Dynamic SCR

The Premier League earns more than £7bn a year and still loses money. Its new spending rule caps squad costs, but it has no destination. Dynamic SCR gives it one: a league that makes a profit, with a squad cost limit that is recalculated every year until it gets there. This page explains how football's money works, why the current rule falls short, and how Dynamic SCR would work. It is updated every season.

Data as of October 2026, engine V2BZ. All model results are static scenarios, not forecasts. · Changelog

1. The state of play

If the Premier League earns £7.5bn, why does it lose £880m?

The Premier League's income keeps rising, season after season. Yet its clubs, taken together, lose money almost every year. The Independent Football Regulator's first State of the Game report, a draft published for consultation on 13 October 2026, estimates that the league's twenty clubs earned about £7.5bn in 2025/26 and lost about £880m before tax between them, an average of £44m per club.

• Revenue has grown every season: from £4.9bn in 2020/21 (a season hit by Covid) to £6.8bn in 2024/25, and about £7.5bn in the regulator's estimate for 2025/26.
• The losses have not gone away with it. Switch to the pre-tax result and you see a loss in every season, ranging from £135m to £948m.
• More money has not meant more profit. Each extra pound of income has been spent, and then some.

What the chart is and isn't: 2020/21 to 2024/25 are Deloitte's league totals, built from the clubs' filed accounts for the twenty clubs in the league each season. The 2025/26 bar is the regulator's estimate from a draft report, for that season's twenty clubs; its loss is our arithmetic (£44m average × 20). The two sources use different methods, so read the last bar as an indication, not a like-for-like data point.

The Premier League's problem is mild compared with the leagues below it.

• Revenue falls off a cliff below the top flight. The regulator puts the Championship at about £1bn, Leagues One and Two at £460m combined, and the National League at about £70m.
• Losses are proportionally far larger lower down. For every £1 of revenue in 2025/26, the regulator estimates that Championship clubs lost 59p (64p for clubs without parachute payments), League One clubs 67p and League Two clubs 43p. The Premier League's equivalent is about 12p.
• In the regulator's figures, the Premier League is the only division where the average club makes money from running the club (an average EBITDA of £47m). EBITDA is profit before interest, tax, depreciation and amortisation, and the regulator also leaves out profit on player sales: it measures the day-to-day business of matches, broadcasting, sponsorship, wages and running costs. The losses come after those items. Across the top five divisions, the regulator found that 94% of clubs made a pre-tax loss in 2025/26.

Why this matters for a Premier League rule: the pyramid chases the top flight. A Championship club spending to get promoted is spending to reach the Premier League's wage levels. Whatever the top division treats as normal spending sets the price everyone below has to pay.

An accounting loss is not the same as a cash shortfall: part of every club's costs, such as amortisation, is not paid in cash that year, and owners can cover gaps with fresh equity or loans. But the money has to come from somewhere, and the regulator's report shows several kinds of financial obligation building up at once. They are different things and should not be added together:

• Interest-bearing debt (bank loans, bonds and other borrowing that charges interest) across the Premier League and the three EFL divisions rose from about £2.8bn in 2020/21 to £4.1bn in 2024/25, and the regulator expects about £5.1bn by 2026/27. About three quarters of it sits in the Premier League. Interest-free loans from owners are not included.
• The cost of that debt has risen faster than the debt itself. Interest paid went from about £97m to £455m over the same four years; the implied interest rate rose from 3.4% to 11.0%.
• Unpaid transfer fees. Transfer fees are usually paid in instalments, so clubs owe each other money. In 2025/26, clubs owed £4.8bn in unpaid transfer fees and were owed £1.5bn: a net £3.4bn (calculated from the unrounded figures: £4,843.9m less £1,456.2m is £3,387.7m), of which the Premier League's share was about £3.1bn. This is not borrowing from a bank, but it is money already committed.
• Factoring: cashing in future transfer income early. A selling club can sell the instalments a buyer still owes it to a lender, who pays cash now at a discount. The amount of new factoring done each year rose from £55m in 2020/21 to £779m in 2024/25. A separate figure shows how much is outstanding at one point in time: Premier League clubs had £1.25bn of transfer instalments still due on their balance sheets in 2025/26, and a further £975m already factored, equal to 78% of what remained (or about 44% of the two together).

