What is PSR? Football finance rules, explained

What's the difference between FFP and PSR?

FFP (Financial Fair Play) was UEFA's framework from 2010 onwards. It was renamed to Financial Sustainability Regulations in 2022. The Premier League runs its own UK version called Profit and Sustainability Rules, or PSR. The EFL runs another version, also called Profitability and Sustainability Rules (slightly different name, similar idea).

When someone says "FFP" in 2026, they almost always mean PSR (for English clubs) or the UEFA Squad Cost Ratio (for European competition). The original FFP framework no longer exists.

How Premier League PSR actually works

PSR caps a Premier League club's losses at £105m across three reporting periods. The rolling window matters: each year you drop off the oldest year and add the newest.

If a club spent one or two of those three years in the Championship, the cap shrinks: £83m for one Championship year, £61m for two Championship years (the Championship's P&S cap is just £39m over three years, so the lower number is averaged in).

A club that breaches PSR can face: a points deduction (Everton and Forest both lost points in 2023/24), a fine, a transfer embargo, or a combination. The Premier League's independent commission decides the sanction.

Allowable deductions (the loopholes that aren't really loopholes)

Before the £105m test bites, certain costs are stripped out of the loss calculation. These are the "allowable deductions":

• Women's football: all costs, fully deductible
• Academy / youth development: all costs, fully deductible
• Infrastructure: depreciation on stadium and training-ground assets
• Community schemes: costs of running the club's community trust
• COVID-era write-offs: specific concessions, mostly expired now

So a club showing a headline loss of £140m might actually be at £75m under PSR after deductions. This is why our PSR Watch destination uses headline P&L (conservative) rather than the post-deduction figure (which isn't disclosed publicly).

EFL Profitability and Sustainability rules

The Championship has its own P&S regime, much tighter than the Premier League's:

• £39m maximum loss over three years: less than half the PL cap
• Parachute-receiving clubs (relegated PL clubs) get higher caps in their parachute years
• Sanctions include points deductions and transfer embargoes

League One and League Two operate under Salary Cost Management Protocol (SCMP) rather than P&S, a wage-to-turnover ratio cap (typically 60% in L1, 50% in L2) rather than a hard loss cap. The National League has its own salary cap and budget controls.

UEFA Squad Cost Ratio

For clubs in European competition (Champions League, Europa League, Conference League), UEFA applies a separate test: the Squad Cost Ratio. Total spending on wages, transfer amortisation and agent fees must not exceed 70% of revenue.

The 70% threshold was phased in: 90% in 2023/24, 80% in 2024/25, 70% from 2025/26. Breaches trigger fines, transfer restrictions or competition bans.

From 2026/27 the Premier League adopts its own squad cost ratio too, set at 85% (70% for clubs in Europe). See the new rules below.

Parachute payments

When a club is relegated from the Premier League, they receive parachute payments for the next three seasons to cushion the financial drop. Roughly:

• Year 1: ~55% of the broadcast share (~£44m)
• Year 2: ~45% of the broadcast share (~£36m)
• Year 3: ~20% of the broadcast share (~£15m, only for clubs that spent multiple years in the PL)

Total package across three years is around £90m. Critics argue parachute payments distort the Championship and lock out clubs trying to compete with relegated sides. The EFL has been campaigning for redistribution reform for years.

Which clubs have breached

Only a handful of clubs have actually been punished under PSR / FFP so far:

• Everton: 10-point deduction in November 2023 for breaching by £19.5m. Reduced to 6 points on appeal. Subsequent 2-point deduction in April 2024.
• Nottingham Forest: 4-point deduction in March 2024 for breaching by £34m.
• Manchester City: 115 charges (later expanded) covering 2009-2018. Case heard 2024, awaiting verdict at time of writing.
• Chelsea: charged with FFP breaches under the Abramovich era; no sanction yet imposed.
• Leicester City: charged in 2024 over a possible breach; case ongoing.

