All 20 Premier League clubs met in November 2025 to decide the future of the EPL’s financial fair play rules. They voted 14-6 in favour of introducing a Squad Cost Ratio (SCR) rule, which will see changes to the amount of money they are allowed to spend on new players each season.
All 20 clubs voted unanimously in favour of introducing mandatory medium and long-term financial forecasting rules too, which – alongside SCR – will replace the pre-existing Profit & Sustainability Rules (PSR) as of the 2026/27 season.
But a plan to introduce the ‘anchoring’ method of calculating financial spending, which would have imposed a limit on spending based upon the bottom club’s earnings, was rejected by 12 of the 20 attendees. Squad Cost Ratio, which will no doubt become better known as SCR, could have ramifications for the transfer plans of Premier League clubs moving forward.
What Is Squad Cost Ratio?
Premier League clubs have voted to introduce Squad Cost Ratio and Sustainability and Systematic Resilience, a new set of financial rules which will come into effect from 2026/27 season
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The Squad Cost Ratio calculation will ensure that all Premier League clubs are only allowed to spend up 85% of their revenue on transfer fees, player wages and agent commissions. However, the most interesting outcome of the rule change is that teams that play in UEFA’s continental competitions – Champions League, Europa League and Conference League – will still have to adhere to that governing body’s 70% SCR rule.
In theory, teams not playing in continental competitions will have a financial edge – they can spend up to 85% of their football revenue and net profit or loss from player sales, as per the Premier League’s new rules, whereas those participating in a UEFA tournament can only spend 70% of revenue.
However, most EPL clubs that play in Europe are of a higher stature than those who don’t, generate far greater annual revenue – therefore, the edge for non-continental teams will be negligible to non-existent. A Premier League statement reads:
The new SCR rules are intended to promote opportunity for all clubs to aspire to greater success and bring the league’s financial system close to UEFA’s existing SCR rules, which operate at a threshold of 70%.
Developed through extensive consultation with clubs and a wide range of stakeholders, these rules are designed to secure financial sustainability of clubs, while promoting long-term investment and protecting the competitive balance of the Premier League.
What Is Included in the Squad Cost Ratio Calculation?
The Premier League have been keen to point out that clubs can spend 85% of their ‘football related’ revenue. That means that they can use player and head coaching staff wages, agent fees and amortisation of transfer fees when calculating SCR. The ratio will also include commercial revenue, such as matchday spending, sponsorships and brand partnerships, as well as profit made from events held at their stadiums, such as summer pop concerts.
The revenues distributed by the Premier League can also be used as mitigation in the SCR calculation. That includes income from domestic and continental tournaments, prize money and facilities fees. The salaries of other, non-playing staff members cannot be included, nor can the wages of assistant managers and auxiliary coaching staff – such as set piece and goalkeeping coaches.
How Is SCR Different to PSR?
One of the key differences between SCR and PSR is the reporting period over which calculations need to be made. The numbers that fed into PSR were calculated over a rolling three-year period, whereas with the SCR rule a new amount will be generated each season.
That will enable clubs to gain a better advantage from earning a huge sum of money in quick fashion, such as when selling a valuable player or when banking a one-off sum of prize money, i.e. Chelsea winning the Club World Cup.
But SCR is monitored within the season itself, to ensure that clubs are compliant, so there is the opportunity for the Premier League to intervene if any teams are breaking the rules – sanctions, which would range from fines to even points deductions, could be dished out mid-campaign.
Interestingly, the Squad Cost Ratio calculation is undertaken before the season has begun. Therefore, even if a club experiences a significant downturn in their revenue streams, i.e. if they’re knocked out of a competition early or are forced to close one or more of their stands, it won’t impact that season’s sums.
Why Do Clubs Playing in Europe Have a Different SCR Calculation?
Quite simply, the Premier League does not have the power or jurisdiction to override UEFA’s own Squad Cost Ratio rule. Any EPL club that qualifies for a continental competition will have to adhere to UEFA’s 70% ruling, whereas those without European football have that higher 85% window to work to.
The Premier League also wants club to be financially sustainable in the long term; rather than reacting to unforeseen events. For example, if Liverpool failed to qualify for Europe, they could use the extra 15% at their disposal to prevent against ‘destabilising cuts’, as the EPL words it.
They also want to create a more level playing field between those clubs that routinely qualify for Europe and those that don’t.
This [SCR ruling] is to allow clubs that do not regularly participate in European competitions to have sufficient headroom to compete for qualification for UEFA club competitions against incumbents who receive additional European revenues.
Will Premier League Clubs Stop Spending Big Due to SCR?
In a word, no. The Premier League’s big boys are all money-making machines, so even when they’re splashing out millions in transfer fees and player salaries, they are able to recoup the money through commercial deals and partnerships.
Even with an 85% cap, they are still going to have plenty of resources to use in the transfer market. The only change that may be a factor is that shorter reporting period. No longer will clubs have three years to get their financial house in order, as was the case with PSR, with the Squad Cost Ratio rules monitored each season.
Some sympathy will also go to smaller clubs that qualify for the UEFA Conference League. They will have that 70% UEFA threshold to adhere to, but the revenues from European football’s third tier competition are minimal, relatively speaking. They, perhaps more than anyone else, stand to lose the most from the new Squad Cost Ratio rules.
