It's the dawning of a new era

This explainer was intended for publication in the close season, but following the reporting today of Andrea Traverso's (UEFA Executive Director, Financial Sustainability and Research) shambolic 15-minute diatribe on February 26th, it really couldn't wait.

Shhhhh.. don't mention the competition

Mistakes, they've had a few

They’ll never admit it, but second only to VAR, PSR has been the biggest threat to the Premier League’s competitive landscape since its controversial and highly partisan implementation.

It was designed for no other reason than to “protect the six” and prevent anyone from breaking into the established order that had arisen across the previous two decades.

Wind back to the 1990s, and the suggestion that Manchester City or Chelsea would be considered football heavyweights would be laughable.

Their sudden money and power, and scant regard for anything resembling fair play, skyrocketed them into an arena to which they were traditionally strangers.

Once there thay had the foresight to lobby to pull up the drawbridge on those below and usher in a new era of financial regulation.

Turkeys and Christmas

It’s still a complete mystery as to why compliant Premier League clubs voted for a system that had a clear and present danger to the basic tenets of competition, but they did.

Swapping acronyms from FFP to PSR did little other than to tighten the straitjacket on competition, and the sheer folly of hugely indebted clubs being allowed to spend like drunken sailors on shore leave, whilst prudent, debt free insitutions were being prevented from spending their personal wealth, remained an incredulous, but entirely predictable by-product of ticking the wrong box.

Little did it help that UEFA got the memo and decided to bring in their own financial regulations, ones that did not mirror those of the Premier League in either form or materiality.

PSR was a measure focused on a club's balance sheet over three years, while SCR was all about team costs on a seasonal basis.

Despite those different approaches, however, UEFA achieved the same ends as the Premier League: to protect the ‘established order’ and prevent fresh competition from blossoming.

Righting a wrong

SCR is not perfect, but it’s a far better system than PSR.

So the majority decision from the Premier League member clubs in November 2025 to move away from PSR to a UEFA-esque Squad Cost Ratio was welcome on many levels.

Not only does the move to SCR simplify financial oversight into a straightforward formula that ties club ambitions to their earnings, but for 2026-27, the Premier League have taken the principles of UEFA’s rules and given them a significantly freer market look.

As a reminder, football revenue for SCR purposes includes broadcast deals, commercial partnerships, and matchday income, plus profits or losses from player sales.

These are offset against player wages, coaching salaries, transfer fees, and agent fees.

In the Premier League’s version, spending is allowed up to a maximum of 85% of football revenue.

Controversially, in UEFA’s rules, this is up to a maximum of 70%.

Spend to get there, punished for being there.

As a result, despite the welcome alignment of the rules, the utter absurdity of being able to legitimately spend within the Premier League’s acceptable limits only to be judged a reckless spender under UEFA’s terms remains.

As we know from personal experience, arriving in European competition, after sensible, organic growth in line with Premier League rules, Villa suddenly saw itself held to account to a different materiality of financial rules and effectively punished for success.

Nonsensical doesn’t even begin to do it justice.

UEFA’s theoretical blueprint for financial compliance, however, was far stronger than the Premier League’s despite its flawed implementation.

Finally, the Premier League acts.

UEFA made rulings that the Premier League was either unwilling or unable to.

By excluding abnormal income generation, UEFA refused to recognise Chelsea’s hotel to and fro and their mirth-inducing £200m Women’s team valuation.

Despite UEFA’s more progressive approach, the Premier League looked on and did nothing.

Under the new SCR era, however, the Premier League have fallen into line, and whilst Chelsea will be free to continue its sleight of hand, it will be to no avail, as such financial mendacity will no longer be recognised as legitimate income sources.

Except for debt-ridden monsters.

Yet, just as with UEFA, the Premier League continues to avoid addressing the biggest factor in skewing financial parity amongst clubs.

As Kieran Maguire pointed out:

“[SCR] completely ignores your non-football-related costs, non-player-related costs.

