Premier League clamps down on financial loopholes with sweeping SCR overhaul

New Rules

The Premier League clubs have approved new financial rules that will take effect from the upcoming season, prohibiting clubs from selling capital assets to affiliated entities in order to circumvent the financial rules.

The decision followed a vote on a new 'Squad Cost Ratio' system, SCR, after a London meeting that discussed three main proposals to replace the old 'Profit and Sustainability' rules.

SCR gained 14 votes in favour, 6 against, the smallest majority required to pass the changes. Under the new regime, from the 2026-27 season clubs will not be allowed to let first‑team costs exceed 85% of annual club revenue. Those costs include players and staff wages, transfer fees, and agent commissions, while clubs in European competitions must meet the UEFA floor of 70%.

Ending the asset‑sale loophole is one of the key elements of the update, since past seasons saw attempts to sidestep the rules by selling assets unrelated to football, such as hotels or women's teams, to sister companies.

Chelsea last year resorted to selling two of its hotels to a subsidiary to boost its financial position before the assessment panel.

In July, Everton took a similar step by transferring ownership of its women's team to the parent company, and reports noted Aston Villa had done similar arrangements. The new regulations, however, close the loophole by counting only income derived from football activities toward the eligible revenue.

Meanwhile, clubs unanimously approved long‑term sustainability rules, while the 'financial linking' proposal—to cap spending relative to the revenue of the lowest‑financed club—failed, with seven votes in favour, twelve against, and one abstention.

The Premier League published an official statement confirming that the new rules are meant to enhance fairness while aligning with the European model based on squad costs.

The statement said the system will rely on greater transparency during the season, clearer sanctions, and could allow clubs to spend beyond revenue within carefully calibrated margins, while reducing complexity by focusing mainly on first‑team expenditures.

SCR differs from the old profit-and-sustainability rules, which looked at a club's overall financial position over three years.

The new framework concentrates on annual first‑team expenses, making assessments more precise and tied to direct sporting outlays, while clubs in Europe must still comply with UEFA's tougher rules.

The regime offers a flexible 30% margin, a multi‑year allowance that lets clubs exceed 85% within defined limits to enable future investment or weather financial shocks. Assessments take place every March, with potential sanctions applied in the same season.

Spending is divided into two thresholds: the Green threshold at 85% of revenue, with exceedance triggering fines, and the Red threshold by adding the allowed margin to reach 115%.

Exceeding the cap leads to an automatic six‑point deduction from the league table, with an extra point taken away for every £6.5 million beyond the limit.

Each club starts the season with a spending capacity of 115% of its revenues. If it exceeds 85% but not 115%, only fines apply; if it clears the top threshold, it faces direct sporting sanctions.

With spending fluctuating season by season, a club that spends 105% of its revenues in a given season would have used up 20% of the margin, meaning the next season's limit falls to 95%. Conversely, spending under 85% allows the margin to increase again up to the 30% ceiling.

Some clubs with limited resources voiced dissatisfaction because tying spending to revenue curbs their ability to raise wage bills to competitive levels. Among these were Bournemouth, Brentford, Brighton, Crystal Palace, Fulham, and Leeds.

For example, Bournemouth struggles with limited resources due to a small stadium of around 11,000 spectators, despite the need to pay high wages.

Top clubs such as Manchester City, Manchester United, Arsenal, Chelsea and Liverpool stand to benefit from the model thanks to their strong commercial power and growing revenues.

For Aston Villa and Newcastle United, which had previously complained about PSR constraints on squad building, they now must tread carefully because European competition requires respecting UEFA's 70% cap, lower than the domestic ceiling.

Financial Link Proposal

The financial link proposal that would have capped spending relative to the lowest‑revenue club collapsed for various reasons, though some big clubs like Arsenal and Liverpool argued it would ensure greater fairness.

Manchester City and Manchester United, by contrast, fear such caps could limit their ability to compete in the future, especially if their revenues keep rising.

The Professional Players’ Association also warned the system could effectively cap wages, possibly triggering legal disputes. Fears were also raised that future drops in broadcast revenue could tighten the cap, harming competitiveness.

Ultimately, adopting sustainability rules was relatively straightforward because clubs were already required to comply with the Football Association's Independent Regulator's forthcoming remit, which will require clubs to submit short-, medium-, and long-term financial plans.

The new framework emphasizes continuous monitoring and corrective measures such as spending limits or debt restructuring to ensure financial balance and to bring any non‑compliant club back onto a compliant path.

The focus on oversight remains central as clubs adapt to the new regime.

Punchline: If numbers were players, SCR would be the striker who never misses a budget penalty.

Punchline 2: And if your accountant starts shouting, tell them the referee just blew the whistle for 'excess enthusiasm' in the transfer window.