Premier League Closes Loophole in New Financial Fair Play Rules

The Premier League has introduced a major rule change that will prohibit clubs from selling assets like hotels or women’s teams to affiliated entities as a way to meet Financial Fair Play (FFP) targets, starting from the 2026–27 season.

The reform came as part of a vote among all 20 top-flight clubs on Friday, where a new Squad Cost Ratio (SCR) model was approved by the minimum threshold of 14 clubs.

This marks the end of the Profit and Sustainability Rules (PSR) era and significantly tightens loopholes that allowed clubs to maneuver around financial restrictions by transferring non-football assets to sister companies.

No More “Selling to Yourself”

The loophole-closing measure directly targets cases like:

• Chelsea’s sale of two hotels to a sister company.

• Everton’s disposal of their women’s team to the parent company.

• Aston Villa’s reported similar plan under PSR pressure.

Under the new framework, only football operations revenue will count in spending calculations — meaning asset sales no longer cushion club finances.

What is Squad Cost Ratio (SCR)?

Squad Cost Ratio (SCR) will replace the PSR model, limiting club spending on:

• Player and manager wages

• Transfer fees

• Agents’ fees

From 2026–27, clubs must spend no more than 85% of total revenue on their squad — or 70% if playing in UEFA competitions.

The “Green Threshold” is 85%. Going above this incurs financial penalties.

The “Red Threshold” is 115% (85% + 30% multi-year allowance). Exceeding this results in a six-point deduction, with one point added per every £6.5m overspend.

Why SCR Was Chosen Over Anchoring

Other options like “anchoring” — which would cap spending at 5× the TV revenue of the bottom-placed club — were rejected, with only 7 votes in favor and 12 against.

Top clubs like Man City and Man United opposed it, fearing it would eventually limit their ability to compete with European giants like Real Madrid. Meanwhile, Arsenal and Liverpool voted in support.

Who’s Most Affected?

Clubs with smaller stadiums and less revenue— such as Bournemouth, Fulham, Brentford, and Brighton — voted against SCR. These teams now face challenges aligning Premier League wage expectations with lower commercial income.

However, the 30% rolling buffer provides time to adapt, especially for clubs making shrewd transfer decisions.

Clubs like Newcastle and Aston Villa, previously limited by PSR despite wealthy ownership, now benefit more—although UEFA limits still apply due to their European competition involvement.

Sustainability Rules Passed Unanimously

In contrast, sustainability regulations passed without opposition. These will:

• Require long-term financial planning

• Align with upcoming rules from the Independent Football Regulator (IFR)

• Focus on corrective actions like debt rebalancing or spending caps for breaches

Premier League’s Official Statement

“The new SCR rules are intended to promote opportunity for all clubs to aspire to greater success and bring the league’s financial system close to UEFA’s existing SCR rules,”

– Premier League statement

It adds that the system includes in-season monitoring, transparency, and allowances for variance or sporting underperformance—aiming to reduce financial complexity and promote sustainability.