Premier League clubs voted on Friday to overhaul the competition’s financial regulations, adopting a new system that focuses exclusively on spending that impacts on-field performance.

Under the reform, clubs approved — by a 14–6 majority — the introduction of the Squad Cost Ratio (SCR) model, which will cap “on-pitch spending” at 85% of a club’s football-related revenue and net profit or loss from player sales. These squad-related expenses include player wages, agent fees and transfer fees.

UEFA already operates a similar framework that limits spending on player and coach wages, transfers and agent fees to 70% of club revenues.

The Premier League said clubs would be given a multi-year allowance of 30% to spend above the 85% limit, although exceeding that allowance would trigger a levy, effectively functioning as a luxury tax. Once the allowance is exhausted, clubs that surpass the 85% threshold will face sporting penalties, including possible points deductions.

The new system—set to take effect in the 2026/27 season—is expected to be simpler due to its exclusive focus on “football costs.” Importantly, clubs will no longer be able to sell non-football assets, such as hotels or women’s teams, to related companies in order to inflate their balance sheets and increase spending power. For example, Chelsea previously sold two hotels to a sister company in 2023 and transferred their women’s team to parent company BlueCo to comply with existing Profitability and Sustainability Rules (PSR).

In addition to the SCR model, clubs also voted to introduce Sustainability and Systemic Resilience (SSR) rules, which will assess a club’s financial stability over the short, medium and long term.

However, the clubs rejected a proposed financial mechanism that would have imposed a hard cap on player-related spending. This top-to-bottom “anchoring” model would have limited any club’s squad expenditure to no more than five times the central revenue received by the league’s lowest-earning club. The Professional Footballers’ Association opposed the measure, arguing it amounted to a salary cap and even warning of potential strike action.

Under the current PSR framework, clubs may lose up to £105 million ($137 million) over a rolling three-year period. Nottingham Forest and Everton both received points deductions in the 2023/24 season for breaching PSR limits.