
Levy relief will only be available to a club once every three seasons. Once a club uses its levy relief, it will need to work up to two seasons of compliance before levy relief will be available again.
Where levy relief is utilised, there is no impact on any other element of the SCR, including the allowance described above, the Red Threshold, the ‘Feedback Loop’ and the application of sporting sanctions, all of which remain unchanged.
For example, a club’s SCR in a season is 95%. In the two previous seasons, the club’s SCR was 82% and 80% (being 8% under 85% in aggregate across the two seasons). As the club can show it was under the 85% threshold in the two previous seasons, the club can reduce its overspend percentage of 10% in the current season (which is used to calculate the levy) by 8%. The club is then liable to pay a levy based only on the remaining 2% overspend (95% - 8% = 87%; 87% - 85% = 2%), however the Negative Feedback Loop applies in full so its allowance is decreased by 10%.
The two exceptions to the general operation of the mechanism are:
- In the first season that levies apply (2027/28), clubs won’t have two seasons of SCR data, because the 2025/26 season was still under the old Profitability and Sustainability Rules. Clubs can still receive levy relief in 2027/28 if they can show they met the 85% threshold in 2026/27, and that in 2025/26 they either complied with PSR or would have met the 85% SCR threshold had it applied (noting that the Premier League ran the SCR system in ‘shadow’ that season).
- Recently promoted clubs will not have been subject to the SCR in one or both of the two previous seasons, so they can’t show prior compliance in the usual way. To ensure that they are not disadvantaged, these clubs can still claim levy relief if they can show they were financially prudent in the previous two seasons - either by complying with the financial rules that applied to them at the time (such as the EFL’s P&S Rules) or by showing they would have met the Premier League’s 85% SCR threshold had it applied.
Why can Premier League clubs use the levy offset mechanism to reduce a financial sanction?
The Premier League recognises that even clubs that have demonstrated sustained financial discipline may experience short-term revenue volatility resulting in a levy. The levy offset mechanism therefore provides some recognition of season-to-season revenue swings so that clubs aren’t penalised when they’ve previously shown financial discipline, while also reinforcing long-term financial sustainability by rewarding clubs that consistently stay within the SCR limits.
At what point will a club be penalised?
Sporting sanctions tied to SCR breaches will be imposed in the season the breach occurred. Levies will be finally determined in October following the end of the season in which the club exceeded the 85% threshold (and receipt of audited annual accounts for that season).
Can clubs appeal penalties under the SCR system?
Yes – if a club disagrees with a decision or determination made by the Board, including the imposition of a financial penalty or points deduction, it can challenge or appeal that decision through a formal process set out in Section G of the SCR Rules.
In summary, a club should bring any such challenge within 7 days of the Board’s decision or determination, having first tried to resolve the issue informally by writing to the League. If the issue is not resolved within 7 days, the club may proceed to arbitration, which is governed by Section X of the existing Premier League Rules. If the dispute could affect the club’s Red Threshold status (such as triggering or reversing a points deduction) the club must notify the League and tribunal and may request expedited arbitration to ensure resolution in-season, to the extent possible.
When does the SCR come into force?
In the 2025/26 season, Clubs were required to comply with the PSRs and the SCR Rules applied in ‘shadow’ form. This meant that while clubs were required to supply the information necessary to inform an assessment of compliance with the SCR Rules by the League, the League would not take any enforcement action in the event that a club was in breach of any of the obligations of the SCR Rules.
The SCR Rules came into full force and effect from the beginning of the 2026/27 season, with the exception of the imposition of levies which will only be payable by clubs for breaches in 2027/28 onwards. PSRs no longer apply from the start of season 2026/27 onwards, although the League’s powers to initiate or continue any required enforcement action in respect of PSR breaches for the period ending season 2025/26 (or in respect of any other previous seasons) are preserved.
Sustainability and Systemic Resilience (SSR)
What is Sustainability and Systemic Resilience?
Sustainability and Systemic Resilience (SSR) involves three tests that are applied throughout the season to support short, medium and long-term financial sustainability of all clubs.
Why has the Premier League introduced SSR?
The Premier League has introduced SSR to improve clubs’ financial sustainability and investability over the short-, medium- and long-term, taking into account prevailing market conditions. SSR has also been implemented to facilitate workable alignment with the regulations of other relevant competitions and to instil confidence in the League’s regulatory system with fans and stakeholders.
