The replacement of PSR by SCR by the Premier League from 2026/27 may seem to be a highly technical matter: indeed it is. It needs someone with the forensic skills of the Swiss Ramble to unravel what it all means for the competition and individual clubs. I recommend subscribing to his Substack page to get the full analysis by the Zurich-based football finance guru. Even so, I had difficulty in getting my head round some of the complexities, but here are some highlights.
First and foremost, PSR and SCR differ in what they measure.
PSR evaluates a club’s overall profit by including all revenues and costs,
while SCR focuses specifically on on-pitch spending.
Under PSR, clubs were assessed based on their financial
performance over a rolling 3-year period, whereas the SCR sets clear spending
limits for each season
Compliance is monitored in-season as well as at the end of
the season, allowing for earlier intervention if a club is breaching the rules.
This shift enables more timely enforcement and encourages clubs to manage their
finances responsibly in real time, rather than relying on longer-term financial
balancing.
Likewise, as clubs’ revenue inputs are agreed in advance of
the season, clubs are given more certainty under SCR as they can’t be
negatively impacted in a given season by an unforeseen fall in revenues (e.g.
poor performance on the pitch, a reduction in match day revenues, or a decrease
in commercial revenues).
One point that the Premier League do not explicitly note is
that SCR means that clubs will have fewer opportunities to comply with
regulations through non-football means. Although clubs will still be able to
sell property assets and women’s teams to other group companies, any resulting
profits will not be included in the SCR calculation.
Five Premier League clubs end up with more than £400m squad
costs, namely Manchester City £494m, Chelsea £469m, Manchester United £440m,
Arsenal £423m and Liverpool £409m.
Comparing squad costs and adjusted revenue, the overall SCR
for the clubs in the Premier League is 71%, but there are big differences
between clubs, suggesting that some will have more of a struggle to meet the
new targets than others.
In 2023/24 there were two clubs with an SCR above 90%,
namely Bournemouth 103% and Fulham 92%, while another eight clubs were above
80%, so quite a few will have to pay close attention to SCR if they wish to
comply with the Green Threshold of 85%.
As al but one of the top ten clubs are outside the Big Six,
this analysis highlights the challenge for ambitious clubs, who have to invest
in the squad to have a better chance of success, while revenue growth
inevitably lags behind the expenditure.
At the other end of the spectrum, five of the lowest SCR are
from members of the Big Six, where the best result was Tottenham’s 55%, though
Brighton got the most “bang for their buck” of all with an impressive 52%.
Around half of the Premier League clubs reviewed are better
than target, while half are worse. Many
clubs are comfortably better, most notably Brighton by 33% (actual 52% vs
target 85%), as well as Tottenham and West Ham, both under target by 15%.
Many clubs will need to improve on their 2023/24 figures to
meet the SCR targets, especially Nottingham Forest 19%, Bournemouth 18%, Aston
Villa 14%, Newcastle United 12% and Chelsea 11%. Fulham, Leeds United and Wolves might also
have some issues in complying with the cap.
Worked example:
Chelsea
Despite their huge transfer spending, Chelsea managed to
comply with the old PSR target for the three-year monitoring period up to
2023/24, delivering an adjusted PSR profit of £50m, which was £155m better than
the allowable loss of £105m.
However, their compliance was entirely dependent on the
£275m profit they booked for asset sales to other group companies, made up of
the women’s team £198m and hotels £77m.
In contrast, Chelsea would have failed the new SCR test if
that had been in operation, as the paper profits from their assets sales would
have been excluded from the calculation.
Despite impressive player trading and decent revenue,
significant investment in the squad took the Blues’ SCR to 81%, which would be
11% worse than the 70% target.
Boost foe promoted clubs
The Swiss Ramble concludes: ‘Promoted clubs should be among
the beneficiaries of SCR, as this is assessed only on the current season in the
top flight, where they will receive higher revenue due to the Premier League’s
stratospheric TV deal.
The new rules do give more headroom to aspirational and
promoted clubs, because the cap only applies to the latest season, as opposed
to the 3-year monitoring period, which is a good thing IMHO. Furthermore, the additional 30% allowance
provides some leeway for such clubs to spend more than the cap, so long as they
are willing to pay a fine.
The Premier League should also be congratulated on finally
providing a clear framework for any sanctions, though I would be surprised if
any club over-spent to such an extent that it managed to incur a points
deduction.
That said, the new rules have basically entrenched the
financial dominance of the elite, as SCR links spending power to revenue and
player sales, which will ensure that the wealthiest clubs continue to enjoy a
bigger budget.’
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