Liverpool, Arsenal, Manchester United and Tottenham have not been charged under PSR. That's partly because they're consistently profitable or close to it, and partly because their big-six revenues create plenty of headroom.

The new rules: Squad Cost Ratio and SSR (from 2026/27)

PSR is being replaced. On 29 January 2026 Premier League clubs voted to scrap the £105m loss limit and bring in a two-part system from the 2026/27 season.

Squad Cost Ratio (SCR)

SCR caps a club's squad costs at 85% of its football revenue, measured each season. Squad costs means first-team wages, the head coach, transfer amortisation and agent fees. Clubs in UEFA competition are held to a tighter 70%, in line with UEFA's own ceiling.

Cross 85% (the green threshold) and a financial levy applies, scaled to how far over you are. Cross 115% (the red threshold) and it is a six-point deduction, with another point for every £6.5m beyond it.

Sustainability and Systemic Resilience (SSR)

Three solvency tests run alongside SCR:

• Working capital: at least £12.5m of projected cash headroom.
• Liquidity: staying positive after an £85m stress test.
• Positive equity: a liabilities-to-assets ratio that tightens from 90% in 2026/27 to 85% in 2027/28 and 80% from 2028/29.

The timeline

• 2025/26: PSR still applies. SCR runs in shadow form, measured but not enforced.
• 2026/27: SCR and SSR go live. PSR ends.
• 2027/28: the SCR financial levies start to bite.

One idea did not make the final system: "anchoring", which would have capped spend at a multiple of the bottom club's broadcast money. It was floated but is not part of the adopted rules. Separately, the Independent Football Regulator, established in 2024-25, now holds its own powers to intervene on club sustainability.

Glossary

Amortisation

The annual cost of spreading a player's transfer fee over the length of their contract. A £40m signing on a 5-year deal = £8m amortisation per year. Counts as a cost in PSR even though no cash leaves the club annually.

Going concern

A statement by directors that the company can keep trading for at least 12 months. Material uncertainty about going concern is the strongest warning sign in UK accounts.

Net debt

Total borrowings minus cash. Includes bank loans, bonds and amounts owed to group / parent companies (which is often owner-loan money).

Net assets

What's left if you sold everything and paid all debts. Total equity. A negative figure means the company is technically insolvent on paper.

Turnover

Total revenue: matchday + commercial + broadcast + player trading. Some clubs file abridged accounts that don't disclose this number.

Wage / turnover ratio

What share of revenue goes to wages. UEFA flags 70% as the danger line. Anything above 100% means a club is paying more in wages than it earns.

Intangible assets

In football accounting this almost always means player registrations: the contractual right to a player's services. Net book value = original signing fees minus amortisation to date.

Going concern note

The note in audited accounts where the directors confirm the company can continue trading. A qualified note ("material uncertainty") is the formal red flag.

PSR (Profit and Sustainability Rules)

The Premier League's financial rules through 2025/26. A club's losses are capped at £105m over three seasons. Replaced by SCR and SSR from 2026/27.

SCR (Squad Cost Ratio)

The Premier League's rule from 2026/27. Squad costs (wages, head coach, transfer amortisation, agent fees) must stay within 85% of football revenue, or 70% for clubs in UEFA competition.

SSR (Sustainability and Systemic Resilience)

The solvency half of the 2026/27 rules. Three tests covering working capital, liquidity under an £85m stress test, and positive equity.

Green and red threshold

Under SCR, 85% is the green threshold (breaching it triggers a financial levy) and 115% is the red threshold (breaching it triggers a six-point deduction, plus a point per £6.5m over).

Allowable deductions

Costs stripped out of the loss calculation before the limit is applied: women's football, the academy, infrastructure depreciation and community schemes.

Sources

This guide is built from the primary rules and the clubs' own filed accounts, not second-hand summaries:

• Premier League, "New Premier League financial system explained": the official announcement of SCR and SSR.
• Club accounts filed at Companies House, parsed for wages, turnover and losses (the figures behind PSR Watch).
• UEFA Financial Sustainability Regulations, for the squad cost ratio in European competition.