Premier League Introduces New Financial Fair Play Regulations

The Premier League will implement a new financial fair play framework starting next season, centered on squad costs.

During a meeting in London, clubs voted on three potential methods to replace the existing profit and sustainability regulations. The Squad Cost Ratio (SCR) received 14 votes in favor and six against, meeting the minimum requirement for enacting a rule change.

Under the new regulations, clubs will be limited to spending 85% of their revenue on squad costs, while teams competing in European tournaments will be required to comply with UEFA’s stricter limit of 70%.

Additionally, rules regarding sustainability, which outline a club’s financial spending strategies over the medium and long term, were unanimously approved. Conversely, the proposal for ‘anchoring’, which aimed to cap spending based on the earnings of the lowest-ranking club, failed to achieve the necessary support, with twelve votes against and only seven in favor, along with one abstention.

A statement from the Premier League highlighted that the new SCR regulations are designed to create equal opportunities for all clubs to pursue greater success while aligning the league’s financial framework more closely with UEFA’s existing SCR standards.

Key features of the new system include transparent in-season monitoring, sanctions, protection against sporting underperformance, the ability to spend in advance of revenues, enhanced investment capabilities off the pitch, and a reduction in complexity by focusing exclusively on football-related costs.

The Sustainability and Systemic Resilience rules will evaluate a club’s short, medium, and long-term financial health through three specific tests: the Working Capital Test, Liquidity Test, and Positive Equity Test.

Further updates will follow.