The Premier League’s glass ceiling: How financial rules limit many clubs’ ambitions

Friday evening brings the return of the Premier League and, with it, nine more months of twists and turns, quality and controversy, and, for fans of the 20 clubs involved, more ups and downs than a FIFA president’s private jet during a World Cup.

Eyes will be focused on the pitch but plenty of attention will be spared for matters off it too, and not only because there’s a summer transfer window with a week and a half left to run. Football’s richest, most-watched league will resume proceedings with its clubs subject to new financial rules, ones set to shape events in the 2026-27 season — and well beyond.

Profit and sustainability rules (PSR), first introduced in 2013, are out; squad cost ratio (SCR) rules are in. So too, to less fanfare, are sustainability and systemic resilience (SSR) rules.

At a vote by Premier League clubs in November 2025, the shift to an SCR regime was passed — barely. Fourteen clubs, the minimum needed to approve rule changes, voted in favour: Bournemouth, Brighton & Hove Albion, Brentford, Crystal Palace, Fulham and Leeds United were the dissenting six.

That vote had been preceded by a separate one on top-to-bottom anchoring, or TBA, which looked to impose a maximum, league-wide limit on squad costs, albeit at a level hardly any clubs would have neared anyway given the size of their revenues.

Regardless, that was voted down 12 to seven, with one abstention. The much less contentious SSR was passed unanimously.

The Athletic has previously detailed the mechanisms of the new rules in some depth but, to refresh, SCR is a financial rule first introduced by UEFA in June 2022, and first operated in the 2023-24 season. The rule is aptly named: it directly targets clubs’ spending on players (and head coaches), spanning wages, transfer fees and agent costs. The Championship, the division directly below the Premier League, has also recently introduced SCR.

Helpfully, none of those three SCR regimes are the same.

UEFA’s runs annually, while the English versions are tethered to football seasons: the Championship assesses player trading over a single season on a cash-flow basis; the Premier League and UEFA incorporate a three-year average on an accounting basis. Other differences abound, including how clubs treat impairments (write-downs) of player values and what figure is included as revenue in the respective calculations. It is little wonder clubs are devoting ever more resources to regulatory compliance.

At their core, the different SCR rules do have one through-line: they limit club spending on the above costs to a set percentage of relevant income, which in the Premier League’s case amounts to annual turnover plus an average of their player profits over the past three seasons.

The Premier League has set its limit at 85 per cent, 15 per cent higher than the level imposed by UEFA. That was a decision taken, the league said, to “promote opportunity for all of (our) clubs to aspire to greater success, while protecting the competitive balance and compelling nature of the league”.

There are further aspects for clubs to consider.

That 85 per cent limit is termed a club’s ‘Green Threshold’, and is determined at the start of a given season based on estimated football revenues. Exceeding that level by 30 per cent or less will incur a fine, or levy, though not until the 2027-28 season, as no levies will be applied for 2026-27 breaches. Additionally, if clubs have come in under the 85 per cent limit previously before exceeding it, they have the option to reduce the levy by the combined amount they came in under 85 per cent over the past two seasons, up to a maximum reduction of 10 per cent.

That 30 per cent is relevant because it takes clubs to 115 per cent, or what will start as each side’s ‘Red Threshold’. That’s the point at which sporting sanctions will apply: a fixed six-point deduction for any breach, plus a further point taken off for every £6.5million by which a club exceeds its Red Threshold. The latter is rounded up, meaning, for example, a £7m Red Threshold breach would incur an eight-point deduction (six points fixed, plus two for the size of the breach).

Between those two thresholds is what the Premier League has termed a Feedback Loop.

Where clubs exceed their Green Threshold but not the Red, the latter will be reduced by the size of the excess. Repeatedly exceeding the Green Threshold will see a club’s Red Threshold move closer to 85 per cent. On the other hand, clubs who exceed then improve can build their Red Threshold back up, though only to a maximum of 115 per cent. The Premier League reckons the Feedback Loop “allows for clubs to invest ahead of revenue and (for) reasonable variance or genuine sporting underperformance throughout the season”.

SSR has played second fiddle to SCR, and its unanimous passing indicated the lack of concern surrounding it. Yet the rules are no less important for that and, theoretically, should encourage more careful fiscal management.

