Regulation series

The history of financial rules in football, Part 3: the new system, SCR and SSR from 2026/27

Part 3 of the Orange Ledger's series on football's financial rules. From 2026/27 the Premier League has split the two questions PSR tried to answer with one number. The Squad Cost Ratio asks whether a club's squad is affordable against its revenue; the Sustainability and Systemic Resilience rules ask whether the club can survive a shock. This is how both work, what they count, and what they still cannot see.

By Arthur van de Laak2 October 2026Updated 3 November 2026 · View updates23 min read

Figures as of 31 October 2026, Orange Engine release V2CI · Latest figures · What the engine does not capture

Part 2 ended with the central weakness of PSR: it tried to answer two different questions with one number. Is the squad affordable? And is the club financially healthy? From the 2026/27 season, the Premier League answers them separately.

• The Squad Cost Ratio (SCR) looks only at the cost of the squad, measured against the club’s football revenue plus its averaged net profit or loss on player sales.
• The Sustainability and Systemic Resilience (SSR) rules look at the club as a whole: its cash, its ability to survive a bad season, and its balance sheet.

The clubs voted the new system in on 21 November 2025. The squad cost ratio passed by 14 votes to six, the minimum two-thirds majority. The resilience rules passed unanimously. The squad cost ratio had been run in trials, without sanctions, since the middle of 2024/25.

The squad cost ratio: what it counts

The ratio is one figure divided by another.

On top, squad costs. The main costs are:

• Wages of players and the head coach.
• The cost of each signing, spread over the player’s contract. The rule counts the fee, the League’s 4% transfer levy and agents’ fees paid on the deal. A player signed for £60m on a five-year contract counts as at least £12m a year, the accounting charge known as amortisation. For contracts signed or extended on or after 12 December 2023, the spreading is capped at five years; older contracts run their full term.
• Agents’ fees charged in the year.

The cost also includes fees paid to borrow players, the fee paid to another club for a head coach, spread over his contract, and any write-down of a registration’s value. Fees received for lending players out first offset that player’s wages, transfer cost and agents’ fees; any surplus counts with the profit on player sales.

Underneath, revenue. The club’s football income from broadcasting, matchdays and commercial deals, plus the average profit on player sales over the last six transfer windows, about three years.

That averaging is one of the most important choices in the system. Player trading still matters, but differently from PSR. One exceptional sale still adds room, but only a third of its profit counts in any one test, and it keeps counting for as long as the sale stays within the six windows. A club that sells well every year, however, builds a permanently larger spending base. The rule rewards a club that is consistently good at developing and selling players, not one that makes a single big sale to fix a single year.

Some things are left out on purpose:

• Owner money. New shares bought by an owner, or a loan from one, do not appear on either side of the ratio. They can pay the bills, but they do not create room to spend on players. This is the biggest change from PSR, where owner equity could unlock a larger loss allowance.
• Spending outside the squad. Stadiums, training grounds, the academy, women’s football and community work are not squad costs, so owners can invest in them without using up any of the club’s allowance.
• Inflated income. Deals with companies linked to a club’s owner count only at their fair market value, under the rules described in Part 2.

The thresholds

The ratio is tested against a line and a band.

• 85% is the line. A club complies when its squad costs are no more than 85% of its football revenue plus its averaged net result on player sales, taken together.
• Above 85%, a club may face a levy, from 2027/28 onwards, if its confirmed results remain above the line. The levy is the overspend, taken as the lower of the March test’s figure and the figure on actual results, multiplied by the number of percentage points the club is over on actual results. A club with a £500m base of revenue and averaged sale result, at 90% on both tests, is £25m over the line and 5 percentage points over it, so it pays 5% of £25m: £1.25m, before any relief. The levy money is shared equally among the clubs that complied.
• A good record can reduce the levy. A club that stayed under 85% in each of the two previous seasons can use the margin it built up, to a maximum of 10 percentage points, to reduce or remove the levy. The relief can be used only once every three seasons, and it does not change the club’s allowance or its red line.
• Every club starts with an allowance of 30 percentage points above 85%, so the line at which league points are deducted begins at 115%.
• Above that red line, a club loses league points: six, plus one more for every £6.5m, or part of it, above the line. A second breach in consecutive seasons multiplies the deduction by 1.3.
• The allowance moves. A breach reduces the allowance for the next season by the size of the breach: a club at 100% has 15 percentage points left the following season, so its red line falls to 100%. Each season at or below 85% restores 10 percentage points, up to the full 30.

The ratio is tested once a season, on 1 March, after the January transfer window, using revenue figures agreed with the League before the season starts. A club above 85% is then tested again on its actual figures in June and in October. That makes the rule far quicker than PSR, where a breach could take years to establish.

Why 85%, when UEFA uses 70%? The League’s own explanation is that the extra room lets clubs that do not regularly play in Europe compete for a European place against clubs that already earn European money, and lets a club that misses out on Europe adjust over several seasons rather than cut costs overnight.

How revenue is counted

Because revenue sets the limit, the rules are precise about which revenue counts, and several parts of it are cushioned against one bad season. The cushions are deliberate: they are meant to stop one poor season from collapsing a club’s spending limit and forcing it to sell players just to stay compliant.

• Prize money for league position counts at the best of three figures: last season’s position, the average of the last three seasons, or 15th place.
• Commercial income counts at last season’s figure, with merchandise at gross profit (sales less the cost of the goods).
• European prize money counts only if the club has qualified for European competition in the season being tested and goes past its qualifying stage. A club that has not gets nothing: there is no floor.
• Promoted clubs are treated as if they finished 15th, and their commercial income counts at the best of last season, their three-season average or £15m.

