Premier League clubs have voted to introduce major financial reforms that will ban teams from selling assets such as hotels or women’s teams to entities within the same ownership structure, closing a controversial loophole previously used to comply with spending regulations.

The decision comes as clubs approved a new Squad Cost Ratio (SCR) system—an updated form of Financial Fair Play—to replace the current Profit and Sustainability Rules (PSR) starting from the 2026–27 season.

The vote passed by the narrowest possible margin, with 14 clubs voting in favour and six against, the minimum required for a rule change.

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What the New Rules Mean for Premier League Clubs

Under the new framework, Premier League sides will be required to limit overall squad spending—including player wages, manager salaries, transfer fees and agents’ fees—to 85% of their football-related revenue.

However, clubs competing in UEFA tournaments will need to comply with Europe’s stricter 70% limit, aligning domestic rules with UEFA’s evolving approach to cost control.

Importantly, the SCR model will stop clubs from generating artificial income by selling physical assets to sister companies, a tactic that previously allowed teams to remain inside the PSR limits.

Recent Examples of the Loophole

• In 2024, Chelsea sold two hotels adjacent to Stamford Bridge to a related company for £76.5m.
• Everton sold their women’s team to their parent company earlier this year.
• Aston Villa were also reported to have lined up a similar move.

These deals will no longer be allowed under the revised structure, which will assess compliance solely on “total earnings from football operations.”

A Premier League statement said the updated rules aim to create a fairer, more transparent environment that mirrors the direction of UEFA’s spending model.

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How the Squad Cost Ratio Works

The SCR system will operate with two spending thresholds:

1. Green Threshold (85%)

Spending above this limit triggers fines. These penalties are less severe than UEFA’s but are designed to discourage overspending.

2. Red Threshold (85% + 30% rolling allowance = 115%)

Going beyond this combined limit results in:

• An automatic six-point deduction
• Plus one additional point deducted for every £6.5m overspent

The 30% rolling allowance is a key feature that gives clubs flexibility over multiple seasons. It allows spending “ahead of revenue” to support growth or respond to sporting needs.

Each club’s status is assessed annually in March, with immediate sporting sanctions possible if limits are breached.

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Why Some Clubs Opposed the New Rules

Smaller Premier League teams with lower revenues—such as Bournemouth, Brentford, Brighton, Crystal Palace, Fulham and Leeds—voted against the changes.

Their concern is simple:
Linking spending to revenue naturally benefits big clubs with huge commercial income, while limiting the competitiveness of those with smaller stadiums and leaner financial profiles.

Bournemouth, for example, have a stadium capacity barely above 11,000 but still need to pay Premier League-level wages. Under SCR, their spending flexibility becomes more restricted.

On the other hand, clubs like Chelsea and Aston Villa—who struggled under PSR due to investment ambitions—may still feel constrained when participating in UEFA competitions, which enforce the stricter 70% threshold.

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Anchoring Proposal Rejected by Clubs

Alongside SCR and sustainability rules, clubs also voted on the more radical “anchoring” model, which would have capped each club’s total spending at five times the broadcast income of the Premier League’s bottom-placed team.

With the last-placed side expected to earn around £120m, this would have created a spending cap of roughly £600m.

But the proposal received only seven votes in favour, with 12 against and one abstention.

Big clubs were divided:

• Manchester City and Manchester United opposed anchoring, fearing future growth might push them against the cap.
• Arsenal and Liverpool supported it, favouring stronger spending controls.

The PFA had also warned that anchoring effectively introduced a form of wage cap—something that could lead to legal action.

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Sustainability Rules Passed Unanimously

Unlike the other measures, the new sustainability regulations passed without opposition. These require clubs to present long-term financial projections and demonstrate they can sustainably fund operations.

This aligns with the expectations of the Independent Football Regulator (IFR), which is set to begin work later this season.

Clubs will need to show:

• Responsible debt management
• Evidence of financial controls
• Plans for returning to compliance if rules are breached

Possible punishments include spending restrictions rather than immediate points deductions.

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What This Means for the Future of the Premier League

The shift to SCR reflects a broader move toward more consistent and transparent financial governance across European football.

The new rules:

• Bring the Premier League closer to UEFA’s model
• Eliminate inflated revenue through internal asset sales
• Create clearer, quicker mid-season sanctions
• Allow some flexibility for clubs to invest in growth

But the consequences will vary:

• Big clubs with strong commercial income will thrive
• Smaller clubs will face tighter margins
• European clubs must juggle two spending limits

The Premier League now enters a new era of financial regulation—one that aims to balance competitiveness, sustainability and fairness while preventing clubs from using creative accounting to sidestep restrictions.