New financial rules will involve a squad cost ratio model monitored in real time
The Premier League is preparing to introduce new financial rules that could take effect from next season, with automatic points deductions to be imposed on clubs that overspend.
According to the draft proposals discussed at a Premier League shareholders’ meeting this week, teams exceeding the planned squad cost ratio (SCR) cap by 30 per cent would face a minimum six-point deduction, as reported by The Guardian.
Further breaches would be punished through extra points deducted on a sliding scale, while minor overspending would result in fines.
The SCR system is designed to replace the league’s current profitability and sustainability rules (PSR), which allow clubs to lose up to £105m over a three-year period.
Instead, club spending on transfers, wages and agent fees will be capped at 85 per cent of club revenue, falling to 70 per cent over the next three years to align with Uefa rules already in place for clubs in European competition.
League executives have told clubs that no fines will be applied for minor overspending in the first year of SCR to allow time to adapt, but points deductions will be enforced for significant breaches.
Unlike PSR, which is enforced retrospectively, SCR would be monitored in real time during the season. The league believes this approach will provide greater clarity and avoid the disputes that have surrounded recent cases.
Everton, for example, were punished with a six-point deduction in November 2023 for breaches relating to the 2021-22 season. By the time the penalty was imposed, two campaigns had passed.
Meanwhile, Nottingham Forest were given a four-point deduction in March 2024 despite overspending more than Everton, and Manchester City’s 115 charges are yet to be decided, despite the alleged rule breaches starting in 2009 and ending in 2018.
The plans will be discussed again at November’s shareholders’ meeting, when a formal vote is expected. A decision at that stage would give clubs clarity ahead of the January transfer window.
