Qualifying for Europe comes with its own risks.
This season will see the end of the Premier League’s (EPL) much hated Profitability & Sustainability Rules (PSR) to be replaced by a Squad Cost Control (SCR) method and the EPL have already said that no club failed PSR last season and as the first season of SCR (2026-2027) has built-in margins of error it seems unlikely that EPL clubs will fail domestic regulations this season either.
All is good then, right?
Yes, but what about the European competitions?
Most recently, Aston Villa and Newcastle United have faced challenges due to their inability to comply with UEFA’s SCR (actually called Financial Sustainability Regulations), mainly because the UEFA regulations are stricter than the EPL ones and don’t allow any leeway for clubs that haven’t competed in Europe for many years, or in the case of some hopefuls, never.
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And there are plenty of hopefuls this season, with the chase for European qualification sill stretching down the league so that even 14th-placed Newcastle, notwithstanding their form, can still achieve European qualification.
As it currently stands, Newcastle are only six points off sixth, which could even end up being enough for a Champions League place in some circumstances.
Chelsea occupy sixth on 48 points, and between the Blues and the Magpies sit Brentford (47 points), Everton (47), Brighton (46), Sunderland (46), Bournemouth (45), Fulham (44) and Crystal Palace (42).
If they are to qualify, then these teams would have to satisfy stricter financial regulations. So how do these work and what are the pitfalls and punishments these clubs may face?
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Under UEFA’s SCR, clubs have to evidence:
Solvency: clubs must meet financial obligations (e.g., no overdue payables)
Stability: controlled losses over time
Cost control: most notably the “squad cost rule,” which limits spending on wages, transfers, and agent fees to a percentage of revenue (phased down to 70%)
UEFA enforces these rules through the Club Financial Control Body (CFCB), which operates in two chambers:
Investigatory Chamber: reviews financial submissions and identifies breaches
Adjudicatory Chamber: imposes sanctions where necessary
Sanctions range along a spectrum:
Warnings and fines
Squad or transfer restrictions
Withholding prize money
Exclusion from UEFA competitions (most severe)
A key feature of how UEFA treats a breach is its use of negotiated settlements rather than purely punitive enforcement. When a breach is identified, the CFCB Investigatory Chamber has discretion to enter into a settlement agreement with the club instead of immediately referring the case for formal adjudication.
These settlements are designed to bring the club back into compliance over a defined period and aim to avoid destabilising clubs and minimise, if not eliminate, the existential-threatening approach the EPL employed most notably when punishing Everton.
They are not a soft touch, though; they are conditional and enforceable and if a club fails to deliver what the settlement agreement details, then their case is immediately escalated to the Adjudicatory Chamber, and harsher punishments can be applied, including competition bans.
This creates a two-stage enforcement model:
Negotiated route to compliance (settlement)
Punitive escalation (if non-compliance persists)
The process starts when a club qualifies for a UEFA competition and is required to submit up-to-date financial data to the Club Financial Control Body (CFCB).
If a club fails the rules, UEFA rarely jump straight to a ban. Instead, they often offer a settlement agreement.
These agreements:
Set financial correction targets over 2–3 years
May impose transfer limits or squad caps in UEFA competition.
Includes fines (often partly suspended)
It is also worth noting that UEFA do not give leeway to clubs that have not competed in European competition for a while, or indeed at all.
In fact, such clubs are often disadvantaged, and particularly those from the EPL, in which the parameters are not as tight.
If club finances are not aligned, for example, wages-to-turnover percentages exceed 70%, issues surface quickly, and it is possible they could immediately be required to reach a settlement agreement that could include, for example, a squad size restriction and/or a requirement to reduce costs.
For those EPL clubs hoping to be in a European competition next season, they ideally need to be profitable with a wage percentage below 70%.
If they cannot prove that, they should consider that UEFA’s Club Financial Control Body would view:
• 70% = compliant
• 70–80% = correctable breach
• 80%+ = excessive cost base
An excessive cost base, as highlighted here, can trigger a breach even if the club made a profit, and the consequences could be:
Aggressive reduction targets (e.g., back to ≤70% within 1–2 seasons)
Tight transfer controls (often close to a “net spend = zero” model)
Hard wage growth limits
A significant fine, with less of it suspended
Reduced European squad size (potentially well below 25)
Restrictions on registering new signings
Requirements to offset any new player with sales (player trading balance rules)
Over the years, Manchester City, Chelsea, Manchester United and more recently Villa have all been subject to sanctions, and at the time of writing, Villa are reported to be negotiating a settlement agreement with UEFA that may result in them not being allowed to sign players unless they first sell, and even then, have to agree to squad restrictions.
Villa’s problem is that they have progressed quickly on the pitch under Unai Emery and their financial performance, limited by the size of their stadium, has not kept up. UEFA will put them under serious pressure, and I anticipate that they will be required to consolidate, control costs and align spending with revenue.
THE EVERTON VIEW
A comparison between Villa and Everton is quite sobering; the former have elevated revenue after being in the Champions League in recent seasons but also have very high player costs.
Everton, for their part, are at the start of a period of serious growth after a change of ownership and the move to a new and larger stadium.
It seems likely Villa will be sanctioned by UEFA and quite possibly so will Everton if they qualify for European competition next season.
The key for Everton is to keep their wage percentage as close to 70% as possible, and in recent years, that has reduced significantly. However, in the club’s last published accounts, it was still too high.
Balancing squad development with regulatory compliance was a PSR issue for Everton, and that experience could hold them in good stead as they plan for a potential European adventure.
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