On 21 November 2025, a set of new rules were passed at the Premier League Shareholders’ meeting which pushes the league not only to align closer to the UEFA rules but with a goal to create a financially sustainable ecosystem for the clubs. The two key rules, set to be introduced from the start of 2026-27 season, were:
- Introduction of Squad Cost Ratio (SCR), and,
- Introduction of Sustainability and Systemic Resilience (SSR).
Interestingly, the proposal to introduce SCR managed to pass on securing the bare minimum majority votes required, that is two-thirds of the clubs or 14 of the 20 clubs, and exactly 14 clubs voted for it. The clubs who voted against it were Bournemouth, Brighton, Crystal Palace, Fulham, Leeds United and Brentford. The proposal to introduce SSR was, however, passed unanimously and a third proposal, Top-to-Bottom Anchoring, was rejected.
In this blog, we look at these rules in a detailed manner and examine the potential action areas of the clubs in course of their implementation.
SCR and SSR Decoded
Both the rules incorporated by Premier League are important in their own way with the broader objective of maintaining financial health of football clubs while growing in a sustainable manner. SCR will, however, have a significant impact on how the clubs prepare for their transfer activities. First, let’s understand the rules better:
Squad Cost Ratio: SCR, simply put, is the sum total of the cost involved in the squad comprising of player and head coach wages, agents’ fees and amortisation or impairment of transfer fees divided by the revenue generated by the club’s total earnings from football operations encompassing both the income that clubs generate themselves (matchday, commercial, broadcast incomes plus profit from player sales) and the revenues distributed by the League and other football competitions. It’s important to note that while non-football profits such as events hosted at the club’s stadium are included, but the sale of assets, e.g. stadium, training ground and women’s team, are excluded.
Ratio Threshold: SCR limits clubs’ on-pitch spending to 85% of their total football-related revenue as mentioned above. Clubs also have an additional multi-year headroom of 30% over and above the 85% threshold but this will be accompanied with a levy and once this allowance is exhausted, they will have to comply with the rules of threshold or face a sporting sanction. The SCR Compliance Test is scheduled to take place during the season on 1st of March.
Sustainability and Systemic Resilience: SSR involves three tests which are applied throughout the season to support short, medium and long-term financial sustainability of all clubs.
- Working Capital Test: Involving available short term cash resources.
- Liquidity Test: It is a medium-term liquidity and resilience parameter assessing a club’s liquidity headroom over two seasons, including market value of player registrations, to ensure it can account for its current financial position and handle a variety of financial shocks inherent to the industry.
- Positive Equity Test: It is a long-term financial health parameter assessing a club’s balance sheet to evaluate its financial health, ensuring it has sufficient leverage to manage macro-economic factors and ensuring clubs do not operate with unreasonably high levels of debt.
SSR is scheduled to be assessed on 7th of July each year & on 31st of October for newly promoted clubs on two of the three tests.
Business Impact of SCR
SCR effectively shifts the business focus of a Premier League club to a business operating models which ‘calculates revenues annually’. Under the earlier Profit and Sustainability Rules (PSR) calculations, a club was allowed to have losses amounting to £105mn over a 3-year rolling period. Under SCR rules, the club’s calculation shifts to ‘revenue generated annually’ which means clubs will have to look at sustainable expenses in line with the revenues generated on an annual basis, a shift of operating philosophy. This leads to two key areas where clubs will have to look, within their own operating system, to maximize:
Increasing Revenue: The term ‘football revenue’ comprises of income generated from matchday, commercial, broadcast along with income from transfer activity. In all practical purposes, it is the matchday and commercial related income under the strategic control of a club while broadcast and income from transfers depend a lot on external factors. Therefore, it will be safe to say that clubs will look aggressively at maximizing the commercial and matchday incomes. A critical view of the SCR rule can also imply that clubs with higher commercial income, namely the ‘big six’, have an unnatural advantage to begin with. This can lead to two developments:
- Renewed stadium redevelopment efforts: At least five Premier League clubs are under various stages of capacity-enhancing stadium redevelopments. Barbour ABI’s, a construction intelligence platform mentions projects by Crystal Palace, Nottingham Forest, Aston Villa’s work on Villa Park’s North Stand redevelopment, Bournemouth’s Vitality Stadium expansion all set to begin in 2026.
- Aggressive sponsorship efforts: 26/27 season onwards, Premier league clubs are already grappling with a ban on partnering with betting and gambling brands for the front-of-shirt asset and we have already seen a slew of sponsorship deals in the works. Introduction of SCR will force them to think out-of-the-box ideas, increase assets like a digital sponsorship category and so on. One sponsorship deal between Newcastle United and Knox Hydration, which is set to replace Sela as front-of-shirt sponsor along with training kit sleeve and renaming training facility, can be given as a creative example. The club along with the brand is set to launch a co-branded sports drink leading to generate additional revenue. Other focus areas could be stadium naming rights with only about 25% of the clubs having a naming righst partner.
Optimized Transfer Spends: One big concern for the clubs is how SCR impacts the player sales in the transfer market. As football finance expert and speaker in the SBI Master in Football Business and Management program puts it, “Instead of being able to put entire player sale profits into the PSR calculations, under SCR those profits are spread over three years. So those clubs which use the transfer market to a greater extent as one of their income generating areas, income generating units, are going to be slightly disadvantaged”. This gives a sense of why the six clubs opposed the implementation of the rules.
Therefore, the summer transfer activity in the Premier League can be expected to be slightly muted with increased emphasis on rationalized valuations and loan-based deals. Also, since 26/27 being the first season of implementation, there can be a long-term based approach in player acquisition. One will have to wait to find out.
In Conclusion
The move by Premier League is aligned at a closer integration of the UEFA rules and in the long-term, it can only mean good for the clubs. At this moment, however, it is too early to tell and only time will unveil the success and impact of the rules. It will be interesting to see how Premier League clubs cope with the changes.
