The Premier League is set for a major financial overhaul after clubs voted to adopt a new squad-cost system, which will replace the long-standing Profit and Sustainability Regulations starting next season.
The decision came on Friday, November 21, during a London meeting where clubs considered three proposals for revising the league’s financial framework. The Squad Cost Ratio (SCR) model received 14 votes — the minimum needed for approval — while six clubs opposed it.
Another proposal, known as anchoring, which would have tied spending limits to the revenue of the league’s lowest-earning club, failed to gain traction. Twelve clubs rejected it, seven supported it, and one abstained. Meanwhile, sustainability rules, guiding medium- and long-term financial planning, passed unanimously.
In a statement confirming the changes, the Premier League said the new system is designed to “promote opportunity for all clubs to aspire to greater success and align the league’s financial system with UEFA’s existing SCR rules.” The league added that the framework will include:
- Transparent in-season monitoring and sanctions
- Protection against sporting underperformance
- The ability to spend ahead of revenues
- Strengthened capacity for off-pitch investment
- Reduced complexity by focusing primarily on football-related costs
Under the new rules, clubs may spend up to 85% of their revenue on wages, transfers, and agent fees. Teams qualifying for European competitions must adhere to UEFA’s stricter 70% limit, meaning a club could still face UEFA penalties even if it complies with Premier League rules.
Several clubs, including Bournemouth, Brentford, Brighton, Crystal Palace, Fulham, and Leeds, preferred to retain the existing PSR system and voted against the change.
To ease the transition, the Premier League has introduced a rolling allowance of 30%, allowing clubs to spend above the limit over multiple seasons. This measure helps teams manage revenue dips or periods of poor performance.
There are two key thresholds under the new system:
- Green Threshold: Spending above 85% triggers a financial penalty.
- Red Threshold: Exceeding 85% plus the 30% allowance results in an automatic six-point deduction, with an additional point added for every £6.5 million spent beyond this limit.
All clubs will begin next season with the full 30% allowance, making the effective upper limit 115% before sporting sanctions apply. The allowance adjusts season by season depending on how much a club spends. For example, a club that spends 105% next season will have only 10% of the allowance remaining for 2027–28, reducing its maximum threshold to 95%. Clubs operating below 85% can rebuild their allowance up to the full 30% over time.
