Premier League financial fair play rules reform explained

In one of the most significant changes to its financial regulations in over a decade, the Premier League (the EPL), from the 2026/27 season, will replace its existing financial fair play rules, known as Profitability and Sustainability Rules (PSR) with a new framework built around two new sets of complementary rules known as the Squad Cost Ratio (SCR) and Sustainability and Systemic Resilience (SSR).

These changes, which were approved by Premier League clubs in November 2025, represent a more immediate, on field revenue‑linked assessment of a club’s financial position, moving away from assessing cumulative losses over longer periods, with the aim of increasing competitiveness and encouraging greater financial discipline and inward investment.

The existing Premier League financial rules – PSR

Under the existing PSR regime, clubs' profit and loss position (which includes off-pitch spending) is assessed over a rolling three‑year period, with maximum permitted losses of £105 million over each three-year period.

The new Premier Leagues financial rules – SCR and SSR

Squad cost ratio rules

The new SCR rules will require clubs to ensure that their on-pitch spending (including player and coach wages, amortised transfer fees and agent costs) does not exceed 85% of their football‑related revenue and net profit or loss on player sales each season. The new SCR regime is closely linked to the existing rules applicable to clubs competing in UEFA competitions, which are subject to a 70% squad cost ratio limit.

At the beginning of each season, clubs will be required to project if they will fall within the squad cost ratio limit based on financial information from previous seasons. Clubs will then be subject to a compliance test each 1 March.

If, following the compliance test, a club is projected to exceed the 85% limit, it will be subject to a confirmation test (based on actual financial information rather than projections) at the end of the relevant season. If a club is still found to be above the 85% threshold it will be required to pay a levy to the EPL, or, if a club is found to be above a specified higher threshold (which will be set at 115% initially and adjusted downwards in the event of non-compliance with the new rules going forwards), the EPL will impose a sporting sanction, such as a points deduction.

In addition to the above, clubs competing in UEFA competitions will remain subject to UEFA's squad cost ratio rules, which set a lower 70% threshold.

Sustainability and systemic resilience rules

Alongside SCR, the EPL is implementing SSR, which focuses on clubs' financial integrity over the short, medium, and long term with the aim of promoting financial sustainability and allowing fans, stakeholders and investors to understand the financial position of clubs in a more transparent and accessible manner. To do this, the SSR rules will introduce three new tests:

1. a short-term working capital test, requiring clubs to show that they have a minimum of £12.5 million in combined working capital and projected cash balance each month;
2. a liquidity test, assessed over two-year periods requiring clubs to demonstrate that their liquidity headroom remains at zero or above after undergoing a financial stress assessment; and
3. a positive equity test, requiring clubs to evidence that their 'positive equity ratio' (calculated by dividing liabilities by adjusted assets) does not exceed a specified threshold each season, with the threshold to be set at 90% for the 2026/27 season, 85% for the 2027/28 season and 80% for the 2028/29 season onwards.

What do these changes mean for funders and investors?

The EPL's new financial regime is expected to be beneficial for clubs in seeking to attract funding and inward investment as debt and equity providers will be encouraged by the increased fiscal transparency and regulatory clarity the new regime provides, as well as in-season monitoring, greater off-pitch investment freedom (including related to expenditure on stadia and training facilities) and alignment with UEFA's financial sustainability rules. Likewise, clubs will need to ensure they have increased financial discipline and compliance measures in place, which is likely to be viewed favourable by both debt funders and equity investors.

Many thanks to trainee Alexander Moir for their help in writing this article.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2026