SSR comprises three assessments: a working capital test; a liquidity test; and a positive equity test. All are geared toward shifting club mindsets away from the short-term.

The working capital test requires club show evidence of continued monthly access to at least £12.5m; the liquidity test requires that a club’s liquid assets less its liquid liabilities less £85m be at or above zero (in effect, to hedge against the potential impact of relegation); the positive equity test requires that a club’s liabilities must not exceed a certain percentage of assets, albeit the latter includes an important adjustment to measure the playing squad at market rather than book value. The maximum allowable liability quotient tapers from 90 per cent this season to 80 per cent from 2028-29 onwards.

Wading through the rules is a challenge in itself, but how they’ll impact proceedings on the pitch is of even greater importance.

Oblique as they may seem on paper, spending rules have a real and obvious impact on who actually wins trophies. In 18 of the 33 Premier League seasons to the end of 2024-25, the club with the largest wage bill won the division (including six years out of the last eight); the second-highest payer has won it nine times, the third-highest four times and the fourth-highest on one occasion. Only once, with Leicester City’s title in 2016, has a club outside of the top four payers won England’s top tier since 1992.

SCR passed a vote, so it stands to reason there’s plenty of support for it. Yet enthusiasm for the new regulatory regime varies, and The Athletic has spoken to multiple sources at clubs across the league for this piece, all of whom offer a unique take on the rules they now need to operate under.

Leicester City are the only team outside the top-four wage payers to have won the title in the Premier League era (Michael Regan/Getty Images)

Operate is a useful word here, as several sources spoke of the increased burden another new set of rules will impose on clubs in their day-to-day work. One Premier League executive, speaking anonymously in order to do so candidly, told The Athletic: “None of this is particularly easy from an operational point of view, and it’s just increasing the cost of running a football club.”

Another person in a similar role, also speaking candidly in exchange for anonymity, described the new rules as “a f***ing nightmare. They are convoluted, overly complicated ratios instead of real things”.

Notably, the clubs who employ each of those executives both voted in favour of SCR.

That throws up a juxtaposition whereby clubs have to balance competing objectives. On one hand, losses are out of control in the Premier League even as the division reaps far more in revenue than anywhere else. As owners are increasingly called upon to fund deficits, anything which tempers the biggest cost categories — wages and transfer fees — is unsurprisingly welcome. Football club valuations lag American sports franchises because of a lack of both a revenue floor (as failing to qualify for Europe, or even relegation, can occur) and a cost ceiling. SCR, at least in some way, moves the sport toward the latter.

The Premier League has detailed seven “SCR principles” to undergird the new rules, with competitive balance and promoting opportunities at the top of the list. Third in line is “improving clubs’ financial sustainability”, though it’s difficult to see how much the new rules will shift the needle in the right direction on that front. 

The Premier League executive was dubious on that, saying: “If your real worry is about sustainability, let clubs put money in escrow.”

La Liga boss Javier Tebas is even more sceptical. Speaking at the Financial Times’ Business of Football Summit in London in February, he was far from impressed with the rules introduced by his English counterparts.

Rather than improving football’s finances, Tebas warned the Premier League’s rule shift could instead fuel even more inflation within the game. He also scoffed at the 85 per cent limit as anything that could amount to promoting sustainability, citing the impossibility of running a club with the remaining 15 per cent of income. He had a point: in 2024-25, average operating costs at Premier League clubs, so not even including the non-playing staff which aren’t covered in SCR, were 27 per cent of revenues.

On the other hand, clubs need to be able to compete. “Competitive balance” was specifically referenced by the Premier League when explaining the higher SCR limit allowed domestically, and the league has long been keen to avoid the sort of revenue disparities seen elsewhere in Europe.

There is growing reason for concern on that front.

It’s already well known that six clubs earn much more than the rest in England, and the size of the gulf means the introduction of a rule which now tethers spending to revenues for everyone, not just those clubs competing in Europe, will likely make it harder for less wealthy clubs to catch up. Several sources told The Athletic that the new rules will worsen, rather than improve, competitive balance in the division.

As an experiment, consider the SCR limits for Premier League clubs if the ‘Big Six’ of Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur are limited to 70 per cent, while the rest can spend 85 per cent.

