Premier League clubs have voted to overhaul the league’s financial regulations from the start of the 2026-27 season.
The clubs held a shareholders’ meeting in London on Friday to discuss a range of proposed new financial measures, known as top to bottom anchoring, the squad cost ratio (SCR) and the sustainability and system resilience (SSR).
Anchoring was voted on first but received only seven votes in favour, with 12 against and one abstention. The clubs then voted on SCR, which passed 14 to six, and SSR, which passed unanimously. A threshold of 14 of the 20 clubs voting in favour of a proposal is required to change Premier League rules.
SCR will replace the league’s current profitability and sustainability rules (PSR), which limit club losses to a maximum of £105million ($137m) over a three-year period. This season will be the last under those regulations.
The Athletic‘s BookKeeper Chris Weatherspoon explains the new rules below
How will SCR work?
Similarly to the current SCR regime operated by UEFA, which nine Premier League clubs needed to adhere to already this season.
SCR broadly covers one year of club activity, except for player sales (see below), and Premier League SCR will be assessed across a season. UEFA, by contrast, assesses clubs on an annual January to December basis.
SCR puts a direct limit on how much clubs can spend on their players and head coach, albeit one which is linked to a given club’s revenue. In other words, the amount able to be spent under SCR will differ from club to club.
Costs assessed under SCR include player and head coach wages, agent fees and the amortisation or impairment (when a club writes down a player’s value in their books) of transfer fees. In a continuation of the old PSR regime, costs relating to women’s teams and youth academies are excluded for SCR purposes.
To allow for swift punishment — i.e. to avoid matters dragging over multiple seasons, as they have under PSR — clubs will undergo an SCR Compliance Test each March 1. If their squad cost is equal to or less than 85 per cent, they will be deemed compliant. If they exceed that level, they will be subject to an Accounts Confirmation Test at the end of the season in June.
How does this compare to UEFA’s rules?
A notable difference between the two SCR frameworks is the proportion of relevant income clubs can spend on squad costs. Under UEFA regulations, that limit sits at 70 per cent while the Premier League has agreed to an 85 per cent limit.
That won’t matter to the nine clubs already competing in Europe this season, but the extra 15 per cent allowed for the rest tallies with the Premier League’s statement, which says the new rule will “promote opportunity for all of (our) clubs to aspire to greater success, while protecting the competitive balance and compelling nature of the league”.
Clubs will only be able to spend a set proportion of relevant income under SCR, which comprises “football-related revenue” (so, generally speaking, a club’s annual turnover) plus their net profit or loss generated from player sales. Under UEFA rules, the latter is averaged over the past three seasons, meaning clubs are less easily able to extricate themselves from regulatory trouble with a quick player sale. The averaging has been reflected in the Premier League’s SCR regime.
UEFA’s SCR rules saw Chelsea and Aston Villa receive combined fines of around £14.7m (€17m) last summer for breaches in 2024.
What about SSR?
SSR comprises three prongs. One seeks to ensure clubs have sufficient resources to handle both known outgoings and any reasonable fluctuations that may occur in revenue. The other two look at clubs’ long-term financial outlook, assessing the health of a club’s balance sheet.
“The sustainability and systemic resilience rules assess a club’s short, medium and long-term financial health through three tests — working capital test, liquidity test and positive equity test,” the league added.
What are red and green thresholds and the other new terms we’ll be hearing about?
That 85 per cent limit has another name, introduced in the new rules soon to inhabit the Premier League’s handbook: The ‘Green Threshold’.
At the beginning of each season, clubs and the Premier League will agree on estimated football revenues, from which their 85 per cent, Green Threshold spending limit will be derived.
A further limit (the ‘Red Threshold’) will be set at up to 30 per cent higher, so for each club in 2026-27 their Red Threshold will be 115 per cent. Clubs will be able to spend above their Green Threshold without incurring a sporting sanction, provided they do not exceed their Red Threshold. If they exceed the latter, a sporting punishment will follow.
If that sounds too simple, then don’t worry, they found a way to make it more complex.
If a club complies with their Green Threshold and returns a squad cost ratio of 85 per cent or lower, their Red Threshold will remain at 115 per cent. However, if a club exceeds the Green Threshold, they will see their Red Threshold reduced by the size of the excess. For exmaple, if a club records a 90 per cent ratio in 2026-27, their 2027-28 Red Threshold would be 110 per cent.
The Premier League has termed this a Feedback Loop, and it is one which updates year-on-year. Ultimately, if a club consistently goes over their Green Threshold but does not exceed their Red Threshold, the latter will move ever closer to the 85 per cent mark.
Chelsea and Villa have breached UEFA’s SCR rules in recent seasons (Clive Mason/Getty Images)
On the flipside, if a club exceeds the Green Threshold in one season but is later compliant, they have scope to build their Red Threshold back up to that 115 per cent maximum. In each season they are compliant, they increase their Red Threshold by 10 per cent, up to the 30 per cent overall maximum.
As an example, say a club records a 100 per cent SCR figure in 2026-27, or 15 per cent over their Green Threshold. That reduces their 2027-28 Red Threshold to 100 per cent.
In 2027-28, they record an SCR figure below 85 per cent, meaning they are compliant. As a result, their 2028-29 Red Threshold would be 110 per cent and further compliance that season would raise it to the 115 per cent maximum for 2029-30.
In explaining why clubs will be allowed to exceed the 85 per cent limit without sporting sanction, the Premier League said it “allows for clubs to invest ahead of revenue and reasonable variance or genuine sporting underperformance throughout the season”.
In essence, clubs not in Europe have been afforded extra leeway for longer-term spending on squads, albeit up to a reducing limit. No such differing thresholds are in place under UEFA’s PSR regime.
And what is anchoring?
Top to bottom anchoring would have limited clubs’ spending on wages and transfer fees — including agent fees — to five times the amount paid in prize money and broadcast revenue to the club which finished bottom.
For example, last season, Southampton received £109.2m while finishing in 20th place, meaning the anchoring limit would have been set at £546m.
It is forecast that had anchoring been in place for the current 2025-26 season, expected increases in distributions to clubs following the start of a new TV deal cycle would have lifted the anchoring limit to £600m.
Anchoring, therefore, represents a variable cap on spending, which applies equally for all 20 top-flight clubs.
As reported by The Athletic, the Premier League could have faced legal action from its players if it had voted in favour of anchoring, which would have effectively resulted in a U.S. sport-style salary cap.
The CEO of the Professional Footballers’ Association (PFA), Maheta Molango, told the BBC last week: “You cannot artificially cap someone’s ability to make a living as this would just not withstand any legal challenge.”
In response, the Premier League claimed the PFA had been given “numerous opportunities” to share its view on the proposed changes, adding: “It is the league’s objective to maintain the Premier League’s value, competitive balance and ensure clubs operate in a sustainable way.”
Three leading football agencies – CAA Base, CAA Stellar and Wasserman – also threatened to sue the Premier League if new rules were voted through, claiming they were not consulted about the potential introduction of anchoring or the squad cost rule (SCR).