From PSR to SCR: Chelsea’s Sanction and the Premier League’s Financial Reset
Chelsea are the latest club to hit football finance headlines, with a Premier League statement confirming the club will face a £10 million fine and a suspended one-year transfer ban. This sanction comes after financial irregularities were discovered during the club’s 2022 takeover, relating to conduct under the ownership of Roman Abramovich.
The sanction arrives just ahead of a significant shift in regulation, with the Premier League preparing to usher in a new financial framework next season. As this transition begins, clubs face a fundamental question: will the new rules make financial planning clearer – or simply make the consequences of breaches harder to avoid?
The PSR Framework
Profit and Sustainability Rules (PSR), are the current financial regulations governing the Premier League. Introduced in the 2015-16 season, they aim to promote financial sustainability, by limiting the losses clubs can make on player transfers and wages.
Under PSR, clubs can incur losses up to £105 million over a rolling three-year period, reduced to £39 million for newly promoted clubs. Of that total, only £15 million can be funded from the club’s own money, with the remainder requiring direct owner funding.
For the purposes of player transfer fees, these are amortised across the length of a player’s contract, allowing clubs to spread the cost over several years.
In practice, PSR has been widely debated. Wealthier clubs, with larger revenues, are better positioned to offset large losses, across the three-year period. By contrast, smaller clubs do not share this advantage, due to limited revenue.
Recent enforcement has highlighted these tensions. Nottingham Forest received a four-point deduction in 2024, while Everton have been subject to two separate point-deductions, with both clubs exceeding the allowable PSR losses. Leicester City have also found themselves in breach of the EFL’s modified version of PSR, resulting in a six-point deduction. With only two league wins in 2026, this has left them battling to preserve their Championship status.
So, why have Chelsea been sanctioned?
Chelsea’s case sits awkwardly within the PSR framework, both in timing and in substance.
During the club’s 2022 takeover, the new owners identified, and self-reported, financial breaches discovered during the due diligence process. These involved secret, undisclosed payments by third parties to players, agents and intermediaries between 2011 and 2018, which were not properly recorded.
However, after investigation, the Premier League concluded that the club would not have breached PSR rules, even the payments had been properly included. Therefore, this case was not about overspending, rather a lack of financial transparency.
Therefore, Chelsea escaped a points deduction and were instead fined £10 million and given a one-year first-team transfer ban, suspended for two years. The league felt this sanction reflected the self-reporting, admissions of breach and co-operation by the club.
A separate investigation into potential breaches of Premier League Youth Development Rules also led to a further £750,000 fine and a nine-month academy transfer ban.
The new framework
However, this sanction by the Premier League may be the last while PSR is still operating, with regulatory change well underway.
The upcoming move away from PSR reflects frustration on two fronts.
First, clubs have struggled to remain compliant with the regulations, and the following sanctions have been retrospective. For the clubs in breach, this has created substantial sporting and commercial uncertainty, usually mid-season.
Second, there has been increasing pressure on English leagues to align more closely with UEFA’s regulations, to reduce the regulatory issues faced by clubs adhering to both sets of financial frameworks.
A meeting between Premier League stakeholders in November 2025 saw two of three new financial measures approved: Sustainability and Systemic Resilience Rules (SSR) and Squad Cost Ratio (SCR), both due to take effect from the 2026/27 season.
A third proposal, Top-to-Bottom Anchoring (TBA), would have introduced a spending cap, based on five times the income of the bottom Premier League club. Its aim was to change the competitive dynamic, by allowing mid and lower table clubs to offer salaries in the same range as the wealthiest clubs. However, opposition from several clubs and the Professional Footballers’ Association, led to its rejection.
So, what are SCR and SSR, and are they stricter?
What are the new regulations?
Sustainability and Systemic Resilience Rules (SSR)
SSR looks broadly at how financially sustainable a club is. It will apply three tests:
Working Capital test, assessing immediately available cash;
Liquidity test, which assesses a club’s medium-term liquidity headroom; and
Positive Equity test, which looks at a club’s balance sheet and long-term financial health.