Even in this scenario, using 2024-25 revenues as a basis, those six clubs could outspend the rest, often significantly so. Note this was in a season when Aston Villa were in the Champions League while both Tottenham and Chelsea were not, yet those two clubs’ non-broadcast revenues are so much higher that they could still outspend all but their richest peers. Half the division’s spending limit would have been pegged at around half the level of the lowest of the Big Six.

One club executive put it to The Athletic that: “If you have high club-controlled revenues and you have high non-player costs, this is good for you.” Where PSR assessed overall profitability and high operational costs hindered squad spending, now, provided owners are willing to foot losses, clubs with big matchday and commercial revenues need not worry as much about the bottom line.

That is a reality already unfolding in north London, where Tottenham received a further £100m in shareholder funding in June and have embarked on the largest transfer outlay in their history, even as they hardly skimped previously.

Spurs’ wage bill has long trailed their ‘Big Six’ counterparts but that is on the rise too, and the removal of operating costs which topped £200m in 2024-25 and interest charges consistently above £40m annually — two types of expenditure included in PSR calculations but not in SCR — alongside a shift away from a sustainable model has allowed them to markedly increase spending on the squad.

The signing of Sandro Tonali has been part of a spending spree at Tottenham this summer (Justin Setterfield/Getty Images)

Spurs will still need to be cognisant of their bottom line — UEFA has retained a tighter version of PSR with its ‘football earnings’ rule — though that will be aided by a summer of improved player sales. That rule, like PSR, recognises player profits in full in the year they are achieved, rather than on the averaged basis under SCR.

The Premier League compares favourably to most peers on a competitive balance front; it is one of the reasons the league is so popular. Yet the monopolisation that plagues other top tiers, while not as stark in England, is creeping in.

In 34 years of the Premier League, seven clubs have won it, though two of those — Blackburn Rovers and Leicester — are one-time winners. In the 34 years prior to the Premier League’s founding in 1992, 13 teams won England’s First Division.

What’s more, evidence suggests dominance at the top is increasing. The average points earned by England’s champions has surged this century; correspondingly, those at the bottom of the table are picking up ever fewer victories.

That is a consequence of several things, though financial rules certainly play their part. And a shift to rules which favour the highest-earners is unlikely to improve matters. The best players across the division are already moving to the richest clubs at record levels. Should Carlos Baleba and Ezri Konsa complete their respective moves to Manchester United and Arsenal, 25 first-team players will have made such a move inside 15 months.

That is potentially ruinous to the vibrancy of competition the Premier League prides itself on, and the introduction of a financial rule tethered to revenue will not improve such matters.

Is SCR more restrictive to the less-well-off than PSR was?

Some certainly think so. In the wake of last November’s vote, Crystal Palace chairman Steve Parish was damning about the changes. And prescient. “I predict that the people who moaned about PSR… you wait until you hear the moaning against this,” Parish told The Athletic. “You won’t be able to invest the money up front that you used to be able to.

“With these new rules, selling is going to become a massive thing. Football should be worried that these clubs — Brentford, Brighton, Bournemouth, Fulham and Leeds, probably the most aspirational clubs in the country — think something isn’t good for football.”

Mapping rules onto eras when they didn’t exist isn’t the most robust of exercises, as clubs work according to the regulatory environment of the day. Still, running the new rules against historical data can help identify whether or not clubs will be more restrained now than they were under PSR. If more of the less wealthy clubs would have breached SCR limits than the number that breached PSR, it’s an indication the new rules are more constraining than the old.

Even while acknowledging SCR calculations require estimates around player and head coach wages, as clubs rarely disclose anything other than the total wage bill, The Athletic finds that several more clubs would have breached an 85 per cent SCR limit than breached PSR and, bar two instances for Chelsea (2022-23 and 2024-25), none of those theoretical breaches were at ‘Big Six’ clubs.

Across the 10 seasons PSR was in operation from 2015-16 onwards, our calculations turned up 40 separate instances of SCR excesses. Fifteen of those came during the 2019-20 and 2020-21 seasons, when financial rules were relaxed because of the Covid-19 pandemic, but even excluding those still leaves 25 breaches of the 85 per cent limit, far more than the number of actual PSR breaches in the same period. Notably, 20 of our hypothetical breaches occurred after the pandemic, reflecting surging player wages and transfer fees.