The picture is not simply "losses create debt". It is a league whose costs run ahead of its income, and which increasingly fills the gap with interest-bearing borrowing, with transfer fees paid on credit, and with transfer income spent before it arrives.

Revenue growth is the good news: Premier League revenue rose from £5.5bn in 2021/22 to about £7.5bn in 2025/26, roughly 36% (Deloitte's total for 2021/22, the regulator's estimate for 2025/26: two sources, so treat the percentage as approximate). Section 4 compares it with how costs have grown.

Limits: we could not build a clean five-year series of every cost line from filed accounts. Two clubs, West Ham and Wolverhampton Wanderers, are not yet in our database; many others hold only some of the figures; and our database has no field yet for amortisation or agents' fees. So the league totals here are Deloitte's, and the cost-growth figures in section 4 are the regulator's. We will replace them with our own series as the database fills in.

2. How we got here

What happened to Financial Fair Play?

Football has tried to control club spending for fifteen years. Each attempt fixed a weakness in the one before.

• UEFA Financial Fair Play (from 2011/12). Approved in 2009, it required clubs in European competition to roughly break even over a rolling period: a deviation of €5m was allowed, or up to €45m (later €30m) if owners covered it. Spending on stadiums, training grounds and youth development was excluded. It produced real sanctions, including €60m fines for Manchester City and Paris Saint-Germain in 2014, but it was a test of losses, and it was hard to enforce: City's 2020 European ban was set aside on appeal.
• UEFA's Financial Sustainability Regulations (from 2022). UEFA kept a version of break-even and added two more tests, giving three pillars: solvency (no overdue payments to other clubs, staff or tax authorities);stability, a football earnings rule that grew out of break-even (the allowed deviation rose from €30m to €60m over three years, plus up to €10m a year more for clubs in good financial health); andcost control, a new squad cost rule capping spending on wages, transfers and agents as a share of revenue, falling from 90% to 80% and then to 70% from 2025/26. Clubs are fined for exceeding it.
• The Premier League's PSR (from 2013). The domestic rules allowed a club to lose up to £105m over three seasons if its owner put in secure funding (£15m otherwise), again excluding infrastructure, youth, women's football and community spending. Everton and Nottingham Forest were both deducted points under it.
• The Premier League's SCR and SSR (from 2026/27). In November 2025 the clubs voted to replace PSR with two sets of rules: a squad cost ratio (SCR), which caps squad spending as a share of revenue, and Sustainability and Systemic Resilience rules (SSR), which test a club's financial resilience: whether it has enough cash to meet its obligations month by month (the working capital and liquidity tests), and whether its balance sheet is sound (the positive equity test: liabilities of no more than 80% of its adjusted assets). In our analysis (Part 2 of the regulation series), PSR had four flaws: its £105m limit had not changed since 2013, it was the same for every club whatever its size, it measured losses rather than spending, and it was slow.

What the new rules still lack: a destination. The SCR caps squad spending at 85% of revenue, with up to 30 points of leeway; the SSR checks that clubs stay solvent. Both are safeguards against collapse. Neither is designed to make the league profitable: a club can pass both and still lose money every year, as long as someone funds it. As section 3 shows, a league that spends close to 85% on its squads struggles to pay for everything else. Dynamic SCR adds the missing piece: an explicit, league-wide profit target.

Sources: Part 1, Part 2 and Part 3 of the regulation series and their sources;UEFA's explainer on its Financial Sustainability Regulations (April 2022); the Premier League Handbook 2026/27, Appendices 2 (SCR) and 3 (SSR).

3. How the SCR works

What is actually being measured?

The squad cost ratio is one fraction: what a club spends on its squad, divided by what it earns. Start with a simple example. A club spends £300m on its squad and earns £400m: its ratio is 75%. Now say it has also made, on average, £50m a year from selling players over the last three seasons. The rule adds that to what it earns: £300m divided by £450m is 66.7%. The same squad, a lower ratio, more room to spend.

Profit on a sale is not the price. If a club sells a player for £50m and the transfer fee it paid for him still has £10m left to be written off in its accounts, its profit on the sale is £40m. That profit is what enters the rule, even if the £50m itself arrives in instalments over several years.

Pooled: the sum of numerators divided by the sum of denominators, never an average of ratios. Published estimates for the 1 March 2027 test (current release). Data as of October 2026, engine V2BZ.

