Premier League replaces PSR with Squad Cost Ratio rules from 2026-27 season

The Premier League will replace its Profitability and Sustainability Rules (PSR) with a new Squad Cost Ratio (SCR) framework beginning in the 2026-27 season, introducing automatic six-point deductions for clubs that exceed the maximum spending threshold.

Under SCR, clubs will be limited to spending no more than 85% of their total football revenue on squad costs — a category that covers player wages, head coach salaries, agent fees, and transfer fee amortisation. Clubs competing in UEFA competitions face a tighter cap of 70%. Those who breach the upper Red Threshold, set at 115% of the Green Threshold, will receive an automatic fine and a six-point deduction with no room for negotiation.

The shift is designed to bring Premier League financial rules into closer alignment with UEFA’s own framework, replacing a PSR system that tracked three-year losses and handed points deductions to Nottingham Forest and Everton for violations.

The new rules also carry incentives for prudent spending. Clubs that remain below the 85% Green Threshold for two consecutive seasons will be permitted to roll over up to 10% of their unused budget into the following year. Crucially, investment in stadiums, academies, and wider infrastructure will not count against a club’s SCR threshold, giving owners greater freedom to develop off-pitch assets.

Although SCR officially comes into force next season, the Premier League has been running it on a shadow basis for the past two years to allow financial executives time to adapt while PSR remained legally in place.

From the start of the 2026-27 season, clubs will submit estimated football revenue and squad cost figures based on previous campaigns. The Premier League will conduct its first SCR Compliance Test on 1 March 2027, using those figures to establish each club’s Green and Red thresholds. A final Accounts Confirmation Test will follow in June 2027 to determine whether any fines or points deductions are to be applied.

Clubs whose squad costs sit at or below the Green Threshold will be deemed fully compliant. Those above the Red Threshold will face sanctions. The league has framed the overhaul as a measure to protect competitive balance while improving the prospects of English clubs in European competition.