Image Credits: Imago Images
The Premier League has officially approved sweeping changes to its financial regulations following a crucial vote on Friday, with the new rules set to take effect from the 2026/27 season.
In what marks one of the most significant shifts in how English football operates financially, clubs agreed to introduce two new frameworks—but rejected a controversial spending cap proposal that had divided the league.
At a shareholders’ meeting in London, Premier League clubs voted on three major financial proposals designed to replace the existing Profit and Sustainability Rules (PSR), which have caused significant controversy after point deductions for clubs like Everton and Nottingham Forest.
Of the three proposals, two passed while one failed to gain enough support.
The three proposals can be understood simply:
Proposal What is it? What does it mean?
Anchoring (Salary Cap) Limits club spending on wages and transfers to a fixed maximum. All clubs capped at the same level, reducing financial gaps between teams.
Squad Cost Rule (SCR) Restricts squad spending to a set percentage of revenue. Clubs must keep wages and transfers under 85% of their income.
Sustainability & System Resilience (SSR) Ensures clubs can meet short- and long-term financial obligations. Extra checks to prevent clubs from falling into financial trouble.
The Two Proposals that were Passed
Squad Cost Rule (SRC): This proposal narrowly passed with the minimum 14 votes required, with six clubs voting against.
Under SCR, clubs can only spend up to 85% of their total revenue on squad-related costs, which includes player wages, transfer fees, and agent payments.
Think of it as a sliding scale based on how much money each club generates. To provide some flexibility, clubs have a “buffer zone” allowing them to spend an extra 30% beyond the 85% limit over multiple years, though this triggers financial penalties.
Sustainability and Systemic Resilience (SSR): This passed unanimously and introduces three financial health checks to ensure clubs can meet their obligations.
The Working Capital Test ensures clubs have at least £12.5 million in available cash each month.
The Liquidity Test examines whether clubs can cover expenses over the medium term. The Positive Equity Test assesses long-term balance sheet health. Together, these measures aim to prevent clubs from falling into financial trouble.
What did not pass?
By far the most controversial proposition, Anchoring (relating to player salary caps) failed to pass with 12 clubs voting against, seven in favour, and one abstaining.
Anchoring would have capped all clubs’ spending at five times the broadcasting and prize money received by the bottom-placed club.
Essentially, it would have been a hard spending limit applying equally to everyone, regardless of how much revenue giants like Manchester City or Liverpool generate.
How did Liverpool vote?
It was reported by the Athletic on Thursday that the Reds were understood to have been in favour of all three of the aforementioned reforms.
What did the Premier League say?
The Premier League has released a statement on the new developments:
At a Premier League Shareholders’ meeting today, clubs voted to introduce a new set of financial rules which will come into effect from the start of the 2026/27 season.
Following extensive consultation, clubs agreed to bring in Squad Cost Ratio (SCR) and Sustainability and Systematic Resilience (SSR) proposals. There was insufficient support for a proposal on Top to Bottom Anchoring.
Since 2023, the Premier League and our clubs have worked collaboratively to develop the financial controls with the objective of maintaining the League’s value, protecting competitive balance and ensuring clubs operate in a financially sustainable way.
The process has included extensive consultation at Shareholder level at clubs, as well as senior finance and legal executives, and club working groups. In addition, independent economic and legal analysis was sought.
You can read more HERE.
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