Premier League teams revise financial regulations

Premier League teams decided on Friday to update the leagues financial guidelines introducing a fresh approach that targets only expenditures linked directly to on field activities.

The teams approved by a vote of 14 to six the squad cost ratio SCR framework which caps teams on field expenditures at 85 percent of their revenue from football activities plus any net gains or losses from player transfers.

Costs tied to squads cover player salaries agents commissions and transfer payments.

UEFA the body overseeing European football employs a comparable system restricting expenditures on salaries for players and coaches transfers and agent fees to 70 percent of a teams income.

In its announcement the Premier League noted that teams would receive a multi year buffer of 30 percent allowing them to exceed the 85 percent cap and that exceeding via this buffer would trigger a penalty fee resembling a luxury tax.

After depleting the buffer teams exceeding 85 percent would encounter sporting penalties like deduction of points.

The Premier League explained that this setup due to its emphasis on football expenditures would prove more straightforward and would take effect starting the 2026/27 campaign.

With these updates teams can no longer offload assets such as hotels or womens squads to affiliated entities to inflate spending on squad costs.

Chelsea transferred two hotels to a related firm in 2023 and moved their womens team to the parent entity BlueCo aiding compliance with current profitability and sustainability PSR guidelines.

Teams also approved on Friday sustainability and systemic resilience SSR guidelines evaluating a teams fiscal stability across short medium and extended periods via multiple assessments.

However teams rejected a proposed financial tool that would impose a strict limit on squad expenditure costs.

The anchoring system from top to bottom would have capped any teams squad spending at five times the central funding allocated to the leagues lowest placed team.

The Professional Footballers Association described this as essentially a wage limit and warned of potential industrial action.

Current PSR rules permit teams to incur losses up to £105 million $137 million across any rolling three year span.

Nottingham Forest and Everton both faced points penalties during the 2023/24 season for violating PSR.