How football's financial rules actually work: PSR, SCR and FFP explained

Updated September 2026

If you have read an explainer about PSR in the last few years, there is a good chance it is now out of date.

Premier League clubs voted to replace the Profitability and Sustainability Rules in November 2025. PSR stayed in force for the rest of that season, and the new system took over from the start of 2026/27. UEFA rebuilt its own framework back in 2022, replacing Financial Fair Play with the Club Licensing and Financial Sustainability Regulations.

So the three sets of initials in the title are not three versions of the same thing. PSR is the Premier League's old system, SCR is part of what it uses now, and UEFA has separate rules that apply to clubs in its competitions.

Here is what each one is, what changed, and what it means when your club sells a player it clearly wanted to keep.

Why these rules exist at all

Football clubs lose money. Not all of them, but enough that it has been a problem for a long time.

The concern has never been only about how much a wealthy owner can spend. It has also been about clubs committing to losses they cannot sustain, and what happens to the staff, the creditors and the fans when that catches up with them.

The Premier League says its current rules are designed to secure the financial sustainability of clubs while protecting competitive balance. UEFA describes its aim as safeguarding the financial stability of European football.

Both end up in a similar place. What a club spends on players should bear some relationship to what that club earns.

PSR: the rule everyone still talks about

The Premier League's Profitability and Sustainability Rules were a limit on how much adjusted loss a club could build up over a three-year assessment period.

The headline figure was £105m. That was an aggregate across the three years, not an annual allowance. It broke down as £5m of permitted losses a year, plus £30m a year that owners could inject as secure funding.

Clubs who had spent part of that period in the Championship were held to less. A club with one Championship season and two in the Premier League, for example, was limited to £83m.

Certain costs could be added back into the calculation rather than counting against it. That covered qualifying spending on stadiums, training grounds, academies, women's football and community work. The thinking was that a club should not be punished for investing in things that last.

PSR had teeth. Everton were docked 10 points in November 2023 and a further two points later that season, and Nottingham Forest lost four points in the same campaign.

Two practical problems attracted most of the criticism. Because the rules relied on audited accounts and a rolling three-year window, enforcement could lag well behind the spending that caused the breach. And the treatment of asset sales and transactions with companies connected to a club's owners became a running argument in itself.

What replaced it, and how it works

On 21 November 2025, Premier League clubs voted 14-6 to replace PSR. Sky Sports reported the vote at the time.

In its place came the Squad Cost Ratio, shortened to SCR. It asks a completely different question.

PSR asked: how much did you lose? SCR asks: what share of your income are you spending on your squad?

According to the Premier League, SCR limits a club's on-pitch spending to 85% of its football-related revenue and net profit or loss from player sales.

Squad costs mean player and head coach wages, agents' fees, and the amortisation or impairment of transfer fees. Amortisation is the practice of spreading a transfer fee across the length of the player's contract, so a £60m signing on a five-year deal counts as £12m a year, not £60m in one go.

Administrative and commercial staff are excluded. So are assistant coaches and the rest of the coaching team.

There is one detail clubs will like. Income from women's teams and academies counts towards revenue, but the costs of running them do not count against it.

That is a deliberate incentive to invest in both, and it is part of why the women's game has grown so quickly at clubs with the money to build it.

Read also: Bayern Munich are the only German club left in the Women's Champions League

Green thresholds, red thresholds and the feedback loop

This is the part most explainers get wrong, and it is the part that actually decides what happens to a club.

The 85% figure is called the Green Threshold. Below it, a club is compliant and nothing happens.

Above it sits the Red Threshold, which is an absolute limit set up to 30% higher. Every club starts with the full 30%, so the Red Threshold begins at 115%.

Those two numbers lead to very different outcomes. Between green and red, a club faces a financial penalty called a levy. Above red, it faces a points deduction.

The allowance is not permanent. If a club finishes a season above 85%, its allowance shrinks the following season by the same percentage as the breach. The Premier League calls this the Feedback Loop.

Their own example makes it clear. A club that records 100% in season one has its allowance cut from 30% to 15%, so its Red Threshold drops from 115% to 100%. If it then records 101% in season two, the allowance is gone and it has breached the Red Threshold.

It works in reverse too. A club that gets back under the threshold recovers 10% a season, up to the original 30%. Unused room cannot be carried forward.

What a breach actually costs

The Premier League has published the arithmetic, which is unusual and useful.

Levies are calculated by taking the smaller of the in-season overspend and the post-season overspend, then multiplying it by the percentage by which the club exceeded 85%. Their example: a club that overspends by £250,000 with a ratio of 89% pays £10,000, because £250,000 multiplied by 4% is £10,000.

Points deductions work differently. A club above the Red Threshold receives a fixed six-point deduction, with one further point added for every £6.5m spent beyond that limit.

There is also relief available. A club that stayed under 85% in each of the previous two seasons can reduce or wipe out a levy, by the total amount it was under the threshold across those two years, up to 10%. That relief can only be used once every three seasons.

Levies do not begin until 2027/28. Sporting sanctions apply in the season the breach happens.

When clubs are checked

Under PSR, a club found out where it stood long after the money was spent. That has changed.

The main SCR compliance test happens on 1 March, just after the winter window closes, with further monitoring in October. Clubs above 85% in March face an Accounts Confirmation Test in June and a True-Up in October, using real figures rather than the estimates agreed before the season.

Revenue is agreed with the League in advance, which means a club cannot be punished because its matchday income fell or results went badly mid-season.

