Squad Cost Ratio: What is it, how does it impact Everton, and Uefa's fears

The Premier League is heading toward change on its financial rules, with the introduction of Squad Cost Ratio (SCR) and Sustainability and Systemic Resilience (SSR), which will replace the Profitability and Sustainability Rules (PSR) from next season.

The new system has been voted in after consultation with clubs and stakeholders, designed to ‘secure financial sustainability, promote long-term investment, and protect the competitive balance’ of the Premier League.

But what exactly is SCR and what difference will it make? Crucially, how will it impact Everton?

What is Squad Cost Ratio?

SCR will be the Premier League’s newest set of financial rules, a regulation that limits clubs’ on-pitch spending to 85% of their football-related revenues and net profit or loss from player sales.

Included in SCR are player and head coach wages, agents' fees, and amortisation and impairment of transfer fees. ‘Impairment’ is described by the Premier League as ‘if the value of a player’s registration is less than what was originally paid for them due to a range of factors, such as injury, performance or relegation’.

Not included are backroom coaching staff wages and all other club personnel salaries. 

What revenues are used for SCR calculation?

All club-generated revenues count towards SCR. These include commercial revenues, matchday revenues, competition ‘merit money’, and profits from non-football events hosted at stadiums, such as concerts. 

The latter could be significant for Everton with plans in motion to bring external events to Hill Dickinson Stadium.

What’s the difference between SCR and PSR?

The main difference between the two systems is that SCR focuses on on-pitch spending, while PSR previously evaluated nearly all revenues and costs. 

According to the Premier League, SCR has been designed to give clubs ‘greater freedom to invest in other areas of their operations’. 

SCR will also run on a seasonal basis, as opposed to the three-year rolling period of PSR. The spending limits that are set each season will only change as a result of player trading. 

The issues with Squad Cost Ratio and the ‘poisoned chalice’ of European football

The imminent changes are not without issues. Earlier this week, the BBC reported that Uefa have clear concerns over the incoming rules. 

Though similar, Uefa’s SCR rules permit clubs to spend only 70% of their revenues, which clubs who compete in European competitions must adhere to. Chelsea and Aston Villa both faced fines for breaching those rules in 2024-25.

With no universal SCR rules across Europe, Uefa are fearful that the Premier League’s incomparable finances mean English clubs that are outside of UEFA competitions will have a far higher threshold for spending than those on the continent.

English teams spent around €3.6B on signings last summer, more than La Liga, Ligue 1, the Bundesliga, and Serie A combined (€3.4B). Premier League teams also continue to dominate in Europe. An unprecedented six English clubs are in the Champions League’s last 16 and all nine English representatives made it to the Round of 16 in their respective Uefa competitions. Additionally, two of the three Uefa club competitions were won by Premier League teams in 2024-25.

So how do the rules impact Everton?

In theory, Everton would have an additional 15% of their revenue to reinvest if the club does not qualify for Europe this season. The flip-side, of course, is the increased revenue that European football brings, but the situation has raised question marks over the merit of Conference League qualification. 

"The money you'll make from winning that -- you're probably talking no more than £20M," football finance expert Kieran Maguire told the BBC. 

"Factor in the costs and that you're going to need a more expensive squad and qualification for the Conference League is now a bit of a poisoned chalice."

Furthermore, the Premier League will have a multi-year rolling allowance of 30% that will allow for even higher spending. A ‘complicated’ set of rules mean clubs could spend up to 115% of their revenues without points deductions. The details are explained in-depth here.

 

---

Reader Comments (1)

Note: the following content is not moderated or vetted by the site owners at the time of submission. Comments are the responsibility of the poster. Disclaimer ()

How to get rid of these ads and support TW