Interestingly, none of our 25 calculated ‘breaches’ outside of the pandemic years saw a club exceed the 115 per cent threshold, which would now incur a sporting sanction. The closest anyone got under our experiment was Leicester in 2022-23 at 111 per cent, which stands to reason given they ran into significant PSR difficulties then too, even as they won an appeal on the basis of poorly structured rules.

That reflects the unlikelihood of clubs ever incurring a sporting sanction under SCR, something which one of those executives highlighted as a positive. “Nobody will ever get a sporting sanction anymore. That was a massive problem. Taking away that uncertainty is a good thing.”

Further reducing the likelihood of a severe breach is the forward-looking and real-time nature of SCR.

Importantly, and largely unnoticed to date, the football revenues estimate from which a club’s 85 per cent (or otherwise) Green Threshold is derived includes a hedge against poorer sporting performance.

As the difference in Premier League finishing position amounts to more and more money — six teams entered last season’s final day with a range of six possible finishing positions, a range of possibilities that equated to an £18.8m difference in prize money — the rules allow clubs to include the previous season’s merit money in their estimated revenues for the upcoming one, for the purposes of calculating their SCR cost limit. If a club then finishes further down the table and thus receives less revenue, they won’t be punished, provided they don’t exceed the limit set at the season’s start.

Naturally, the following season won’t see as generous a limit afforded, but both that and the up-to-date monitoring of SCR should lessen the chances of a serious breach and, if one does occur, ensure punishments are meted out quickly.

One of the key critiques of PSR was its retrospective nature, and several sources and clubs have praised the shift to real-time under SCR. Sunderland, who voted in favour of the rules, praised that element in a supporters’ trust meeting earlier this year, and also applauded how SCR “encourages investment off the pitch, in facilities and infrastructure”.

The limited risk of sporting sanction might encourage some to take the hit on a fine, but that is a tactic which both narrows in scope (as a club’s Red Threshold reduces each time a club exceeds their Green Threshold) and, perversely, improves the position of competitors, as collected SCR levies are then shared among compliant clubs. Per Parish: “Perhaps the most egregious thing is that even if you want to invest, you have to pay a fine to other clubs, and they will go to the big clubs”.

Crystal Palace chairman Steve Parish thinks the rules impede aspirational clubs (Lewis Storey/Getty Images)

Luxury taxes are of debatable worth in sports anyway; in a division where the richest can already spend far more than the rest, imbuing them with even greater resources is antithetical to competitive balance.

To serve that particular end, the Premier League has talked up the prospect of the rest of the division having a higher spending limit, but that quickly runs into trouble if a club succeeds in qualifying for Europe and needs to get its ratio down quickly. It is especially a problem in UEFA’s less remunerated competitions, in which the uplift in prize money is absorbed by the reduction in spending ability.

In the case of Brighton, who finished eighth last season and will now compete in the Conference League, the increase in revenues from playing in Europe (if they successfully make it to the league phase) is likely subsumed by the 15 per cent reduction in spending limit (to comply with UEFA’s SCR rules).

Finishing eighth instead of ninth generated an extra £3.76m in Premier League prize money, and there’ll be uplifts in matchday and probably commercial income from playing on the continental stage. If Brighton were to match Chelsea’s haul from winning the competition in 2025, that would amount to roughly £18m in prize money. Add on (a possibly generous) £10m increase in matchday and commercial revenues, alongside the extra Premier League merit money, and the total revenue uplift translates to £31.8m, or £22.2m extra spending capacity under a 70 per cent SCR limit.

Yet a reasonable minimum estimate of Brighton’s revenues had they finished ninth last season lands at around £230m, and 15 per cent of that, being the difference between UEFA and Premier League SCR limits, totals £34m — or £12m more than the uplift in spending capacity, in even a generous hypothetical, that they’ll enjoy from qualifying for Europe. In other words, under this estimate, Brighton will be able to spend £12m less than if they’d finished ninth and missed out on UEFA competition entirely.