What are the three SSR tests?
- i) Working Capital Test (short-term cash resources): Assessment of a club’s immediately available cash headroom across a season to ensure it can manage required outgoings and unforeseen fluctuations, particularly between transfer windows. This includes (for example): poor results in a season, sudden termination of commercial contracts (e.g., bankruptcy of commercial partner), significant reduction in matchday revenue (e.g., unforeseen closure of part of stadium) and delay of incoming transfer fee payments.
- ii) Liquidity Test(medium-term liquidity and resilience): Assessment of a club’s liquidity headroom over two seasons, including market value of player registrations, to ensure it can account for its current financial position and handle a variety of financial shocks inherent to the industry. This includes (for example): consequential impact of poor sporting performance in both the current and subsequent season (e.g., relegation), loss of substantive commercial sponsor and loss of broadcaster contract in any given competition.
iii) Positive Equity Test (long-term financial health): Assessment of a club’s balance sheet to evaluate its financial health, ensuring it has sufficient leverage to manage macro-economic factors. This includes (for example): structural market changes (e.g., decline in media rights market) and other extreme events (e.g., a global pandemic). This test ensures that clubs do not operate with unreasonably high levels of debt.
What steps must clubs take to meet these requirements?
i) Working Capital Test:A club must demonstrate that, for each calendar month over the course of a season, the sum of its projected cash balances (Adjusted Cashflow Figure) and qualifying working capital funds is at least £12.5 million. Qualifying working capital funds include undrawn credit facilities, receivables, and other funds that can be accessed within 28 days.
ii) Liquidity Test: A club must demonstrate that, for the current and following season, its ‘Liquidity Headroom’ is zero or positive having absorbed a ‘Stress Test’ of £85 million. The Stress Test accounts for a variety of potential negative events, with the proposed Stress Test figure being based on the revenue impact of relegation or failure to qualify for UEFA Club Competitions. A club’s Liquidity Headroom is what’s left after taking its liquid assets, subtracting its liquid liabilities, and then taking away £85 million for the ‘Stress Test Adjustment’. The Liquidity Test calculation includes 40% of the club’s squad market value (as opposed to its book value) as a liquid asset.
iii) Positive Equity Test: A club must demonstrate that its ‘Positive Equity Ratio’ (liabilities ÷ adjusted assets) is less than or equal to 90% in the 2026/27 season, 85% in the 2027/28 season and 80% from the 2028/29 season onwards. The Positive Equity Ratio calculation includes the club’s full squad market value (or the net book value of players, if higher) as an adjusted asset. All liabilities reported on the club’s balance sheet are considered in the calculation, including shareholder loans and external debt.
When will clubs be assessed by these tests?
Club compliance with each of the three tests described above is conducted on 7 July each year. Further assessments of compliance with each of the tests may be required following a ‘Call-In Event’, which may take place at any point in a season.
To facilitate the League’s assessments of compliance with the SSR, clubs will be required to submit “Future Financial Information” relating to the following two seasons to the League on 7 July each year.
Does this differ for promoted clubs?
Newly promoted clubs will be assessed by the Liquidity Test and Positive Equity Test on 31 October.
Will clubs be sanctioned if they don’t comply with the SSR Rules?
There may be occasions when a club will be required to make changes to improve their financial position.
The range of potential methods available to clubs to address non-compliance include voluntary spending limitations, cash injections, or the rebalancing of their debt / equity position. Where a club does not proactively take action to remedy its financial position and/or it has a consistent track record of unsustainable activities, the Premier League will intervene through enhanced monitoring, and other sanctions (unless the Premier League Board considers that exceptional circumstances apply).
What sanctions could a club face?
Under the SSR, where breaches occur, the focus is on monitoring and the imposition of measures that return a club to compliance. If a club is non-compliant with a relevant test, it shall be required to demonstrate to the League how it will bring the club back into compliance, through the submission of a business plan. If a club does not submit the required business plan, or that submitted does not satisfy the League, the Board may impose any of a defined list of measures on a club, including requiring that the club seeks the Board’s approval to register new contracts, require the club to adhere to a spending limit or exercise its disciplinary powers under Rule W.3 of the League’s Rules.
When will SSR be implemented?
The SSR Rules came into full effect from the start of the 2026/27 season.