Premier League, Squad Cost Ratio (SCR) and Sustainability and Systemic Resilience (SSR)

The rules were approved at a Premier League Shareholders’ meeting on 21 November 2025, with clubs voting in favour of new rules that will come into force for the start of the 2026-27 season. The vote to introduce SCR was extremely tight with 14 of the 20 Premier League clubs in favour of the change, so only just reaching the required two-thirds majority, while SSR was passed unanimously. A third proposal, Top-to-Bottom Anchoring, was rejected.

The SCR formula. A club’s squad cost ratio is calculated as the sum of squad costs divided by adjusted revenue. The numerator (squad costs) comprises wages of players and head coaches, player amortisation and impairment, and agents’ fees. Crucially, it excludes non-playing staff, such as administrative or commercial personnel; assistant coaches and other members of the coaching staff; academy players; and women’s teams.

The denominator (adjusted revenue) is operating revenue (match day, broadcast and commercial) plus profit from player sales. Profits from non-football events hosted at the club’s stadium, e.g. Beyoncé gigs and NFL games, are included, but the sale of assets, e.g. stadium, training ground and women’s team, are excluded.

The thresholds. SCR will regulate clubs’ on-pitch spending to 85 per cent of their football revenue and net profit/loss on player sales. Clubs will have a multi-year allowance of 30 per cent that they can use to spend in excess of the 85 per cent. Utilising this allowance will incur a levy and once the allowance is exhausted, they will need to comply with 85 per cent or face a sporting sanction.

The 85% line is called the Green Threshold and the 115% line the Red Threshold. Any clubs that participate in a UEFA competition will be subject to lower limits, as they benefit from higher revenue, especially the Champions League participants, so their Green Threshold is only 70%, while the Red Threshold is 100%.

Enforcement mechanics. The SCR Compliance Test will take place during the season on 1 March.

If squad cost is equal to or less than the Green Threshold, a club is compliant and no further action is needed. If squad cost is above the Green Threshold but below the Red Threshold, a club will be subject to the Accounts Confirmation Test.

This will be carried out at the end of the season in June to verify whether a club’s actual revenue and costs reflect the estimated revenue and costs used in season. If a club is still above the 85% threshold using actual squad cost ratio, it will be liable for a levy but will not incur a SCR sporting sanction.

If squad cost is above the Red Threshold, a club will face a sporting sanction. Crossing into the red threshold triggers penalties, starting with a six-point deduction and escalating by one point for every £6.5 million overspent.

Each breach lowers the club’s allowance for the following season by the amount they breached it by. This is known as the negative feedback loop. Clubs can rebuild this allowance over time. If they return to compliance in later years, their headroom will increase by 10% per season until they reach the maximum 115% allowance again.

SSR (the three sustainability tests).

• Working capital test: cash and short-term resources.
• Liquidity test: A club must demonstrate that, for the current and following season, its liquidity headroom is zero or positive having absorbed a stress test of £85 million. The Stress Test accounts for a variety of potential negative events, with the proposed Stress Test figure being based on the revenue impact of relegation or failure to qualify for UEFA Club Competitions. A club’s liquidity headroom is what’s left after taking its liquid assets, subtracting its liquid liabilities, and then taking away £85 million for the stress test adjustment. The liquidity test calculation includes 40% of the club’s squad market value (as opposed to its book value) as a liquid asset.
• Positive Equity test: A club must demonstrate that its positive equity ratio (liabilities ÷ adjusted assets) is less than or equal to 90% in the 2026/27 season, 85% in the 2027/28 season and 80% from the 2028/29 season onwards.

SSR is assessed on 7 July each year (31 October for newly-promoted clubs on two of the three tests). The full set of rules will be published in Section E of the Premier League Handbook in due course.

The legally binding text is the forthcoming Section E of the Premier League Handbook, has not yet been published.

The Championship: Squad Cost Rules (SCR)

The Championship vote was held on Friday 15 May 2026 (the EFL Annual General Meeting).

The official EFL statement (here) reads: “Championship Clubs have approved a new Squad Cost Rules (SCR) financial framework that will replace the current Profitability and Sustainability (P&S) rules from Season 2026/27. From the 2026/27 season the SCR allowance for Clubs will be set at 85% of income, with a flexible equity top-up allowance of £33 million over a three-year period (up to a maximum of £15 million a season).

The new framework allows for real-time monitoring during the season, rather than reviewing ‘after the event’, with the aim of giving Clubs greater clarity and the Club Financial Reporting Unit earlier visibility over Clubs’ financial position. The framework also includes safeguards around commercial deals linked to Owners or associated parties.”