The second new test almost nobody mentions

Alongside SCR, the Premier League brought in Sustainability and Systemic Resilience, or SSR.

SCR governs how much a club spends on its squad. SSR tests whether the club can survive a shock. It runs through three assessments, all carried out on 7 July each year.

The Working Capital Test asks whether a club has at least £12.5m available in cash or funds it can reach within 28 days, in every month of the season.

The Liquidity Test looks two seasons ahead and applies an £85m stress test, roughly the revenue hit of relegation or dropping out of Europe. A club must still be above water after absorbing it.

The Positive Equity Test compares liabilities against adjusted assets, and that ratio must be no higher than 90% this season, 85% next season and 80% from 2028/29. Shareholder loans count as liabilities, and the squad's market value counts as an asset.

Failing an SSR test does not bring an automatic punishment. The club has to submit a plan to fix it, and sanctions follow only if it does not.

The spending cap that did not pass

Clubs voted on a third proposal that day and rejected it.

Top to Bottom Anchoring would have tied spending across the league to a multiple of what the bottom club earned in television money. It did not receive enough support.

The wider argument about how far league spending should be controlled has not gone away.

UEFA's rules are separate, and stricter

For a club playing in Europe, both systems apply at once.

UEFA introduced Financial Fair Play in 2009. In 2022 it was rebuilt as the Club Licensing and Financial Sustainability Regulations. Almost everyone still says FFP.

According to UEFA, it rests on three pillars.

Solvency means keeping payments to other clubs, to employees and to tax authorities up to date. It is about overdue debts, not about having no debt at all.

The football earnings rule allows an aggregate deficit within an acceptable deviation of €60m across a three-year monitoring period, which can rise where a club meets specified financial health conditions. This is the closest thing to the old break-even test.

The squad cost rule caps spending on player and coach wages, transfers and agents' fees at 70% of revenue. That limit is set out in Article 94 of UEFA's 2026 regulations.

Note the gap. The Premier League allows 85%. UEFA allows 70%.

The Premier League has explained why it sits higher. The extra 15% gives clubs outside Europe room to chase qualification against clubs already receiving European money, and cushions clubs who drop out of Europe so they are not forced into sudden cuts.

One more difference worth knowing: the Premier League's system runs by season, UEFA's by calendar year.

Every country has its own rules too

The Premier League's system is one of several, and a club in Europe usually lives under two at once.

Spain runs the most interventionist model. La Liga sets a Squad Cost Limit for each club individually, known as the LCPD. Clubs propose their own figure, and La Liga's Validation Body either approves it or cuts it to a level it considers safe.

According to LaLiga, that limit covers salaries, social security, bonuses, agents' commissions and transfer amortisation. It is fixed before the season starts, and a club that goes past it cannot register players. That is why registration problems make headlines in Spain in a way they rarely do in England.

France has the oldest financial control in football. The DNCG audits every professional club each year, and its powers come from French law rather than league rulebooks. It can block registrations, cap a club's wage bill, limit net transfer spending, or in the most serious cases relegate a club administratively.

Germany works through licensing. Clubs apply each year for permission to compete the following season and must prove they can meet their commitments. It is the most conservative system of the major leagues.

Italy also licenses its clubs, with a liquidity test that has to be passed before players can be registered.

England's second tier changed at the same time the Premier League did. From this season the Championship has its own squad cost system, also set at 85% of income, with an equity top-up allowance of £33m across three years and no more than £15m in any single season.

Its old rules still have a tail, though. The previous limit was £13m of losses a season, and Leicester were docked six points in February 2026 after a commission found they had exceeded it by £20.8m.

None of this replaces UEFA's rules. A club in the Champions League answers to its own league and to UEFA at the same time.

The three systems side by side

Manchester City, and why the old rules still mattered

This is the part that confuses people most.

PSR no longer applies going forward. But when the Premier League replaced it, it explicitly preserved its powers to pursue breaches from earlier seasons. That is why City's case was still heard under the old rules.

An independent commission found City guilty of all charges relating to serious breaches of the Premier League's financial rules across a nine-season period, and of the majority of charges about failing to co-operate with the investigation.

According to ESPN, the panel found that City used sham contracts with commercial partners to inflate their commercial income, filed misstated accounts, and breached both Premier League and UEFA spending limits. Premier League chief executive Richard Masters said the findings showed City systematically broke the rules for nearly a decade.

The charges were brought in February 2023 and covered the seasons from 2009/10 to 2017/18. The investigation began in 2018, after the German outlet Der Spiegel published documents from the Football Leaks cache.

Sanctions have not been decided. That goes to a separate hearing. City say they are disappointed and surprised and intend to appeal, so the case is not finished.

The case matters beyond Manchester because it puts the treatment of commercial income and related-party deals at the centre of the argument. The new system addresses that directly: sales of non-football assets to related parties no longer feed the revenue figure that SCR is measured against.

What this means for your club

Four things worth carrying around.

The main test is now a ratio, not a loss. Your club's squad costs are measured against its football revenue and its net profit on player sales, season by season.

Selling players changes what a club can spend. Net profit from sales sits inside the calculation, which is why a big sale can create room that a big sponsorship deal cannot.

European football cuts both ways. Qualifying brings more revenue, but it also brings UEFA's 70% limit instead of the Premier League's 85%.

And going over 85% is not automatically a disaster. Between the green and red thresholds a club pays a levy, not a points deduction. The real danger is doing it repeatedly, because each breach shrinks the allowance until there is nothing left.

None of that will make the rules popular. But it does explain why a club can be wealthy, successful, and still unable to sign the player its manager wants.

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