PSR explained: Premier League Profitability and Sustainability Rules

The Premier League's Profitability and Sustainability Rules, known as PSR, are being replaced from the 2026/27 season, and the system replacing them is harsher than most people realise. PSR capped a club's losses at £105m over a rolling three-year period for most clubs, a limit that produced two points deductions for Everton, one for Nottingham Forest and years of argument about whether it worked at all. From 2026/27 the Squad Cost Ratio takes over, capping what a club can spend on its squad at 85 per cent of football-related revenue, with an effective ceiling of 115 per cent once a rolling allowance is used. The claim worth disagreeing with is that the £105m loss limit stopped the richest clubs. It did not, because it measured losses rather than spending, and the new ratio will catch clubs that passed the old test comfortably. PSRwatch, which models both systems, estimates that AFC Bournemouth passes the old loss test comfortably yet sits at about 130.1 per cent on squad cost, a figure above the 115 per cent line where sporting sanctions begin.

What the Profitability and Sustainability Rules actually were

PSR were the Premier League's version of club financial controls, first introduced in the 2013/14 season, according to the independent commission that heard Everton's first case. Under the regime, clubs were assessed on their financial performance over a rolling three-year period, and total losses beyond £105m were not allowed regardless of the size of a club's revenue. That works out at £35m per campaign. The ceiling was lower for clubs that spent part of the assessment period in the Championship: Nottingham Forest, whose assessed period included two seasons in the second tier, were limited to £61m.

The test was never applied to raw losses. Clubs could deduct approved spending from their adjusted losses in listed areas including academy, infrastructure, community and women's football investment, and owners could cover the remaining loss with secure funding. The whole system was therefore about how much money owners were willing to fund, not about how much a club actually spent on its squad. That distinction became the central argument of the PSR years.

The enforcement record: points deductions

Points deductions for financial failure were rare before PSR started producing them. Middlesbrough were deducted three points in the 1996/97 season for failing to fulfil a fixture against Blackburn, and Portsmouth were deducted nine points in 2010 after going into administration. Then, in November 2023, Everton became the first club to be docked points for a PSR breach: ten points, at the time the biggest sporting sanction in the history of the competition, after an independent commission found their losses to 2021/22 reached £124.5m, £19.5m beyond the £105m threshold. The deduction was reduced to six points on appeal in February 2024. A second, separate breach brought a further two-point deduction in April 2024.

Nottingham Forest were docked four points in March 2024 for breaching their £61m limit by £34.5m, with the commission crediting early admission and exceptional cooperation for reducing the sanction from an original six points. Forest's appeal failed in May 2024. Manchester City remain the only other club charged by the Premier League for financial breaches, referred in February 2023 over more than 100 alleged rule breaches between 2009 and 2018.

Squad Cost Ratio: what replaces PSR in 2026/27

Premier League clubs voted 14-6 at a shareholders' meeting in November 2025 to introduce the Squad Cost Ratio as the permanent financial test from the 2026/27 season, replacing PSR. The ratio limits a club's squad spending, covering player and coach wages, amortised transfer fees and agent costs, to 85 per cent of football-related revenue and net profit or loss on player sales. The league describes the 85 per cent mark as the Green Threshold. Clubs also hold a multi-year rolling allowance of up to 30 per cent above that, which means every club starts the 2026/27 season with an effective ceiling of 115 per cent.

The penalty structure is the part that bites. Spending above 85 per cent but within the allowance triggers a financial levy. Going beyond both the threshold and the allowance produces a fixed six-point deduction, rising by one point for every £6.5m spent over the 115 per cent line. Compliance is assessed on 1 March each year, with additional monitoring in October, and levies become payable from the 2027/28 season onwards.

The three tests running alongside it

SCR arrived with a second regime, the Sustainability and Systemic Resilience rules, or SSR, which test a club's short, medium and long-term financial health through three checks. The Working Capital Test requires a club to show that its projected cash balances and working capital funds reach at least £12.5m for each calendar month of the season. The Liquidity Test models whether a club can meet its obligations under stress. The Positive Equity Test requires a ratio of liabilities to adjusted assets of no more than 90 per cent in 2026/27, tightening to 85 per cent in 2027/28 and 80 per cent from 2028/29.

Why the change matters

Anchoring, a rival proposal that would have tied any club's spending to a multiple of the bottom club's income, was trialled in 2025/26 and then rejected at the vote of Premier League clubs, meaning the league's new spending discipline rests entirely on the ratio. The 85 per cent figure also brings the Premier League close to UEFA's existing squad cost rules, which operate at 70 per cent for clubs in European competition.

The deeper change is philosophical. PSR asked whether a club made losses and let owners fill the gap with funding. SCR asks whether a club's spending fits its income, and an owner cannot inject money into the denominator of a ratio. PSRwatch's modelling shows how far apart the two systems are: it estimates Bournemouth on about 130.1 per cent of squad cost, which is points territory under the new rules, while Hull City, a club the old test would have worried about, sits at just 49.8 per cent. The old system punished owners who did not fund; the new one punishes clubs whose income cannot carry their wages. That is the Profitability and Sustainability Rules era ending, and the Squad Cost Ratio era beginning.

Key takeaways

• PSR capped total losses at £105m over a rolling three-year period, or £35m per season, from 2013/14 to 2025/26.
• The only clubs docked points for a PSR breach were Everton (ten points reduced to six on appeal, then a further two) and Nottingham Forest (four points).
• PSR is replaced from 2026/27 by the Squad Cost Ratio, which limits squad costs to 85 per cent of football-related revenue.
• The effective ceiling is 115 per cent: past it sits a six-point deduction, plus one point for every £6.5m overspent.
• The new system is a spending test, not a loss test, which is why it can catch clubs like Bournemouth (estimated 130.1 per cent) that passed the old one.

FAQ

What does PSR stand for?

Profitability and Sustainability Rules, the Premier League's financial control regime that limited club losses to £105m over three seasons. It is replaced by the Squad Cost Ratio from the 2026/27 season.

How much money can a club lose under PSR?

£105m over a rolling three-year period, or £35m per season, with deductions available for approved spending on the academy, infrastructure, community and women's football. Clubs with time in the Championship face a lower ceiling, as Nottingham Forest did at £61m.

Which clubs have been deducted points for breaking PSR?

Everton and Nottingham Forest. Earlier deductions in Premier League history, for Middlesbrough in 1996/97 and Portsmouth in 2010, came from other causes.

What is the Squad Cost Ratio?

The replacement for PSR from 2026/27. Squad costs, including wages, amortised transfer fees and agent costs, are capped at 85 per cent of football-related revenue, with an effective ceiling of 115 per cent once a club's rolling allowance is used.

Does the new system still punish losses?

No. It punishes spending that outgrows income, which is the key difference from the Profitability and Sustainability Rules.