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Who wins and who loses under new Premier League rules?

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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