"What happens if you're borrowing money at huge rates of interest [like Manchester United]?

"What happens if you've had a disastrous overspend in terms of some of your maintenance and infrastructure costs?”

None of these critical elements fell into the purview of either PSR or SCR, as to put it bluntly, in so doing, the likes of Manchester United, Real Madrid and Barcelona would be nowhere near the top table, something UEFA and the Premier League simply could not countenance.

For context:

Manchester United currently owe £1.3bn in debt to third parties.

Aston Villa are debt free.

But let’s focus on what has happened, not what could have or should have.

Green is for Grow

The Premier League’s 85% marker is known as the Green Threshold.

In principle, if a club spends more than that, it will receive a financial penalty, although it will be far less punitive than those threatened by UEFA (more on that later).

Red (or rather a variable shade of pink) is for Slow

The Red Threshold is 85% plus the allowance.

If a club spends beyond that ratio, then it faces a fixed six-point deduction, which increases by one point for every additional £6.5m spent above the Red Threshold.

The Allowance

Where the Premier League has left UEFA standing, however, is their addition of a multi-year rolling allowance of 30%.

In effect, the Premier League allows clubs to “invest ahead of revenue and variance or sporting underperformance.”

Without wishing to sound glib, this is a remarkably prescient, prudent and sensible approach that actually reflects the vagaries of building a competitive football team.

It isn’t a freebie, however, by any means.

2026-27

Under PLSCR, each club will start the 2026-27 season with allowable spending of 85% plus the 30% allowance, so effectively 115%.

Fines, albeit nominal ones, will be payable by clubs operating in excess of 85%, but there will be no danger of punitive action or point deductions unless a club breaches the 115% threshold.

2027-28

Under PLSCR, if a club spends in excess of 85%, then that overspend is carried forward into future years, leading to a commensurate reduction in their available allowance.

So if a club spends 105% on their squad next season, i.e. 20% above the Green Threshold, their allowance for 2027-28 will be a maximum of 95% as they have just 10% of their allowance remaining on a rolling basis.

Should they exceed that 95% level, then both financial and point penalties will apply.

Conversely, if a club spend less than their 85%, they can increase their allowance again to the maximum of 30%.

Credit where it’s due

The Premier League and its member clubs deserve credit:

Firstly, the long-overdue move away from the shockingly inequitable and unjustifiable PSR mechanism has finally been agreed.

Secondly, the Premier League have closed the Chelsea loopholes (although Chelsea remain beneficiaries from the previous laxity without any semblance of sanction).

Thirdly, the Premier League have implemented a system that is actually attuned to the investment cycles of a football club.

And fourthly, and critically, punishment is now fully prescribed, it’s six points full stop.

The clarity that it provides to clubs cannot be underestimated, as they are now able to navigate known requirements with room to manoeuvre. The best-run clubs will prosper in as near to a meritocracy as we have ever seen in the Premier League era.

It is far from perfect, though, indebtedness still does not matter if there is a commercial revenue-generating machine to match it, and then there is the elephant in the room - the disparity with UEFA.

UEFA vs. the Premier League

It’s fair to say UEFA don’t like what the Premier League have done, after all, they have copied Europe’s (superior) format but thrown a massive middle finger at the arbitrary financial constraint levied on participating clubs in UEFA competition.

The Green Threshold at 85% and the Allowance have put UEFA in their horrors and deservedly so.

It feels strange to praise the Premier League, an organisation who get so much wrong so much of the time, but they really do have UEFA on the ropes.

The Premier League is arguably as powerful, if not moreso, than UEFA.

Europe’s premier tournament, and the only one that can get close to the levels of exposure the Premier League enjoys, is the Champions League, and UEFA is fully aware that the Champions League without the presence of English clubs would be its undoing.

