The Premier League is on the verge of a seismic shift in its financial landscape as clubs have voted to overhaul their financial regulations, closing a controversial loophole that allowed the sale of non-football assets to related companies. This sweeping reform, passed on November 21, 2025, is set to take effect from the 2026-27 season and promises to reshape the way English football’s top tier manages its finances—ushering in an era of greater transparency, accountability, and competitive balance.
For years, the Profit and Sustainability Rules (PSR) governed how Premier League clubs could spend and account for their finances. However, the system was widely criticized for its complexity and for inadvertently enabling clubs to artificially boost their balance sheets by selling off assets—such as hotels or women’s teams—to sister companies. The most high-profile example came in 2024, when Chelsea sold two hotels adjacent to Stamford Bridge for £76.5 million to an associated business, a move that sparked debate over the fairness and integrity of the league’s financial regulations. Everton and Aston Villa followed suit, selling their women’s teams to parent companies in similar fashion.
All that is about to change. At a meeting in London, Premier League clubs voted 14 to 6 in favor of implementing the new Squad Cost Ratio (SCR) model, with just enough support to pass the rule change. The SCR system will replace the PSR, shifting the focus from three-year profit-loss calculations to a season-by-season assessment of squad spending. Under the new rules, clubs will be strictly limited to spending no more than 85% of their football-related revenue on squad costs—which include player and manager wages, transfer fees, and agent commissions.
For clubs participating in European competitions, UEFA’s even stricter 70% squad cost ceiling will apply, aligning the Premier League’s approach more closely with continental standards. The Premier League explained in a statement, “The new SCR rules are intended to promote opportunity for all clubs to aspire to greater success and bring the league’s financial system close to UEFA’s existing SCR rules.”
The SCR introduces a rolling 30% “allowance,” effectively giving clubs a buffer to spend up to 115% of their revenue before facing the harshest sporting sanctions. Exceeding the “Green Threshold” of 85% brings a financial penalty, while breaching the “Red Threshold” (85% plus the allowance) automatically triggers a six-point deduction, with an additional point lost for every £6.5 million overspent. This structure is designed to allow clubs some flexibility—enabling them to invest ahead of revenue or navigate periods of sporting underperformance—while still holding them accountable for reckless spending.
“The other key features of the league’s new system include transparent in-season monitoring and sanctions, protection against sporting underperformance, an ability to spend ahead of revenues, strengthened ability to invest off the pitch, and a reduction in complexity by focusing on football costs,” the Premier League’s statement continued.
Not everyone is thrilled with the changes. Wealthier clubs with robust commercial operations are generally comfortable with the new system, as their high revenues give them more room to maneuver. However, smaller clubs—such as Bournemouth, Brentford, Brighton, Crystal Palace, Fulham, and Leeds—voted against the SCR, fearing that tying wage bills so tightly to revenue would make it even harder for them to compete with the league’s financial heavyweights. Bournemouth, for instance, with a stadium capacity of just over 11,000, faces a unique challenge: they must pay Premier League wages, but their income is dwarfed by the division’s giants. “Savvy transfer business will be crucial for these clubs,” noted BBC Sport, highlighting the importance of smart recruitment and resourcefulness in the new era.
The vote also saw the defeat of the so-called “anchoring” proposal—a hard spending cap mechanism that would have limited any club’s squad spending to five times the central income earned by the league’s bottom club. Twelve clubs voted against this measure, with only seven in support and one abstention. Top clubs feared that such a cap could eventually restrict their ability to compete with Europe’s elite, while the Professional Footballers’ Association (PFA) warned that it could amount to a wage cap, potentially leading to legal challenges. The union had even prepared to take legal action if the measure had passed.
In addition to SCR, clubs unanimously approved new Sustainability and Systemic Resilience (SSR) rules, which will require them to provide detailed financial projections covering the short, medium, and long term. These regulations are designed to align with the incoming Independent Football Regulator’s requirements and will subject clubs to tests on working capital, liquidity, and positive equity. The focus is on ensuring that clubs can fund their operations sustainably and are able to return to compliance if they breach spending limits.
The new rules also clarify what revenue can—and cannot—be used to calculate spending limits. Sales of fixed assets to related companies, previously allowed under PSR, will no longer count toward the revenue clubs use to determine their squad spending. This closes the loophole that allowed clubs like Chelsea and Aston Villa to artificially inflate their spending power through creative accounting. While clubs can still sell assets, these transactions won’t help them skirt the new squad cost limits.
Clubs now face a period of adjustment as they prepare for the SCR’s implementation in 2026-27. For those with healthy finances and strong commercial arms, the transition may be relatively smooth. But for smaller sides, the challenge is clear: adapt quickly or risk falling behind. The Premier League’s hope is that the new model will foster a more level playing field, ensuring that financial muscle does not always dictate success on the pitch.
As the dust settles on this landmark vote, the football world will be watching closely to see how clubs respond. Will the new rules deliver the promised transparency and sustainability? Can smaller clubs find ways to thrive under tighter constraints? With the era of creative accounting drawing to a close, the Premier League is set for a future where financial discipline and sporting ambition must go hand in hand.
With the 2026-27 season looming, the countdown begins for clubs to adapt to a system that promises both opportunity and challenge. The Premier League’s financial revolution is officially underway.