Key features:

• 85% cap on football income (broadly mirroring the Premier League).
• £33 million equity top-up over three years, capped at £15 million in any single season this is materially more generous than the Premier League’s regime in equity terms, because the PL allowance is a percentage (30% of the Green Threshold), whereas the Championship has a hard cash figure that can fund clubs with otherwise low absolute revenues.
• Real-time/in-season monitoring rather than backward-looking three-year cycles.
• Associated Party Transaction safeguards to close the door on commercial deals priced above fair market value with owner-linked entities (the loophole Chelsea exploited with hotel and women’s team sales).
• The vote required a two-thirds majority of the 24 clubs (i.e. at least 16 votes in favour).

The full Championship rules will be inserted into the relevant section of the EFL Regulations (Section 3 of the EFL Handbook 2026/27, formerly the home of Profitability & Sustainability), and the EFL has confirmed the wording will be published in due course.

League One: revised Salary Cost Management Protocol (SCMP)

League One clubs chose not to follow the Championship into SCR; instead they tightened the existing SCMP.

The EFL statement explains: League One clubs could spend 60% of turnover on wages, but that has now been reduced to 50%. Manager costs will also be included within the calculation. However, clubs relegated from the Championship will be allowed to spend 65% of turnover on wages during their first season in League One, reduced from 75% under the current rules.

The vote also abolished the previous staggered treatment of equity injections: a change was also approved which would remove the staggered approach to equity injections in the division, meaning that all equity injections will be included within the calculation at 50 per cent. The EFL explained: “This means that if an owner invests £500k into the club, a maximum of £250k (in addition to that already permitted as a percentage of turnover) can be spent on wages.”

In other words, an owner can no longer front-load their funding to inflate the SCMP allowance early in the season. Critically, manager (and head-coach) costs being inside the calculation is a meaningful tightening,  most published wage bills do not separate these out.

League Two: Salary Cost Management Protocol (SCMP) unchanged

League Two retains the existing SCMP at 50% of turnover, which is now identical to the headline League One percentage but without the in-built relegation-club allowance. League Two clubs are also not subject to a P&S / SCR overlay.

Summary

How each club would have performed on last audited accounts

Important methodology caveats

Doing a true SCR calculation for every club requires four data points that are rarely disclosed cleanly in audited accounts: (1) wages of only players and head coach, (2) amortisation of player registrations, (3) agents’ fees, and (4) net profit on player disposals. Most clubs publish a single staff costs line that includes admin, commercial, coaching and academy personnel.

Premier League: 2023/24 SCR position

According to an analysis by The Athletic, five EPL clubs spent more than 85% of revenue during the 2023-24 season. Bournemouth (104%) and Fulham (91%) were the only ones that topped 90%. Chelsea (76%) was the highest of the Big Six clubs.

Translating this to the new framework:

• Bournemouth (104%): would have been in the amber zone (above Green, below Red 115%). A levy, not a points deduction, on those numbers. Among the six clubs that voted against SCR.
• Fulham (91%): amber zone; levy. Also voted against.
• Two other clubs in the high-80s/low-90s amber range: most likely candidates given context are Aston Villa (because of European participation pushing them into the 70% bucket) and Nottingham Forest (high wage / amortisation against modest revenue base).
• Chelsea (76%): would have failed the UEFA 70% test in 2024/25 (which they did, and were fined), but would have passed the 85% domestic line.
• Aston Villa: similarly fined by UEFA for breaching the 70% European cap.

The remaining clubs (Manchester City, Manchester United, Liverpool, Arsenal, Tottenham, Newcastle, West Ham, Brighton, Brentford, Crystal Palace, Wolves, Everton, Burnley, Sheffield United, Luton) all sat below 85% on the 2023/24 accounts on The Athletic’s analysis. The six clubs that voted against SCR in November were Bournemouth, Brentford, Brighton, Crystal Palace, Fulham, and Leeds, all of which are small-revenue clubs for whom the absolute cash room within an 85% band is uncomfortably tight even if the percentage is met.

For reference, headline 2023/24 figures (£m) sourced from club accounts:

(*=estimate; the staff/revenue proxy understates SCR by excluding amortisation but overstates it by including non-squad staff, for Leicester the gap is enormous because their wage bill was inherited from a Premier League squad while their revenue was Championship-level.)