How can a league at 75.6% still lose so much?

• Add up all twenty clubs' squad costs (about £6.23bn) and divide by all twenty denominators, and the Premier League as a whole sits at 75.6%, comfortably under the 85% limit.
• Take player-sale profit out and it is 87.1%: about 87p of every £1 of revenue goes on the squad.
• Split the league and the picture sharpens. The traditional big six spend 71.5% on the rule's measure and 79.5% before player trading. The other fourteen spend 80.3%, and 96.3% before player trading: almost every pound they earn, with player sales filling the gap.

Now look at the rest of the bill, using a different source. The regulator estimates that a Premier League club spends, on average, about 39p of every £1 of revenue on costs that have nothing to do with the squad: staff, stadium, travel, administration.

These two figures cannot simply be added up. The 87.1% is our estimate for 2026/27, on the rule's definitions of squad cost and revenue, pooled across twenty clubs. The 39p is the regulator's figure for 2025/26, on company-accounts definitions, averaged per club (the draft doesn't say exactly how). But read side by side, they point the same way: the squad takes most of every pound, and what it leaves is not obviously enough for everything else. That is how a league can comply with an 85% rule and still lose money every year. The gap is filled by selling players, by owners and by borrowing.

Note: these are pooled ratios, the sum of all squad costs divided by the sum of all denominators, not an average of twenty percentages. Figures are our estimates for 2026/27 on the current engine release.

4. Why a fixed 85% is not enough

Why might 60% be fine today and too generous in five years?

Any fixed percentage is a bet on how the rest of a club's costs will behave. If everything outside the squad grew in step with revenue, a fixed limit could work. It doesn't.

This chart covers the Premier League only, over 2021/22 to 2025/26, using the regulator's figures (averages per club):

• Player wages rose about 33%.
• Non-player operating costs (everything outside the squad: staff, stadium, travel, administration) rose about 68%.
• Revenue rose roughly 36% (section 1; two sources, so approximate).

Wages have grown roughly in line with revenue. Non-player costs have grown nearly twice as fast as either, so they are taking a growing share of every pound. That squeezes the room left for the squad: if costs outside the squad keep taking more, the share left for wages and transfers has to fall just to stand still. A limit that produced a break-even league one year would produce a loss a few years later.

The other parts of squad cost are not standing still either. These figures cover English football more widely, not the Premier League alone, so they are shown separately:

• Amortisation, the cost of transfer fees spread over players' contracts, doubled from £1.3bn to £2.6bn across the leagues the regulator covers.
• Agents' fees rose from £317m to £548m, about 73% (the FA's published figures, as cited by the regulator).

So we do not claim that non-player costs are rising faster than every player cost; only that they are rising faster than wages and faster than revenue, and fast enough to matter.

This is the core of the case for a dynamic rule. A fixed 85% cannot respond. Even the 60% I proposed inPart 5 of the regulation series would be a guess about the future: perhaps right today, perhaps too generous in five years. A rule that recalculates its limit from each season's accounts follows the economics instead of guessing them.

Two more pressures point the same way:

• Dependence on player trading. For the fourteen clubs outside the big six, the gap between 80.3% and 96.3% is player-sale profit. If transfer prices fall, their spending room falls with them.
• Debt. Interest paid has more than quadrupled in four years (section 1). Every pound spent on interest is a pound not available for anything else.

5. The first proposal

Where does Dynamic SCR come from?

In Part 5 of the regulation series, I proposed three changes to the SCR:

• A lower limit: 60% instead of 85%, reached in steps of 5 points a year.
• An F1-style sliding scale. Formula 1 gives its champion the least wind-tunnel time (70% of the standard allocation in 2023) and its last-placed team the most (115%). I proposed the football version: clubs in the top five on a three-season average lose 2 points of allowance a year, down to 10 points below the base, and get them back when they drop out.
• Room for promoted clubs: 10 points above the base, coming down 2 points a year as they settle.

Part 5 of the regulation series

Dynamic SCR keeps the sliding scale and the promoted-club room. What changes is the end point. Instead of picking 60% and hoping it delivers a profit, the base is set each year at whatever level actually does.

6. Dynamic SCR

How would it work, and why each part?

Dynamic SCR has one goal and six working parts.

