The Premier League is set to replace its current Profitability and Sustainability Rules (PSR) this summer, introducing a new financial regulatory framework from the 2026/27 season. Under the existing PSR system, clubs were monitored for losses over a three-year period, leading to points deductions for teams such as Nottingham Forest and Everton that violated the requirements.
The top-flight has now decided to implement a new framework that aligns with UEFA's regulations, adopting the Squad Cost Ratio (SCR) as the key metric. Under these rules, clubs' on-field expenditure—including player salaries, transfer fees, and agent commissions—will be capped at 85% of their total football revenue. For clubs participating in UEFA competitions, the cap is set at 70%.
The SCR covers player and head coach wages, agent fees, and transfer fee amortisation. The revised regulations encourage fiscal responsibility, allowing clubs that operate below their budget and do not use their full 85% allocation for two consecutive seasons to carry forward up to 10% of their unspent allowance into the following year.
Conversely, clubs that exceed the maximum 115% SCR threshold—which focuses exclusively on squad expenditure—will face an automatic fine along with a mandatory six-point deduction. The SCR provides financial flexibility off the pitch, enabling clubs to invest in stadium improvements, youth academies, and infrastructure without these costs counting towards the threshold, as reported by the Mirror.
While the SCR will formally take 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 sufficient time to familiarise themselves with the new requirements while the Profitability and Sustainability Rules remained the legal framework.
At the start of the 2026/27 season, clubs must submit projected football income and squad expenditure based on previous seasons' performance. The Premier League will then conduct its first 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. However, if squad expenditure exceeds 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 balance.