The Premier League SCR analysis is least controversial: 14 of 20 clubs are comfortably inside 85%, with the squeeze concentrated on (a) clubs in Europe needing to get from circa 70-80% to ≤70%, and (b) small-revenue clubs (Bournemouth, Fulham, plus typically newly-promoted teams) where the absolute squad budget at 85% is barely enough to field a Premier League-competitive XI.

Championship: 2023/24 indicative position

The Championship picture is far more strained.  Last season total pre-tax losses for the 24 clubs in the Championship increased to almost £350 million. Staff costs, including amortisation on transfers, were £1.2 billion, more than teams’ total revenue.

Indicative ratios from 2023/24 audited accounts (£ million):

(*Based on staff/revenue proxy. Adding player amortisation, which is significant for parachute clubs, would push the parachute four substantially higher; the West Bromwich Albion, Stoke, Hull, Sheffield Wednesday, Swansea and Oxford numbers indicate genuine SCR distress on 2023/24 figures.)

The reality is consistent with the research I published in February: only 27% of Championship clubs would have complied with a 70% SCR threshold in recent seasons. The 85% line is significantly more accommodating but, on these numbers, would still have left a clear majority of non-parachute Championship clubs needing the £33 million three-year equity top-up just to comply.

The new £15 million/£33 million equity allowance was clearly calibrated for clubs at the Hull, Stoke, Middlesbrough or Cardiff end of the spectrum: they can fund the gap between 85% of revenue and their actual squad bill from owner injection. For clubs like Sheffield Wednesday (now in League One after relegation and administration), West Bromwich Albion (which received a P&S sanction earlier this season) and Hull City the equity allowance is sufficient on paper, but the in-season monitoring of associated-party transactions removes the historical safety valve of inflated sponsorship deals.

League One: 2023/24 indicative position against the new 50% SCMP

The shift from 60% to 50%, with manager costs now inside, is genuinely tightening. Using the 2023/24 accounts as the baseline (recognising most published staff cost figures include manager remuneration anyway):

(Note that SCMP is calculated differently from staff/revenue, owner equity injections are added to the turnover side at 50%, manager costs are included on the wage side, and the percentage applies only to “player wages” rather than total staff cost. The above is illustrative.)

The headline observation is that essentially every current League One club would have failed an unsupported 50% SCMP on 2023/24 figures. The mechanism that makes the regime workable is the equity injection, at 50% inclusion, an owner putting in £1 million allows another £500k of player wages on top of the 50% revenue allowance. Birmingham City’s £35.8 million wage bill, for example, was funded heavily by Knighthead Capital equity, and only that owner top-up keeps the calculation viable. Wrexham’s accounts (which include the Hollywood-driven step-up in revenue) make them one of the few clubs with material headroom organically.

The clubs most likely to be squeezed are mid-table sides without deep-pocketed ownership, particularly those with squads built for promotion that did not deliver it (Reading, Charlton, Barnsley would be in this category).

League Two: indicative position against existing 50% SCMP

For League Two, audited account data is patchier, but it is reasonable to assume typical revenue of £6-8 million and staff costs of £5-6 million,  a staff/revenue proxy in the 75-85% range across most clubs. AFC Wimbledon’s 2023/24 figures (£9.0 million revenue / ~£6.5 million staff costs, c.72%), Bradford City (£7.7 million / £6.1 million, 79%), Gillingham (£8.2 million / c.£6.3 million, c.77%) and MK Dons (c.£7.0 million / £5.8 million, c.83%) are representative. Again these proxies are dominated by total staff cost; the player wage element only, to which the SCMP percentage actually applies, is typically 60-70% of the total wage line and so most clubs sit at or marginally above the 50% line, with the equity injection mechanism plugging gaps.

There are three structural reasons to read the per-club picture as indicative only:

1. Player amortisation is the biggest hidden variable. A club that has signed players on long contracts (Chelsea-style) has a lower amortisation charge than a club that has signed similarly-priced players on shorter contracts. The Premier League SCR caps the amortisation period at five years from 2026/27, which closes this loophole going forward but means the audited accounts figures will not match the future SCR submissions even for the same year’s underlying transactions.
2. Player trading profit/loss is volatile. Brighton and Brentford routinely run squad costs that look uncomfortable against revenue, but they record large profits on player sales that flow into the SCR denominator. A single window can move a club’s SCR by 10-15 percentage points.
3. Football revenue ≠ turnover. SCR uses football revenue, which excludes one-off asset sales but includes concert and NFL income at the stadium. Several clubs’ 2023/24 turnover lines contain significant items that would be stripped out (most notably Chelsea’s intra-group transactions).

Part II can be read here