Regulation series

The history of financial rules in football, Part 2: the Premier League's own rules, PSR 2013 to 2026

Part 2 of the Orange Ledger's series on football's financial rules. In 2013 the Premier League wrote its own version of UEFA's rules: a limit of £105m of losses over three seasons. This is how the Profitability and Sustainability Rules worked, how clubs learned to manage them, the points deductions that followed, the legal fight over deals with owner-linked companies, and why the League replaced them from 2026/27.

By Arthur van de Laak1 October 2026Updated 3 November 2026 · View updates17 min read

UEFA’s rules only applied to clubs playing in European competitions. In most seasons, that left more than half of the Premier League outside them. In 2013 the League decided to write its own.

The Profitability and Sustainability Rules, known as PSR, ran for more than a decade. They produced the first Premier League points deductions for breaking its spending rules, a string of creative accounting, and a legal battle over sponsorship deals that reached the heart of the League’s rulebook. From the 2026/27 season they have been replaced. This is the story of how they worked and why they went.

The 2013 vote

The clubs voted on 7 February 2013. The rules passed by 13 votes to six, with one abstention, a narrow margin. They limited a club’s losses to £105m over three seasons and restricted how much of the new television money could go on wages. The six clubs against were Fulham, West Bromwich Albion, Manchester City, Aston Villa, Swansea City and Southampton; Reading abstained. Chelsea, expected by some to oppose the rules, voted in favour.

The Premier League’s chief executive at the time, Richard Scudamore, said the aim was to stop the kind of rapid, owner-funded rise seen at Chelsea and Manchester City, and that the League would seek points deductions for a breach. At the time, only City, Chelsea and Liverpool had reported losses of more than £105m over the previous three years.

The vote matters for a reason that is easy to forget in today’s arguments: the rules were not imposed on the clubs from outside. The clubs wrote them and voted for them, by the majority their own constitution required.

Was it a “red cartel” rule?

A common argument among supporters of clubs with wealthy owners is that the financial rules were pushed through by a “red cartel” of Arsenal, Liverpool and Manchester United to protect their place at the top. Some of them did lobby for tougher rules. In a letter to the League’s chief executive, Richard Scudamore, before Christmas 2012, reported the following January, Arsenal, Liverpool, Manchester United and Tottenham said the League’s proposals did not go far enough and that owner investment should be limited further. But the rules that passed were looser than they had asked for, and the vote does not show three clubs imposing them.

• Arsenal, Liverpool and Manchester United were three of 13. The rules could not have passed without ten other clubs, most of them mid-table or smaller clubs such as Norwich, Stoke, Sunderland and Wigan.
• Chelsea, the club whose owner had done most to change English football’s finances, voted in favour.
• Liverpool voted for rules that constrained Liverpool. It was one of only three clubs, with City and Chelsea, whose losses over the previous three years were above the new £105m limit.
• The opposition was not a group of challengers to the top clubs. Apart from Manchester City, the clubs voting against were Aston Villa, Fulham, Southampton, Swansea and West Bromwich Albion.

The vote shows a league-wide majority, not three clubs acting alone. Whether the rules later worked in the biggest clubs’ favour is a separate question, and one this series returns to in Parts 4 and 5.

How PSR worked

The core of the rules was a single number: a club could lose no more than £105m over three seasons.

That limit was built in two layers:

• £15m of losses over three seasons, or £5m a year, was allowed on the club’s own account.
• Up to £90m more was allowed only if the owner provided “secure funding”: new money for shares, or an irrevocable commitment to buy them. A loan did not count. Without that commitment, the limit stayed at £15m.

PSR did not stop an owner putting money into a club. It decided how much of the resulting loss the rules would tolerate. Money from an owner buying new shares could pay for the losses and unlock the higher allowance, but it did not count as income and did not make the loss any smaller. That distinction becomes much more important under the rules that replaced PSR, where owner funding can strengthen a club financially but does not itself increase the revenue used to calculate how much it may spend on its squad.

Several kinds of spending were left out of the calculation, because the League saw them as good for the game rather than a route to buying success:

• Infrastructure: the cost of stadiums and training grounds, through their depreciation.
• Youth development: the cost of running an academy.
• Women’s football.
• Community work.

Clubs outside the Premier League faced a lower limit. The Championship allowed £13m of losses a year, and for every season in the Championship within its three-year window, a Premier League club’s limit fell by £22m. That is why Nottingham Forest, promoted in 2022, had a limit of £61m rather than £105m.

