How the Premier League’s squad-cost ratio and anchoring would work

The Premier League this season has trialled a squad-cost ratio system that limits how much clubs may spend on their playing squads relative to their revenue. The idea is simple: a club can only devote a set percentage of its total income to wages, transfers and other squad-related costs.

What is the squad-cost ratio?

Squad-cost ratio (SCR) mirrors a system already used by UEFA for European competitions. Under UEFA rules the cap is 70%. The Premier League has adopted a similar approach on a trial basis and plans to align its clubs that compete in Europe with that percentage.

That means the following clubs would be capped at 70% of their revenues for squad costs:

• Liverpool
• Arsenal
• Manchester City
• Chelsea
• Newcastle
• Tottenham
• Aston Villa
• Crystal Palace
• Nottingham Forest

What about clubs not in Europe?

Clubs that do not qualify for European competition would face a higher ceiling. The Premier League chief executive Richard Masters said non-European clubs would be limited to 85% of revenues, a figure the league says preserves scope to invest.

“Because we always want our clubs to have the ability to invest”

Top-to-bottom anchoring explained

Alongside the percentage caps the Premier League is trialling a top-to-bottom anchoring model. Under anchoring the maximum a club can spend would be set as a multiple of the income earned by the division’s lowest-earning side.

Put another way: the richest club could not expand its wage and transfer bill without regard to the finances of the smallest club in the league. The measure is designed to moderate gaps between the top and bottom of the table.

When would these rules take effect?

If the trial is approved the new SCR and anchoring rules would replace the current profit and sustainability rules (PSR). The Premier League says the changes would come into force from the start of the 2026-27 season.

PSR currently focuses on limiting club losses over set reporting periods. The proposed system shifts the emphasis toward linking spending directly to income, and tying top-level spending to the economic realities of the bottom club.

For supporters and club boards the change would mean clearer limits on how much can be spent on squads and a closer alignment with UEFA’s approach for clubs playing in Europe.