A promoted club also starts with the full 30-point allowance, and can ask for relief from the levy if it complied with the rules that applied to it in the two previous seasons.

Clubs playing in Europe face a second limit. UEFA’s own squad cost rule has capped them at 70% since 2025/26, and they must meet both.

What our estimates showed in October 2026

The Orange Ledger has rebuilt the ratio for all 20 Premier League clubs from their filed accounts and transfer records, for the first test in March 2027. Three clubs are clearly above the 85% line on those estimates: Fulham (102.7%), Nottingham Forest (97.4%) and Ipswich Town (97.9%). Chelsea’s central estimate is 92.3%, in an assumption range (the spread between our lowest and highest reasonable assumptions, not a probability) of 82.9% to 96.8% that reaches below the line. Bournemouth’s central estimate is 85.4%, in an assumption range of 78.3% to 86.9% that spans the line: the estimate does not reliably tell which side of the line the club is on. None is near the 115% red line. These are the figures of our October release, kept here as published; the full table carries the current estimates, and the individual club reconstructions show how each figure was built.

The resilience rules: can the club survive a shock?

The squad cost ratio asks whether a club can afford its squad. The Sustainability and Systemic Resilience rules ask whether it can survive when things go wrong. They apply three tests, each looking further ahead.

1. Working capital: the next few months. For every month of the season, a club must show at least £12.5m of cash and money it can reach within 28 days, such as an unused credit facility. The test is meant to cover short-term shocks: a sponsor going bust, part of a stadium closing, or a transfer fee arriving late.

2. Liquidity: the next two seasons. A club must show that its liquid resources, including 40% of the market value of its players, would still cover its obligations after a stress test of £85m. The stress test represents events such as relegation, missing out on Europe or losing a major sponsor. The League can set a higher figure for a club whose exposure is larger.

3. Positive equity: the balance sheet. A club’s liabilities, divided by its adjusted assets, must not exceed 90% in 2026/27, 85% in 2027/28 and 80% from 2028/29. Every liability counts, including loans from the owner and external debt, while the squad is included in the club’s assets at its full market value, or its value in the accounts if that is higher. In plain terms, a club must own more than it owes, with a margin that grows over three seasons. This is the test designed to stop clubs carrying unreasonably high debt.

The tests are assessed each year on 7 July, when clubs also submit their forecasts for the next two seasons, and the League can call a club in for a fresh assessment at any point in the season. Newly promoted clubs take the liquidity and equity tests on 31 October. Failing a test brings no automatic points deduction, unlike the squad cost ratio. The club must submit a business plan showing how it will return to compliance; if the League is not satisfied it can impose measures such as a spending limit or a requirement for approval before new contracts are registered, and a club that does not comply with those measures can face disciplinary proceedings.

What the three tests share is that none of them asks whether a club is profitable. They ask whether it has enough cash to hand, enough to absorb a shock and enough assets behind its debts to keep functioning if something goes wrong. A club can lose money and still pass, if its owners provide the capital and its balance sheet stays strong.

Here, owner money does count. An owner who buys new shares brings in cash and strengthens the balance sheet; one who turns existing loans into shares brings in no cash, but reduces what the club owes. Either can help it pass. That is the split in one sentence: owner money cannot buy a bigger squad, but it can make a club safer.

What the new system still cannot see

The new system fixes several of PSR’s weaknesses: it is faster, it grows with each club’s revenue, and it no longer lets a hotel sale pay for a striker. But four questions remain open, and most have been the subject of an Orange Ledger reconstruction.

• The squad cost ratio cannot see debt. Interest, loan repayments and dividends are not squad costs. Manchester United sit comfortably inside the line at 56.9%, while running cash shortfalls of £89m, £201m and £50m in the last three seasons. The resilience rules can see debt, but they ask whether a club can withstand it, not whether servicing it is a good use of the club’s money.
• The ratio works with a delay. Because revenue is cushioned and averaged, a bad season, or a sanction, reaches the ratio a year or more later, and then stays in it for several seasons. The Orange Ledger’s scenarios for Manchester City show how a single points deduction would echo through the rule until 2030.
• The ratio rewards revenue that already exists. A club’s limit is a share of its own income, so a club earning £700m can spend far more than a club earning £150m, and owner money cannot close the gap. The Orange Ledger’s comparison of Chelsea and Manchester City shows how much that matters.
• Compliance at 85% is not financial health. The 85% line is not a profit target. Because profit on player sales is included in the calculation, a club at 85% can spend more than 85% of its football revenue on its squad. The ratio says nothing about whether the club can also cover its other staff, running costs, interest, tax and investment. A club can comply and still lose money or run short of cash.

There is also the level itself. At 85%, a club can spend most of any new revenue on its squad. UEFA’s report on the European club game in September 2026 found that Premier League clubs spent an estimated €4.6bn on transfers in summer 2026, equal to 56% of their annual revenue, against an average of 33% in the decade before Covid. Whether 85% is the right level is a question for Part 5.

What Part 3 shows

• The new system asks two questions instead of one. The squad cost ratio tests the squad; the resilience rules test the club.
• Owner money has changed role. It no longer buys spending room, but it still counts towards a club’s safety.
• The limit grows with revenue. That makes the rule fairer between large and small clubs in one sense, and harder on small clubs trying to catch up in another.

The last point is where the argument over the rules now sits. When the clubs voted for the squad cost ratio, they also voted on a proposal designed to deal with it: a cap linking the biggest clubs’ spending to the smallest club’s income. It was rejected. Part 4 explains what it was, and why it failed.

Next in the seriesPart 4: the anchor that was voted down→