Transfer fees counted the way accountants count them. A player signed for £50m on a five-year contract appeared as a £10m cost in each of the five years, not £50m in the year he was bought. Accountants call this amortisation. In 2023, Chelsea signed several players on contracts of seven and eight years, which spread the cost more thinly still. For contracts signed or extended on or after 12 December 2023, the League capped the spreading at five years, whatever the contract’s length; earlier contracts kept their full term.

Alongside the loss limit, the 2013 rules added short-term cost controls for the first three seasons. A club whose player costs were above a threshold, £52m in 2013/14 rising to £60m in 2015/16, could raise them by up to £4m a year. A larger rise had to come from contracts signed by 31 January 2013, from growth in the club’s own revenue, or from profit on player trading. The aim was to stop the new television money going straight into wages. The controls were renewed with higher thresholds for three more seasons, to 2018/19, and not extended after that.

Compared with UEFA. The Premier League’s version was the more permissive of the two. UEFA’s limit at the time was €45m over its assessment period, then €30m; the Premier League’s was £105m. Clubs playing in Europe had to satisfy both.

The first punishments

For a decade, no club was punished under PSR. Then, in a single season, three sanctions arrived.

• Everton, November 2023. An independent commission found that Everton’s losses in the three years to 2021/22 were £19.5m above the limit. Everton had argued the true figure was much lower. The club was docked 10 points, reduced to six on appeal in February 2024.
• Nottingham Forest, March 2024. Forest admitted losses £34.5m above their £61m limit. The League had sought eight points, less two for Forest’s cooperation. Forest were docked four.
• Everton, April 2024. A second breach, of £16.6m, for the three years to 2022/23, with a dispute over the costs of the club’s new stadium. The starting point was five points; Everton were docked two after mitigation.

Both clubs complained publicly that separate commissions had treated similar cases differently. Both stayed up.

Everton’s first breach had a second cost. In June 2026 a Premier League commission ordered Everton to pay Burnley about £35m, £26m in damages and £9m in interest, finding that the breach was connected to the 2021/22 season in which Burnley were relegated and Everton stayed up. Everton appealed, disputing the finding that its breach had caused Burnley’s relegation.

How clubs managed the numbers

A rule based on profit and loss can be managed by changing the profit and loss. As the limits started to bite, clubs found ways to do it.

Selling academy players. An academy player has cost the club nothing in transfer fees, so whatever he is sold for counts almost entirely as profit. The costs of producing him had already been left out of the calculation. For a club near the limit, selling a homegrown player was the quickest way back under it.

The June 2024 trades. Most clubs’ accounts close on 30 June. In the last days of June 2024, several clubs near the limit traded players with each other:

• Aston Villa signed Ian Maatsen from Chelsea for a reported £37.5m, and Chelsea signed Villa’s Omari Kellyman, who had made two brief first-team appearances, for a reported £19m.
• Everton sold Lewis Dobbin to Aston Villa, and bought Tim Iroegbunam from Villa, each for around £9m.

Each sale produced a profit in the selling club’s accounts before the deadline, while the cost of the player bought in was spread over his contract. The deals were within the accounting rules, but the League reminded all 20 clubs of its rules on the fair valuation of players involved in transfers.

The reason this worked is a difference in timing between a sale and a purchase. A simple example:

• A club sells an academy player for £20m. Because he cost nothing in transfer fees, almost the full £20m counts as profit in the year of the sale.
• The same club buys a replacement for £20m on a five-year contract. Only £4m of that fee counts as a cost in the first year.

The club has spent and received the same £20m in the transfer market, but its result for the season has improved by about £16m. When two clubs near the limit trade players with each other, both can benefit in the same way.

Selling assets to sister companies. Chelsea sold two hotels to a company under the same ownership, and in June 2024 sold its women’s team to another sister company for nearly £200m, turning each sale into profit in the club’s accounts. Everton and Aston Villa later sold their women’s teams to their own parent companies in the same way. For 2024/25, all 20 clubs were reported to have met the rules.

None of these moves led to a PSR sanction. A profit in the accounts is not the same as the League accepting the price, though: a sale to a company under the same ownership had to be at fair market value, and Chelsea’s accounts for 2023/24 recorded the women’s team sale as subject to the League’s assessment, with the price to be adjusted if the League valued it differently. Together, the moves showed that a limit on losses could be met by changing where a cost or a profit landed, without changing what the club spent on its team.