Qualifying for Europe might end up reducing what Brighton can spend (Mike Hewitt/Getty Images)

The other point to this is that clubs who aren’t in European competition probably want to get there at some stage, so they can’t just plod on at the higher domestic SCR limit. The fact that UEFA’s SCR level does not change regardless of which competition you play in, even as the Champions League affords participants vastly more wealth than its siblings, pitches middling clubs into a Catch-22 situation. Spend to your Premier League limit, and you’ll need to bring your costs down if you qualify for the Europa or Conference Leagues; underspend and you reduce your chances of ever getting there.

A fair argument here is that, actually, Premier League rules aren’t the ones to blame. SCR in England’s top tier is more lenient, even allowing for the fact that any levies will be redistributed to those already compliant, and it’s on the European stage where the damage is truly done.

The strictness of UEFA’s rules — remember, they still operate a form of PSR too — is one factor behind the Premier League’s new regulations having what might seem an unlikely supporter: Aston Villa.

Villa voted in favour of SCR and, while they would have preferred a hard limit on squad costs under TBA, the club are generally happy with the new domestic rules.

“Quite an elegant solution,” was the description offered to The Athletic by a high-ranking club figure, speaking anonymously to protect relationships, who cited the flexibility offered in comparison to UEFA’s version and the fact that infrastructure investment is encouraged by SCR. Tethering spending to revenues encourages clubs to improve the latter. “We’re rebuilding the North Stand (at Villa Park) for that reason.”

Premier League SCR, per that Villa source, is a decent enough way to regulate if you accept there’s a need for some sort of restraints and that “no system is perfect”. That is notable from a club who have faced their fair share of regulatory headaches in recent seasons.

But if you take the view, as some do, that the Premier League’s version of SCR is a lesser evil than UEFA’s in terms of competitive balance, it is still hard to argue the domestic version does all that much to improve things.

The new SCR rules incentivised Aston Villa to rebuild the North Stand of Villa Park (Darren Staples/AFP via Getty Images)

Clubs not in Europe have a higher limit but quickly need to reduce costs if they do qualify for UEFA competitions. Those who want to push the boat out end up paying a fine which lands in the pockets of competitors. Meanwhile, anchoring costs to a hard limit ran aground in large part because the richest clubs felt it would put them at a competitive disadvantage in the Champions League, even as scarcely a handful of foreign clubs can afford to pay the wages the richest in England do.

There was a feeling among some who voted for SCR last autumn that it should be a step towards even better regulations in the future, and there are some clubs, as we’ve seen here, who voted for the new rules even while not exactly cheerleading them.

One not mentioned but regularly at the centre of discussions around financial rules is Newcastle United. They, like Villa, both voted in favour of SCR but also wanted anchoring in place, and CEO David Hopkinson has since been clear about his belief the rules are skewed towards a rich minority.

“SCR is the most unfair salary system I’ve ever heard of,” Hopkinson told The Athletic earlier this month. “My experience is as a commercial expert in the sports industry. I’m used to a North American model where you have some version of a salary cap, which means everybody gets about the same amount of money to work with. The idea that the amount of money you’re able to work with is indexed to your ability to generate revenue is a unique challenge.”

There is more which could have been done even within an SCR regime, too. When Brighton owner and chairman Tony Bloom spoke to The Athletic before November’s vote, his club were still weighing up which way to vote, conscious that “There’s an element of unsustainability (in the Premier League), which is why the rules we’re going to be voting on soon are really important.”

Brighton ultimately voted against, and later tabled an amendment that would have allowed clubs to allocate player profits as they saw fit over a three-year period, rather than each year’s SCR calculation including an equal third. That would have been useful for clubs like Brighton, who more heavily lean on a player trading model to compete with richer outfits. It is not part of the new regime.

In a relative sense, there is little to complain about. Compared to leagues in France and Germany and, to a lesser extent, Spain, there is genuine competition at the top of English football. Newly promoted Coventry City travel to champions Arsenal on Friday evening as significant underdogs but not to the extent found elsewhere. The Premier League distributes its money more fairly than any other rich European league.

Yet the chances of most winning the division are slim to none. That is a problem for a sport and, if the cakewalks seen elsewhere aren’t present in England, it does not mean the Premier League is trending in the right direction. And all of this is without mentioning the impact huge spending on the top tier has further down the English pyramid, where loss-making is rampant.

The richest division in the sport might be the strongest, but financial rules, now both domestic and foreign, will do little to temper the advantage of the highest-earners.