The Premier League’s gambit is that by mirroring UEFA’s model but with more flexibility, they will force UEFA to move into line with the Premier League’s 85%+ or face competition without English participation (either by choice or by exclusion).

UEFA simply cannot afford that to happen. The Premier League knows this, and what at first view appears a more equitable financial structure, is actually the first strike in a power-play to ensure English clubs remain the dominant force in football, and the Premier League the real power brokers.

Just Say No to competition

Andrea Traveso, UEFA’s Director of Financial Sustainability and Research, did a neat turn of spouting epic-level nonsense addressing the new Premier League rules, saying:

"The Premier League alone now generates a quarter of all European club revenues. With more spending power on top, this will create tensions in the market.

"The objective at Uefa is financial sustainability. The objective in the Premier League is competitiveness.

“40% of the top-value players in the world [are in the Premier League. But many are sitting on the bench or, even worse, in the stands. This is an extraordinary and worrying concentration of talent."

Bizarre words indeed.

Keiran Maguire sums it up beautifully:

"I'm not convinced with the central tenet of the argument, but UEFA, to its credit, has not been bothered about having a competitive product.

"UEFA has given away so many concessions to the bigger clubs to effectively ring-fence it as far as the Champions League is concerned."

Align or die

Without an alignment between UEFA and the Premier League’s thresholds, a club will continue to be sanctioned by UEFA, despite being compliant in the Premier League.

Indeed, UEFA qualification will continue to undermine the gains made by the more progressive Premier League rules, creating a perverse disincentive to accept European qualification.

What is for sure is the likelihood that the Conference League, the competition for accidental European qualifiers, will become the modern Intertoto and be an entirely optional entry, bandied around amongst increasingly few interested parties before its inevitable demise.

Likewise, European qualification through the FA Cup or its associated trickle-down effect will become a poisoned chalice no one wants to hold.

Explaining that to fans remains difficult, but it is far easier now we’re comparing apples with at least something that looks like an apple.

Take a European place and have to let 15% of our squad go (made-up scenario), forego Europe and remain a competitive force at home.

When it’s put like that, the equation is pretty simple.

UEFA are fully aware that the rise of the Premier League and its belated embracing of SCR places a material threat on their position.

UEFA face a choice: dwindling appetite from English teams or alignment that emboldens and strengthens English domination.

The new, more flexible Premier League rules will undoubtedly further boost competitiveness in England’s top flight. It may take some time, but the usual suspects and their powerhouse revenue generation may well not be first in line as European qualifiers.

The prospect of the English Premier League champions being barred from UEFA competition would be too much ignominy for the governing body to bear. No wonder they’re in a state of wild panic.

From the Premier League’s perspective, they want to cement their place as the richest, largest and most significant League in World football, and if UEFA’s competition suffers as a result, what do they care?

How excited can Villa get?

Very, kind of.

The bogus financial restrictions placed upon Villa in the Premier League will finally be lifted.

The deadweight that has been placed on Villa’s progress has been enormous.

The flip side is, of course, that what benefits Villa will also boost other, well-run clubs, as those looking to “do a Villa” will find it far easier to progress and compete.

Good thing? Bad thing? Once the genie’s out of the bottle, it’s going to be difficult to stop.

But that is probably a price worth paying.

Ultimately, however, whatever the political or footballing consequences, the move to SCR is a huge boost to any club being run on a prudent, organic basis, focused on delivering sustainable success on the pitch.

The losers?

Beyond UEFA, the likes of Bournemouth and Brentford, who benefitted so sharply under PSR despite their catastrophically low gates, will probably not be buying more £40m players anytime soon.

Little wonder then that they, as well as Brighton, Palace, Fulham and Leeds voted against SCR.

Oh Andrea

The rules of course still massively favour the ‘Six’, but the ability for clubs to challenge on a financial footing has never been greater since the days when Chelsea and Manchester City were mid-table also-rans. Amazing what competition can do eh, Andrea? Try it, you might just like it.