Premier League clubs agree new FFP rules to block loophole used by Chelsea and Aston Villa

Clubs voted by a majority of 14 to six at a meeting on Friday to bring in squad cost ratio (SCR) rules, which from next season will replace the existing profitability and sustainability rules (PSR).

Under PSR, clubs have been allowed under the rules to include money received from the sale of fixed assets to related companies within their revenue calculation.

Chelsea sold two hotels to a sister company in June 2023 for just over £70million, and sold their women’s team to parent company Blueco for just under £200m, with both moves helping boost the club’s PSR balance sheet.

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Aston Villa sold their women’s team to the club’s parent company earlier this year in a reported £55m deal.

Sales of fixed assets will still be allowed but the PA news agency understands they will not be in scope when consideration is given to how much a club can spend on squad-related costs. SCR will limit clubs to spending no more than 85 per cent of football revenue on on-pitch costs.

SCR could have been accompanied by a hard spending cap mechanism, known as top-to-bottom anchoring (TBA), but clubs voted against introducing that.

Twelve of the 20 top-flight teams are understood to have voted against TBA, which would have limited any club’s spending on squad costs to five times the amount received in central income by the league’s bottom club.

Opponents, including the Professional Footballers’ Association, said the measure would effectively be a salary cap. The union had been preparing to take legal action if the proposal had been voted through.

However, only seven clubs are understood to have voted in support of it, with both Manchester clubs and Aston Villa previously known to be opposed.

It is understood clubs first voted on TBA, before the 14-6 vote on SCR.

Some sources indicated surprise that SCR had passed without anchoring, believing one without the other helps the big clubs lock in their advantage and likened smaller clubs supporting it to “turkeys voting for Christmas”.

UEFA operates a similar model to SCR which limits clubs playing in its competitions to on-pitch spending equating to 70 per cent of revenue.

The Premier League said clubs would have a multi-year allowance of 30 per cent which they can use to spend above the 85 per cent limit, and that using the allowance would incur a levy – effectively a luxury tax. Once the allowance is used up, however, they will face sporting sanctions such as points deductions if they go above 85 per cent.

SCR will come into effect from the start of the 2026-27 season.

Clubs have also voted to bring in Sustainability and Systemic Resilience (SSR) rules. These will assess a club’s short, medium and long-term financial health through three tests – Working Capital Test, Liquidity Test and Positive Equity Test – and come at a time when the top five tiers of English football are set to be subject to independent regulation.