To comply with the rules and ensure clubs are operating under financially sound methods, the Premier League may require clubs to make financial adjustments, such as voluntary spending limitations or submission of a business plan.
Squad Cost Ratio (SCR)
SSR will operate alongside SCR, as part of a broader financial assessment. SCR takes a new approach to club spending, over a more condensed timeline.
These rules limit clubs to spend no more than 85% of their football-related income on on-pitch spending. The ‘on-pitch spending’ will include any fees relating to the player (salary, amortised transfer fees and agent fees) and head coach salaries. Anything the club spends off the pitch, such as stadium upgrades, can be done so with freedom.
Every year in March, clubs will be assessed to ensure they are meeting the 85% threshold.The Premier League have set out two thresholds as follows: The Green Threshold is 85% of a club’s income and the Red Threshold is calculated as 30% above that Green Threshold.
For example, imagine a club’s annual income is £200 million.
The Green Threshold for this club would be £170 million (85% of the annual income), and the Red Threshold would be £221 million (30% above the £170 million).
If in March during testing, a club’s SCR falls between these two thresholds, confirmed by an Accounts Confirmation Test, there will be a financial sanction but no points deduction. This essentially allows clubs some leeway before a sporting sanction is applied.
However, if SCR rises above that Red Threshold, like the consequences of PSR, there will be a points deduction. The framework imposes a six-point deduction as a fixed amount, followed by an additional point for every £6.5 million the club is over the Red Threshold.
So, in the previous example, if the club were to spend £210 million, they would be fined, as this is between the Thresholds, but if they were to spend anything over £221 million, they would receive a points deduction, as this is over the Red Threshold.
What does this regulatory shift mean in practice for football clubs?
The new regulations are more than a nuanced technical reform. Under PSR, breaches often emerged years after the underlying financial decisions had been made. Under SCR, compliance will be assessed annually, and risk is arguably more predictable.
For football clubs, three practical consequences arise:
1. The end of the three-year cushion
Under PSR, clubs could mitigate losses over a three-year period. SCR removes that flexibility.
This has immediate implications. An immediate dip in revenue, for example, through failure to re-qualify for European competitions – can no longer be absorbed over multiple seasons.
Clubs must respond quickly, having adequate safeguards in place to manage squad costs in alignment with revenue and mitigate any losses by the end of the season.
For those clubs already subject to UEFA’s stricter 70% squad cost rule, the new regulations will feel familiar. For mid-table and lower-revenue clubs, who have not previously been subject to such a threshold, this is a completely new framework.
2. Closing the asset-sale loophole
One of the most commercially significant changes is what counts as revenue under the new rules.
Under PSR, clubs were able to record profits from the sale of capital assets, including hotels and women’s teams, to improve their financial standing. However, this is no longer a quick-fix, creative route to compliance.
Under SCR, the relevant revenue in terms of the 85% allowance is more tightly defined and excludes capital asset sales. Therefore, these non-football asset disposals, as recently exploited by both Everton and Chelsea, will not expand a club’s allowance in the same way.
3. A stronger Premier League?
UEFA have voiced their concerns over the new regulations.
All clubs competing in Europe must meet UEFA’s stricter 70% SCR limit, whereas those not competing in Europe, have a much more lenient threshold of 85%, with an extra 30% allowance before a sporting sanction occurs.
The concern here is that European clubs will not be able to compete with the wages that Premier League clubs will be able to facilitate, under the more advantageous 85% threshold, meaning they risk losing talent to these clubs.
However, this assumes that European clubs are unable to match that spending, despite operating with typically higher revenues. The Premier League argued that the clubs outside of Europe will simply gain headroom to compete for these European qualification.
So, the key question is: will the impact of these regulations remain domestic and simply increase competitiveness, as the Premier League claims, or will UEFA’s concerns materialise, with undermining of Europe’s traditional football powerhouses?
Conclusion
A new era of financial discipline is beginning.
Chelsea’s sanction reflects the closing chapter of PSR – a system defined by delayed enforcement and varied outcomes. The new framework is more transparent, and less susceptible to creative compliance.
For clubs, owners and commercial stakeholders, the message is clear: financial assessment will be more immediate and so preparations must be well underway.