Premier League clubs recently decided to change their financial rules, starting from the 2026-27 season. During a recent meeting in London, they discussed new measures like the Squad Cost Ratio (SCR) and Sustainability and System Resilience (SSR).
The SCR replaces the old rules that limited club losses to £105 million over three years. This season will be the last under those regulations.
How Will the SCR Work?
The SCR will focus on a club’s spending for a single season, with some exceptions for player sales. It sets limits based on a club’s revenue, meaning different clubs can spend different amounts. This includes costs for player and coach salaries, agent fees, and transfer fees. However, costs related to women’s teams and youth academies won’t count toward this limit.
To keep clubs compliant, they’ll take an SCR Compliance Test each March. If a club spends 85% or less of its relevant income, it’s compliant. If not, they’ll face an Accounts Confirmation Test at the end of the season.
Comparison to UEFA’s Rules
There’s an interesting difference in spending limits between the Premier League and UEFA. UEFA has a cap of 70% of relevant income for squad costs, while the Premier League has set theirs at 85%. This gives Premier League clubs more freedom to spend, which could encourage competition.
SSR Explained
The SSR is designed to ensure clubs can manage both their current expenses and any unexpected changes in revenue. It evaluates a club’s long-term financial health through three tests: working capital, liquidity, and positive equity.
What Happened to Anchoring?
The proposal for top-to-bottom anchoring, which would have limited spending to five times the prize money of the last-placed club, was not passed. If implemented, it would have capped spending for all clubs, creating a salary cap similar to U.S. sports leagues. Concerns about legal challenges from players led to its rejection. The CEO of the Professional Footballers’ Association highlighted that restricting earnings could face legal issues.
Recent data from Deloitte shows that Premier League clubs reported record revenues of £5.6 billion, underscoring the growing financial power of the league. This increase, driven by lucrative broadcast deals and commercial income, shapes the financial landscape in which these new regulations will operate.
In summary, these changes aim to balance spending while encouraging sustainable growth among Premier League clubs.
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