The 2025-26 Premier League and Championship seasons included the introduction of squad-cost ratio rules on a shadow basis, testing to see how a spending cap for squad costs set at a percentage of a club's total revenues might work.
These SCR regulations have now been permanently implemented for the 2026-27 season, replacing previous profit and sustainability rules (PSR).
Uefa has a 70% SCR cap for European competitions, so Premier League clubs who qualified for Europe fall in line with this limit.
Clubs who did not qualify for Europe, and so are only taking part in domestic competitions, are capped at 85% of their total revenue.
However, clubs can spend above the 85% limit by using a multi-year rolling allowance of 30%. This allows them to invest ahead of revenue and variance or sporting underperformance.
Every club will start this coming season on 85% + 30% allowance, so effectively 115%.
If a club spends 105% on their squad in 2026-27, it means they have used 20% of their allowance, and for 2027-28 their maximum spend before potential sporting sanction is 95%.
If a club spend less than 85%, they can increase the allowance again to the maximum of 30%.
Spending above 85% but under the allowance results in a financial penalty, whereas going over both the 85% and the allowance will land the club a fixed six-point deduction which increases by one point for every £6.5m spent over the 115%.
'Anchoring' was also trialled in 2025-26, which meant any club's spending could not exceed a multiple of income earned by the bottom-placed club - however this was rejected at a vote of Premier League clubs.
SCR was approved by a vote of 14 clubs to six, and was introduced alongside sustainability and systemic resilience (SSR) regulations.
SSR involves three tests that are applied throughout the season:
Working capital test - assesses short-term cash resources
Liquidity test - assesses medium-term liquidity and resilience
Positive equity test -assesses long-term financial health
The aim of the SCR and SSR regulations is to stop the richest owners providing endless funds to their clubs to sign new players, as any money injected this way does not count as seasonal revenue.
They will also aim to prevent clubs from overspending and accruing unmanageable losses.