The fight over owner-linked deals

The deepest challenge to the rules came from income rather than spending.

In December 2021, shortly after Saudi Arabia’s Public Investment Fund bought Newcastle United, the League introduced rules on associated party transactions: deals between a club and a company linked to its owner, such as a sponsorship with a company the owner controls. The rules required such deals to be at “fair market value”, so that an owner could not simply channel money into the club through an inflated sponsorship and raise the club’s income, and so its spending limit. Newcastle and Manchester City voted against.

Why fair value matters is easiest to see with numbers. If a company linked to the owner pays £100m a year for a sponsorship that an independent company would pay £30m for, the extra £70m is the owner’s money dressed up as income. Under PSR, it reduces the club’s loss by the same amount.

In 2023, the League rejected proposed sponsorship deals between Manchester City and Etihad Airways and First Abu Dhabi Bank. City challenged the rules themselves.

• October 2024. An independent tribunal found parts of the rules unlawful. It identified the exclusion of shareholder loans from the fair-value test, some of the changes made in early 2024, and the fact that clubs could not comment on the comparison data used against them. Interest-free loans from owners, used by several clubs, were being treated more favourably than sponsorship deals.
• November 2024. The League amended the rules. City launched a second challenge, arguing the new rules were also unlawful.
• February 2025. A tribunal ruled that the original rules, in force from 2021 to 2024, were void and unenforceable as a whole.
• September 2025. City and the League settled the second challenge. City accepted that the current rules are valid and binding, and both sides agreed to make no further comment.

The fair-value question has not gone away. It is the same question that ran through UEFA’s cases in Part 1, and it sits under every rule that ties spending to income.

Separately, the Premier League charged Manchester City in February 2023 over the period from 2009/10 to 2017/18, including the accuracy of the financial information the club reported and its compliance with the League’s financial rules. On 29 September 2026, the League published the independent commission’s core decision. It found City guilty of all the charges relating to breaches of the League’s financial rules, including arranging ‘sham’ commercial contracts, part of a disguised funding scheme paid for by the club’s owner, that inflated revenue and reduced costs by more than £900m so that the club appeared to comply. Had the deals been reported accurately, the commission found, City would have breached both the League’s and UEFA’s loss limits by a very large amount. It also upheld three of the four charges that City failed to cooperate with the investigation. No sanction had been set at the time of writing, and City said the decision contains material errors of law, principle and fact and that it would appeal.

In March 2026, Chelsea were fined £10m over £47.5m of payments made between 2011 and 2018 that had not been disclosed to the League; a separate breach of the rules on registering academy players brought the total penalties announced that day to £10.75m. The League found that Chelsea would not have breached PSR even with those payments included.

Why the League replaced PSR

By the mid-2020s, the weaknesses of a limit on losses were hard to ignore.

• The number never moved. The £105m limit was set in 2013 and never raised, while revenues, wages and transfer fees rose sharply.
• For established Premier League clubs, it was the same fixed number regardless of scale. £105m was a small margin for a club earning £700m a year and a very large one for a club earning £150m.
• It measured losses, not spending. A club could pass by selling academy players, a hotel or a women’s team, without changing what it spent on its squad.
• It was slow. A breach was found only after a club’s accounts were filed and a commission had heard the case, often years after the spending.

PSR also mixed together two different questions. Was the squad affordable? And was the club financially healthy overall? A single loss figure tried to answer both. A club could pass by selling assets while spending heavily on players, and another could fail because of losses elsewhere in the business while its squad was affordable.

Richard Masters, the League’s chief executive, said in 2024 that the rules had been introduced to ensure unsustainable spending could not go too far. In November 2025, the clubs voted to replace them from 2026/27 with a system that splits the two questions: a squad cost ratio, which measures the cost of the squad against football revenue plus the average profit or loss on player sales over the last six transfer windows, about three years, and separate tests of each club’s cash, working capital and balance sheet.

What PSR shows

Three lessons from PSR carry into the rest of the series.

• A loss limit can be met without spending less on players. Where a cost or a profit lands in the accounts can matter as much as the spending itself.
• A fixed number ages badly. £105m was never raised as revenues grew. It let the smallest clubs lose a much larger share of their income, while the biggest clubs’ revenue still gave them far more to spend.
• Income is the battleground. Whether an owner-linked deal reflects its real value decides how much a club can spend, and it has been fought over at every level of the game.

Next in the seriesPart 3: the new system, SCR and SSR from 2026/27→