• Target: league profit before tax of 3% of turnover, as the IFR measures it, by 2030/31.
• Base: recalculated each season; starts at 85%; falls at most 5 points a year; one-way ratchet.
• Club adjustments: top five −2 a year from year 4 to −10 (recovering +2 a year after leaving); promoted clubs +10, falling 2 a year; never stacked.
• Enforcement: band 0 to 15 points; falls by the overspend, recovers 5 a clean season; progressive levy; redistribution and sporting sanction kept; offsets open.

The goal: a 3% profit. The Premier League as a whole should make a profit before tax of 3% of its revenue, as the regulator measures it, by 2030/31. Three per cent is modest: about £225m on today's revenue, roughly £11m per club. It is a floor, not a ceiling. It is enough to stop losses being normal, and to start repairing balance sheets that are now funded by expensive debt. Formula 1 is the precedent for what profitability does to value: since its cost cap arrived in 2021, Forbes's average team valuation rose from $500m (2019) to $3.6bn (2025), which Forbes attributes mainly to teams becoming profitable (a closed grid and F1's commercial growth helped too).

Sources: Forbes, Formula 1's most valuable teams 2025 (20 November 2025) (the 2025 average and the reason for the rise); the 2019 average, RacingNews365, citing Forbes (2023).

The base, recalculated every season. Each year the League takes the clubs' latest filed accounts and works out one number: the squad cost ratio at which, if every club spent exactly to its limit, the league would make 3%. If costs outside the squad rise, that number falls; if the league becomes more efficient, it doesn't need to.

How the base is worked out, step by step (2026/27; regulator-calibrated starting point, bottom-up in brackets):

1. Start from the accounts. Revenue £7,500m (£7,354m); profit before tax −£880m (−£471m).
2. Find the gap to 3%. A 3% margin is a profit of £225m (£221m), so the league's costs must come down by £1,105m (£692m).
3. Turn that into a squad budget on the rule's terms. The rule counts squad cost differently from the accounts (£6,231m on the rule's definition, against £5,876m in the accounts). Model assumption: each £1 of squad cost saved on the rule's terms is £1 more profit before tax. That is a simplification, not an accounting identity: bonuses, capitalised transfer fees and timing can make the two move differently. The affordable squad cost is then £5,126m (£5,539m), set against the clubs' combined denominators of £8,240m.
4. Allow for the club adjustments (the squeeze on the top five, the room for promoted clubs) and solve for the single base that makes the twenty allowances add up to that budget: the target base, 61.6% (66.6%).
5. Apply the glide path. The base in force can fall by at most 5 points a year, so the permitted base for 2026/27 is 85%.

How the two definitions differ. The statutory squad cost here is player and head-coach wages, amortisation on the accounts basis and net loan costs, as the clubs' accounts would show them. The rule's squad cost (Handbook Appendix 2, A.1.22) counts bonuses on its own basis and agents' fees. The rule counts all amounts payable in connection with a transfer (Handbook Appendix 2, A.1.43, "Player Transfer Fees"), so the 4% levy and agents' fees that are capitalised count too. The Orange Engine estimates that amount as 1.12 times the reported fee (range 1.06 to 1.20): our estimation convention, not a figure in the rule. The ratio is measured against the rule's denominator (revenue on the rule's bases plus the three-year average of player-sale profit, A.1.29), not statutory turnover. Static scenario, not a forecast.

The gap between steps 4 and 5 is the point: on the regulator's figures the league needs a base of about 62%, and starts at 85%. Because of the assumption in step 3, read the target base as an estimate, not an exact figure. The target base says where the league needs to be; the permitted base says how fast it is allowed to get there. Setting the base does not guarantee a profit in any one year: it sets the limit at which a profit would follow if clubs spent to it.

A glide path of at most 5 points a year. The base starts at today's 85% and can fall by no more than 5 points a season. Players are under contract and transfer fees are being written off over years; a club cannot cut its squad bill overnight. Five points a year gives existing contracts time to run off (section 7) while keeping the direction firm.

A one-way ratchet. Once the target is reached, the base does not rise again automatically. Without this, the formula would hand back room as soon as the league touched 3%, and the target would become a ceiling. The rule tightens itself; only people can loosen it.

