Josh Kroenke and William Saliba celebrate with the Premier League trophy(Image: 2026 Visionhaus)
The Premier League is ditching its current Profitability and Sustainability Rules (PSR) this summer, ushering in fresh financial regulations from next season. PSR monitored three-year losses and resulted in points deductions for clubs like Nottingham Forest and Everton who fell foul of the requirements.
The top-flight has now decided to implement a new framework that mirrors UEFA's regulations, introducing the Squad Cost Ratio (SCR) as the governing metric. Under these rules, clubs' on-field expenditure – encompassing player salaries, transfer fees, and agent commissions – will be capped at 85% of their overall football revenue (or 70% for those participating in UEFA competitions).
SCR encompasses player and head coach wages, agent fees and transfer fee amortisation. The revised regulations incentivise fiscal responsibility, as clubs operating beneath their budget and choosing not to utilise their full 85% allocation for two successive seasons can carry forward up to 10% of their unspent allowance into the next year.
Conversely, clubs exceeding the maximum 115% SCR threshold – which concentrates exclusively on squad expenditure – will face an automatic fine alongside a mandatory six-point deduction.
SCR does provide financial flexibility off the pitch, enabling clubs to channel investment into stadium improvements, youth academies and infrastructure without these costs counting towards the threshold, reports [the Mirror](https://www.mirror.co.uk/sport/football/news/premier-league-transfer-points-deduction-37214510).
While SCR will formally come into effect next season, it has been operating on a shadow basis over the previous two campaigns. The Premier League chose this approach to allow financial executives adequate time to familiarise themselves with the fresh requirements while Profitability and Sustainability Rules (PSR) remained the legal framework.
At the start of the 2026/27 campaign, clubs must present projected football income and squad expenditure based on previous seasons' performance. The Premier League will then conduct its inaugural SCR Compliance Test mid-season on March 1, 2027.
These submissions will determine each club's Green Threshold (85% revenue) and Red Threshold (the upper spending cap of up to 30% beyond the Green Threshold). An Accounts Confirmation Test will subsequently take place at the season's conclusion in June to establish any penalties or points deductions.
Where squad expenditure matches or falls below the Green Threshold, a club will be considered compliant with no additional measures required. Conversely, should squad expenditure exceed the Red Threshold, that club will be subject to a sanction.
Beyond harmonising with UEFA's financial regulations, the SCR framework aims to bolster Premier League clubs' achievements while safeguarding the league's competitive equilibrium.