The Premier League's decision to scrap its current financial regulations and introduce a new system based on Squad Cost Ratio could significantly hinder clubs like Aston Villa from challenging the established elite, according to a leading football finance expert.
What are the new financial rules?
Starting from the 2026/27 season, the Premier League will replace its Profitability and Sustainability Rules (PSR) with Squad Cost Ratio regulations similar to those used by UEFA. The outgoing PSR system limited clubs to losses of £105 million over three years, a framework that Villa co-owner Nassef Sawiris had strongly criticised.
The incoming rules will restrict Premier League clubs to spending 85% of their football-related revenue on player and coach wages, transfer fees, and agent payments. This contrasts with UEFA's even stricter threshold, which has recently dropped to 70% after Villa received a fine for exceeding the previous 80% limit last season.
Expert analysis: Who benefits from the changes?
Dr Tom Bason, Assistant Professor (Research) at Coventry University, believes the changes were "not hugely surprising" given UEFA's recent move toward a similar model and the fact that nearly half of Premier League clubs compete in European competitions.
"What it will do though, is make revenue an even bigger issue," Dr Bason explained. Unlike PSR, which considered all revenues, the Squad Cost Ratio focuses exclusively on football-related income from commercial deals, match days, broadcasting, and net profit from non-football stadium events.
This shift will particularly benefit clubs with established large revenue streams. "It's definitely going to benefit those clubs who have the big football related revenues," Dr Bason noted, pointing out that clubs with more tourist fans can potentially charge higher ticket prices, creating a natural advantage.
Consequences for ambitious owners
The new system presents challenges for owners like Villa's Nassef Sawiris and Wes Edens, and Nottingham Forest's Evangelos Marinakis, who have invested significantly to elevate their clubs. Under PSR, owners could cover losses through equity injections, but the Squad Cost Ratio explicitly ties spending to generated revenue.
"Marinakis writing a cheque for Nottingham Forest doesn't count as revenue," Dr Bason emphasised, suggesting the rules are designed to protect established clubs from "upstart pretenders" with wealthy backers.
However, there is some flexibility. The 85% threshold represents the "green" zone, with a "red" threshold allowing slightly higher spending. Owners can also invest unlimited amounts in non-football areas like commercial departments, which could indirectly boost football revenues through increased sponsorship and ticket sales.
End of transfer deadline day scrambles?
The new regulations may reduce the kind of pre-June 30 transfer activity that forced Villa to sell Douglas Luiz to Juventus recently. Under the old system, player sales like Jacob Ramsey's move to Newcastle provided immediate accounting benefits, but the new rules will average such income over three years.
"I think that's far less likely to happen now," Dr Bason said regarding the transfer merry-go-round between clubs like Everton, Forest, Villa, Chelsea, and Newcastle. "I think that's probably done to try and stop that sort of thing."
The changes represent a fundamental shift in how Premier League clubs will manage their finances, potentially creating a more rigid hierarchy that rewards established commercial power over ambitious investment.