Open design question: who can loosen the ratchet, and when? Dynamic SCR does not yet settle this. Some of the questions any answer has to cover:

• Who decides: the clubs by their normal vote on rule changes, the League's board, or the regulator?
• On what evidence: how many seasons of audited league profit at or above 3% should come first?
• What happens in a shock: if broadcasting income collapsed, the formula would want the base to fall sharply. The 5-point glide path already stops it falling faster than clubs can adjust; should the League also be able to pause the glide path for a season?

Whatever the answer, the principle stands: the rule tightens itself, and loosening it should take a deliberate, accountable decision.

The squeeze on the strongest. The five clubs with the best average finish over three seasons lose 2 points a year, from the fourth season (when three seasons under the rule exist to average), down to 10 points below the base. Ties are broken by Premier League points over the same seasons, then goal difference. Success already brings more revenue, and a revenue-based limit turns that into more spending room; the squeeze trims that advantage without capping anyone in pounds.

Room for promoted clubs. A club promoted under the new rules starts 10 points above the base and comes down 2 points a year. It gives a newly promoted owner room to invest while the club establishes itself, without letting the room become permanent. (Clubs promoted before the rule starts, Leeds and Sunderland, get no adjustment.)

Tighter enforcement. Spending above the limit is allowed only within a band, and costs a levy; above the band lies a sporting sanction. Dynamic SCR halves the band from 30 points to 15, and halves the recovery after a clean season from 10 points to 5. Section 8 shows how it works season by season.

No club adjustment moves more than 2 points in a season, and adjustments never stack.

A club that stays in the top five follows the base for three seasons, then its allowance drops 2 points a year below it, until it sits 10 points below the base. If it drops out of the top five, it climbs back 2 points a year.

A club promoted under the new rules starts 10 points above the base, and the gap closes by 2 points a year until it follows the base like everyone else.

Today a club can overspend by up to 30 points and earns back 10 points of band for each clean season. Under Dynamic SCR the band is 15 points and a clean season earns back 5. The chart follows the same club, overspending in full in season 1, under both systems.

How Dynamic SCR fits with UEFA's rule. Clubs in European competition also have to meet UEFA's 70% squad cost rule. Dynamic SCR does not replace it. The two rules count squad cost and revenue differently, so their percentages cannot be compared directly: a Premier League base of 70% is not the same limit as UEFA's 70%. A club in Europe has to meet both.

A profitable league can still contain loss-making clubs. The 3% target is for the league as a whole. About £225m of profit spread across twenty clubs is roughly £11m each on average, but in practice some clubs would make more and some would still lose money. In the model, in 2030/31 under scenario B, seven clubs still make a loss, £230m between them, on the bottom-up estimate; eight clubs and £329m on the regulator-calibrated one (an illustration: club-level figures in that case are not validated). That is why Dynamic SCR sits alongside the League's solvency tests (SSR), not instead of them: the profit target steers the league; the solvency tests protect individual clubs.

7. What the model says

Would it work?

We ran Dynamic SCR on all twenty clubs of 2026/27 and carried the league forward eight seasons under the rule. It is a static scenario, not a forecast: it does not predict transfer markets, TV deals or how owners will behave. What it shows is whether the design's arithmetic holds, and where it breaks.

Nobody yet knows the 2026/27 starting point, so the model uses two:

• Bottom-up club-accounts estimate: built from each club's latest accounts: revenue of about £7.35bn and a loss of £471m. It leans optimistic: it holds clubs' other costs flat while revenue grows, takes wages as currently contracted, and counts a modelled £1.2bn of profit from one summer of player sales.
• IFR-calibrated sensitivity: the same model scaled to the regulator's figures, £7.5bn and a loss of £880m. The league totals are the regulator's; how the loss is spread across our twenty clubs is an assumption.

And four kinds of behaviour:

• A: every club spends exactly to its limit, including clubs that today spend less.
• B: clubs over their limit cut to it; clubs below it stay where they are.
• C, minimum compliance: clubs above their red line cut back only as far as the red line, and pay the levy on the overspend; every other club stays where it is.
• Stress: every club spends right up to its red line, including clubs that today spend far less. It is the worst case, which is why its losses are so much larger than C's.

First season at 3%, one-way ratchet: A 2030/31 (bottom-up) and 2031/32 (IFR-calibrated); B 2029/30 and 2031/32; C with band depletion 2031/32 and 2033/34; C and stress without band depletion not within eight years in either case. Static scenario, not a forecast.

