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Premier League clubs will no longer be permitted to sell assets such as hotels and women’s teams to related companies in an effort to inflate their spending power on squad-related costs, effective from next season.
In a significant shift, clubs voted by a majority of 14 to six on Friday to introduce new Squad Cost Ratio (SCR) rules.
These regulations will supersede the existing profitability and sustainability rules (PSR) from the upcoming season.
Under the previous PSR framework, clubs were able to include revenue generated from the sale of fixed assets to associated companies within their overall financial calculations.
This loophole was notably utilised by Chelsea, who in June 2023 sold two hotels to a sister company for just over £70 million, and their women’s team to parent company Blueco for nearly £200 million, both transactions bolstering the club’s PSR balance sheet.
Aston Villa similarly sold their women’s team to their parent company earlier this year in a reported £55 million deal.
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Aston Villa sold their women’s team to their parent company earlier this year (Getty Images)
While the sale of fixed assets will still be permitted, they will no longer be considered when determining a club’s permissible spending on squad-related costs. The new SCR rules will cap clubs’ expenditure on on-pitch costs at 85 per cent of their football revenue.
A proposed hard spending cap, known as top-to-bottom anchoring (TBA), was, however, rejected by clubs.
This mechanism would have limited any club’s squad spending to five times the central income received by the league’s lowest-ranked team. Twelve of the 20 top-flight teams reportedly voted against TBA, with only seven in favour.
Both Manchester clubs and Aston Villa were known opponents of the measure, which the Professional Footballers’ Association (PFA) had criticised as effectively a salary cap, threatening legal action if it passed.
Some sources expressed surprise that SCR was approved without the anchoring mechanism, suggesting this outcome could further entrench the advantage of larger clubs, likening smaller clubs’ support to “turkeys voting for Christmas”.
The Premier League’s SCR model, which is similar to UEFA’s 70 per cent revenue limit for clubs in its competitions, includes a multi-year allowance.
Clubs can spend up to 30 per cent above the 85 per cent limit, incurring a levy – effectively a luxury tax. Exceeding this allowance will result in sporting sanctions, such as points deductions.
The SCR rules are set to come into force from the start of the 2026-27 season.
Additionally, clubs have voted to implement Sustainability and Systemic Resilience (SSR) rules. These will assess a club’s financial health across short, medium, and long-term horizons through three key tests: Working Capital, Liquidity, and Positive Equity.
This move coincides with the impending independent regulation of the top five tiers of English football.