For the coming football season, 2026/2027, it’s all change again for how football clubs are assessed for keeping their financial houses in order. In recent seasons it’s all been about Profit and Sustainability Rules (PSR) broadly: keep your losses below £105 million across a three-year rolling period in the Premier League, and below £39 million across a rolling three-year period for the English Football League (EFL).
But now it’s Squad Cost Ratio (SCR) that clubs will be judged against, which also comes in at the same time a new football regulator gets to bear its teeth in managing the game, and ensuring clubs act on a sustainable basis, with regular future profitability and cashflow forecasts being shared with the regulator to demonstrate sound safeguarding of clubs.
The aim of the governing bodies is for real-time reviews to take place rather than later down the line, when taking remedial action might be too late; the introduction of SCR being about sustainability and keeping the pyramid alive. For the EFL, this could be a real challenge with only three clubs in season 2024/2025 actually recording a profit.
Reviews will take place throughout a season, in March (well after the winter transfer window has closed) and October; however, if issues arise, a further review will also take place in June.
The emphasis going forward, for now – until inevitably yet another method of assessing clubs' finances is created – is for clubs to spend up to, but no more than, 85% of their annual income on relevant costs (the Green threshold). For teams playing in European competition, the UEFA threshold is stricter, with the bar set at 70%, and that is likely to pose challenges for the nine Premier League clubs taking part this season. This, in theory, allows all other clubs a little more wiggle room in spending on player costs and competing to finish in those European places.
Those relevant costs cover players' and head coaches' wage costs; amortisation of player transfer fees (or impairment of those fees); and more controversially, agent payments, now a targeted cost as opposed to a general overhead. Relevant income continues to be that earned from broadcasting, matchday, commercial, and retail. Clearly, those clubs that can use their grounds all year round for various events, as opposed to only football matches every fortnight across nine months, will hold a distinct advantage in maximising their revenue and increasing the level of costs they can spend.
Conversely, given SCR is drawn quite narrowly in terms of relevant income and costs, the financial brakes are released on what clubs are allowed to spend on stadium and infrastructure costs, and the matchday fan experience, although that is not to say club liquidity can simply be disregarded.
The new SCR rules allow clubs to go over that 85% bar by a further 30% (the Red Threshold), but this would see a club require a further review in June. If spending still sits between the 85% and 115% thresholds, following that review, the club could face a fine but not a sporting sanction in the form of a points deduction – that said, such fines might be seen over the long term as another form of operating cost which a club learns to live with, rather than acting as a deterrent. Any club exceeding the Red Threshold, however, would see a sporting sanction.
This sporting sanction would be a fixed six-point deduction, with an extra point deducted for every £6.5 million spent over the Red Threshold and, importantly, will be applied in the season the breach occurs. Where the 85% is breached, the 30% allowance would be reduced by the size of the breach, the following season, until such time as that 30% allowance was exhausted. There is no reward for going under the Green Threshold in future seasons, but consistent compliance will enable the 30% allowance (up to the Red Threshold) to eventually be restored.
Such changes in the landscape of football governance will attract both the Football Association and Regulator’s focus. In circumstances where the thresholds are in danger of being breached, it may be of benefit to retain a forensic accountant to assist in managing the financial position. At Crowe UK, we regularly deal with the financial impact from a range of business scenarios, and the future changes facing football clubs are an area where we can lend our support, both as forensic accountants and, where necessary, in assisting with business turnarounds through our insolvency and restructuring team. With greater scrutiny and real-time financial oversight on the horizon, understanding the impact of these changes has never been more important.
If you would like to discuss how these developments could affect your club, please get in touch with your usual Crowe UK contact.
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