• The target is reached if clubs comply. In A, the league reaches 3% in 2030/31 on the bottom-up estimate, and in 2031/32 on the regulator-calibrated one. In B, where clubs below their limit stay below it, it arrives in 2029/30 and 2031/32.
• I keep 2030/31 as the target. It is achievable on favourable assumptions, not guaranteed. On less favourable ones it slips a year when clubs spend to their limits (A and B), and up to three years when overspending clubs only come down as far as their red line, even with the band shrinking (C with band depletion, regulator-calibrated: 2033/34). I would not steepen the glide path to force it: the steps have to leave time for contracts to run off.
• Be careful with scenario A. The base is calculated so that A hits 3%; A reaching the target is arithmetic, not a prediction. The informative results are the others.
• C without band depletion, and stress: tests of the base mechanism, not of the full rule. Both keep the full 15-point band open every year, which Dynamic SCR's feedback mechanism would not allow (section 8). If overspending clubs only come down as far as their red line with the band never shrinking, the target is not reached within the eight modelled seasons on either starting point, and the stress case is far worse. They show the price of a band that is used routinely.
• C with band depletion: the same clubs, with the band carried forward. Each club's band falls by its overspend and recovers 5 points a clean season; we assume that a club with no band left cuts its spending to its allowance. Under that assumed response, the league reaches 3% in 2031/32 on the bottom-up estimate and 2033/34 on the regulator-calibrated one. Over eight seasons, the bottom-up league ends about £180m in profit (against a £2.7bn loss without band depletion), and the regulator-calibrated one loses about £2.2bn (against £5.4bn). Carrying the band forward materially reduces the losses, but it does not, on its own, bring the target forward to 2030/31. It is a test of the rule's mechanics given that response, not proof that sanctions or contracts would produce it. This run does not apply the contract run-off constraint: each club's squad cost is held at its 2026/27 level and contracts do not run off. The contract run-off test below is a separate run; the two are not combined.

Two tests of the risks the case rests on.

• If non-player costs keep rising faster than revenue. We let the ratio of costs outside the squad to revenue rise by about 5% a year (5.35%), the pace implied by the regulator's figures for 2021/22 to 2025/26 (an assumption, not a forecast). In the model, revenue is held at its 2026/27 level and each club's costs outside the squad grow 5.35% a year, compounded, from the second season: the regulator's +68% for non-player operating costs against revenue's +36%, over four years. Our costs outside the squad are net of other income and include interest and depreciation, a wider measure than the regulator's, so its rate is applied to a wider base. The target slips: to 2032/33 on the bottom-up estimate, and beyond the eight modelled seasons on the regulator-calibrated one. And the base has to keep falling: to about 55% (bottom-up) or 50% (regulator-calibrated, which is as low as 5-point steps can go in seven years, so the target there wants it lower still) by year 8, where on today's trend it would settle at 65% to 69%. This is the case for a dynamic rule in one line: if costs outside the squad keep growing, the squad's share has to keep shrinking. A limit that recalculates itself follows them down automatically; a fixed limit would need repeated rule changes to keep up. On that path, the 60% of Part 5 would not be enough either.
• If player-sale profit is lower. With 25% or 50% less profit from selling players in every season (both the profit in each season's accounts and the three-year average in each club's denominator; the model holds that average fixed, so the fall enters it in full from the first season rather than over three), the target date moves by a year at most against the main results (2030/31 on the bottom-up estimate, 2031/32 on the regulator-calibrated one), because the base adjusts: it ends 1.5 to 3.5 points lower. In these tests, lower transfer profits mean tighter limits rather than a missed target.

These show whether the rule copes with the problems it is designed for, not just with a favourable path. Static scenario, not a forecast.

Switch to "base path": on the regulator-calibrated estimate, the base falls 85%, 80%, 75%, 70%, 65%, then holds at 64.7%. Without the ratchet it would drift back up to 66.4% as the top-five squeeze deepens.

Reaching a profitable year is not the same as having made money. Added up over the eight seasons, scenario A still loses about £1.2bn on the bottom-up estimate and £3.2bn on the regulator-calibrated one; B makes £1.5bn or loses £0.7bn. These are accounting results, not borrowing forecasts (part of every club's cost is amortisation, which is not cash), but someone has to fund them. The transition has a cost, and it is lower the sooner clubs comply.

