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What the Squad Cost Ratio measures
The SCR is a ratio of specified squad costs to a club’s relevant football-related revenue and net profit or loss from player sales. The Premier League describes it as a limit on clubs’ “on-pitch spending”; it is not simply a wage cap. Premier League: Squad Cost Ratio explainer
Costs in the numerator
- Player and head-coach wages.
- Agents’ fees.
- Transfer-fee amortisation: the transfer cost allocated over a player’s contract.
- Impairment: a write-down in the value of a player’s registration.
Income in the calculation
Football-related revenue includes income from football operations, such as commercial and matchday earnings and distributions from the Premier League and other competitions. The League says women’s-team and youth-academy income counts, while the costs of those teams and programmes do not. Player-sale profit or loss is also part of the calculation, so it is not limited to broadcast or ticket revenue.
How the 85% and 115% thresholds work
The Green Threshold is 85%. A club at or below it complies with the ordinary SCR limit. The Red Threshold is a separate enforcement line, initially 30 percentage points higher: 115%. The allowance that creates this gap is available initially to all clubs, including promoted clubs, but it is not a permanent right to spend at 115%. A club’s later Red Threshold depends on its allowance and compliance history. Premier League: SCR thresholds and enforcement
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The space between 85% and the applicable Red Threshold matters. Going above 85% does not by itself trigger a sporting sanction. A club in that band may owe a levy after the relevant checks, subject to the levy-offset mechanism. Crossing the Red Threshold can trigger a points deduction.
When clubs are monitored
Before each season, clubs and the League agree estimated revenue figures for the SCR calculation. The main compliance test follows the winter transfer window, on 1 March; the League also monitors clubs in October. For clubs above 85%, confirmation checks using actual figures can follow in June and October.
The in-season test uses the revenue inputs agreed before the season. A drop in revenue during the campaign does not change that test immediately, although actual revenue can matter in the post-season confirmation. That distinction makes the calendar and the difference between estimates and actual figures important to how a club’s position is assessed.
What happens when a club breaches a threshold
Above 85%, but below the Red Threshold
After the applicable checks, a club may face a financial levy, subject to the offset mechanism. This band does not, on its own, mean a points deduction.
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Above the Red Threshold
The Premier League says a points deduction starts at six points and increases by one point for each £6.5 million spent above the Red Threshold. The sanction therefore depends on the amount of overspending relative to that club’s current Red Threshold, not simply on whether it exceeds 85%.
How the allowance changes
A confirmed breach of the 85% Green Threshold reduces the club’s allowance for the next season by the amount of the breach. If a compliant club previously had its allowance reduced, it can rebuild the allowance by 10% in a subsequent season, up to a maximum of 30%. Unused allowance does not automatically carry forward.
How SCR differs from PSR
The Premier League says PSR stopped applying from the start of 2026/27, when SCR took over. The League can still pursue possible PSR breaches relating to earlier seasons. Premier League: SCR and the end of PSR
| Rule | What it measures | Basis and period | Monitoring and consequences |
|---|---|---|---|
| Premier League SCR | Specified on-pitch costs, including player and head-coach wages, agents’ fees, transfer amortisation and impairment. | Share of football-related revenue plus net profit or loss from player sales; seasonal framework from 2026/27. | Pre-agreed revenue inputs, an in-season test and follow-up checks for clubs above 85%. A levy may apply above 85%; exceeding the current Red Threshold can mean a points deduction. |
| Former Premier League PSR | Overall club profit or loss. | Rolling three-year period. | PSR no longer applies from 2026/27, but the League retains powers to pursue possible breaches from earlier seasons. |
| UEFA squad-cost rule | Employee-benefit costs, transfer amortisation, loan income and expenses, and agent, intermediary and connected-party costs. | UEFA’s adjusted operating revenue and specified transfer-related items; reporting periods differ from the Premier League’s seasonal framework. | A maximum ratio of 70% under UEFA’s 2026 rule. The Premier League’s SCR levy and points framework is separate. |
SCR is not the old loss limit rewritten as a percentage. It focuses on specified on-pitch costs against a revenue-based measure, is assessed within the season, and has its own allowance and enforcement structure.
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Why Premier League clubs also need to consider UEFA’s rule
UEFA’s 2026 squad-cost rule sets a 70% maximum for a licensee’s ratio, below the Premier League’s domestic 85% Green Threshold. A Premier League club competing in UEFA competitions must meet both frameworks, so the lower UEFA limit is the relevant additional constraint for its UEFA compliance. The calculations are not identical: UEFA Article 93 specifies its own costs, revenue adjustments and reporting periods. UEFA regulations, Article 93
What the companion SSR rules cover
The Premier League approved Sustainability and Systemic Resilience (SSR) rules alongside SCR. Their three named tests address different time horizons of financial health:
- Working capital: short-term financial resilience.
- Liquidity: medium-term financial resilience.
- Positive equity: long-term financial position.
The League presents SCR as a means to support opportunity and competitive balance while giving clubs more freedom to invest off the pitch. Those are the League’s stated aims, not demonstrated outcomes established by the rule announcement. The League also says clubs shadow-tested the proposed system before adoption.
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