Three clubs show how the adjustments play out:

• Arsenal, with the best three-season average finish: from 85% in year 1, down by the base and, from year 4, by the top-five squeeze, to 10 points below the base by year 8.
• Newcastle, a mid-table club with no adjustment: follows the base.
• Ipswich Town, promoted in 2026: starts 10 points above the base, and the extra room tapers to nothing.

Switch to £m to see what the percentages mean in money: the top clubs' larger revenue keeps their allowance in pounds far above everyone else's even after the squeeze. Illustration from the bottom-up estimate.

A lower allowance is not a lower wage bill. We tested scenario B with one extra constraint: a club over its limit can only come down as its existing contracts expire, with departing players replaced at 90% (slow), 70% (central) or 50% (fast) of their cost. Sales are left out, because selling a player is not a clean saving: it brings in a fee but usually means buying someone else.

• At the central or fast rate, contracts run off quickly enough for 3% to arrive in 2030/31 on the bottom-up estimate.
• At the slow rate, it doesn't arrive within eight years, and five clubs never get under their limit by contracts running off alone: Bournemouth, Chelsea, Fulham, Ipswich Town and Nottingham Forest.

These results are conditional on the replacement rates and on contracts as recorded; a club that renews contracts or sells to rebuild changes them. They are why the glide path is 5 points a year and not 10.

The squeeze narrows the gap without closing it. In year 1, the club with the most spending room can spend 2.97 times as much as the median club; by year 8 it is 2.72 times. The strongest clubs still have by far the most room in pounds.

The levy money doesn't disappear: the League pays it out in equal shares to the clubs that stayed within their limit. In this illustration, fourteen clubs pay about £93m between them and six clubs receive about £15.5m each. The fewer clubs comply, the larger each compliant club's share: rivals end up paying the clubs that stayed inside the rule. It moves money between clubs and does nothing for the league's total profit.Illustration from the bottom-up estimate, using the current rule's levy formula; Dynamic SCR's progressive levy (section 8) has no rate yet.

8. Enforcement

What stops a club simply paying to overspend?

Every club has three lines:

• Its allowance (the green line): the base plus its own adjustment.
• Its red line: the allowance plus a band of leeway. Spending between the two lines is allowed, but costs a levy.
• Above the red line: a sporting sanction. Under the current rules that is a deduction of six points, plus one point for every £6.5m over the red line, rounded up (Handbook Appendix 2, rules F.4.1 and F.4.2). For a second consecutive season of breach the deduction is multiplied by 1.3, for a third by 1.6, and by a further 0.3 for each season after that, rounded up (rule F.5).

The band is not fixed. It shrinks when a club uses it and grows back slowly when it doesn't:

• Season 1: a club with a 65% allowance and the full 15-point band spends to 80%, right at its red line. No sanction, but it pays a levy.
• Season 2: its band has fallen by the 15 points it used. It has none left: its red line is now its allowance. Any overspend at all means a points deduction.
• Seasons 3, 4 and 5: each clean season earns back 5 points: a band of 5, then 10, then 15.

So a club cannot overspend by the full band year after year. Small overspends can use what is left of the band for a few seasons, but not indefinitely without eventually reaching its red line. Use the whole band once and it takes three clean seasons to rebuild it. The current rule works the same way, but with a band of up to 30 points that recovers 10 a season (rules A.1.17, A.1.39 and A.1.44). Halving the band and halving the recovery is a deliberate choice of Dynamic SCR, not part of the current rules.

Why the levy must be steeper. Under the current formula, the levy is the overspend in pounds multiplied by the overspend as a percentage, so it already rises faster than the overspend. Take a club with a £400m denominator and a 65% allowance (£260m):

• 5 points over: £20m more squad, a levy of £1m.
• 10 points over: £40m more squad, a levy of £4m.
• 15 points over, at the red line: £60m more squad, a levy of £9m.

The club pays for the extra players as well, so going to the red line costs £69m in all. But what it buys is £60m more annual squad spending than its allowance permits, and in a league where a few places are worth tens of millions in prize money, European football or survival, a 15% surcharge is a price many owners will pay. Dynamic SCR keeps the band and the levy, but makes the levy steeper: modest just above the allowance, much heavier towards the red line. The band is there to absorb a bad season, a cup run that didn't happen or a sale that fell through, not to buy a bigger squad. We have not calibrated the rate; that is work for the League.

Open in the proposal: the current rules let a club that complied in earlier seasons reduce its levy (rules E.7 to E.9). Dynamic SCR does not yet take a position on these offsets. No levy can be charged under the current rules before 2027/28.

A deduction of points (F.1): six points fixed (F.4.1) plus one point per GBP 6.5m of Red Threshold Overspend, rounded up (F.4.2); multiplied by 1.3 for a second consecutive season's breach, 1.6 for a third, and a further 0.3 each season after (F.5), rounded up. With a Club Error Margin of 0, the red threshold is 85% + 0 = 85% of revenue (A.1.48), equal to the green threshold (A.1.31): any squad cost above the green threshold is then above the red line. Source: the Premier League Handbook 2026/27, Appendix 2.

9. Revenue integrity

What if a club inflates its revenue?

Any rule tied to revenue has one obvious weak point: a club that can inflate its revenue inflates its spending limit. The Premier League's charges against Manchester City concerned the accuracy of reported revenue, including sponsorship; the finding has not been published, and City deny wrongdoing. Whatever the outcome, the lesson for rule design stands.

The League already tests deals with associated parties against fair market value. A revenue-based rule needs more: continuous monitoring, using statistical tools to benchmark commercial and sponsorship deals against comparable clubs and flag outliers as they happen, not years later. The stronger the link between revenue and spending, the more the revenue figures have to be trusted.

10. Methodology and changelog

• Squad cost and revenue are the Orange Engine's estimates for 2026/27 under the Premier League's 2026/27 rules (Appendix 2 of the Handbook), on engine release V2BZ.
• Starting points: a bottom-up estimate bridged from each club's 2024/25 filed accounts; and the same scaled to the regulator's 2025/26 league totals (State of the Game, draft for consultation, 13 October 2026), with the loss spread across clubs by revenue share, an assumption. Club-level results in the regulator-calibrated case are not validated.
• Scenarios run eight policy years, 2026/27 to 2033/34, from a static starting point. They are not forecasts. Scenario A's 3% is built into the formula. C is run twice: C without band depletion (a fixed 15-point band every year) and C with band depletion (each club's band carried forward, with the assumed response that a club with no band left spends at its allowance). Stress uses a fixed band. The same 20 clubs of 2026/27 are kept in all eight seasons: promotion and relegation are not modelled. The three clubs promoted in 2026 (Coventry City, Hull City, Ipswich Town) take the promoted-club room from the first season, and no later club is promoted. The top five is fixed for all eight seasons (Arsenal, Aston Villa, Chelsea, Liverpool, Manchester City: the best average finishes over 2023/24 to 2025/26), so no club enters or leaves it. Static scenario, not a forecast.
• Converting the rule's squad cost to profit assumes £1 for £1 (section 6), a simplifying assumption.
• Sensitivities: non-player costs as a share of revenue rising 5.35% a year; player-sale profit 25% and 50% lower. Definitions as in section 7.
• 2026/27 player-sale profit is a model estimate from reported transfer fees and modelled book values, with an assumed 5% selling cost. It is not audited.
• Contract run-off uses contracts as recorded in our ledgers and stated replacement rates.
• League history (2020/21 to 2024/25) is Deloitte's Annual Review of Football Finance, as cited in Part 5.
• The regulator's figures are cited by page from a draft for consultation; most are averages per club, and its 2025/26 figures cover that season's twenty clubs, not 2026/27's.

Changelog

• 15 October 2026: first publication. Engine V2BX.
• 21 October 2026: correction. The Premier League's losses for 2020/21 to 2022/23 are now Deloitte's 2026 edition: £707m, from £669m; £601m, from £607m; £683m, from £685m. They had come from earlier editions, as in Part 5, corrected the same day. No model result changes.
• 22 October 2026: correction. The page now uses engine V2BZ, whose corrections changed six clubs' squad costs. The league's pooled ratio is 75.6% (from 75.8%), and 87.1% before player trading (from 87.3%). The bottom-up starting loss is £471m (from £482m); on the regulator-calibrated starting point the target base is 61.6% (from 61.7%) and the base holds at 64.7% (from 64.9%). The first seasons at 3% do not change: 2030/31 on the bottom-up estimate, 2031/32 on the regulator-calibrated one.