Premier League Introduces New Financial Controls Without Using Salary Caps

The Premier League will replace the current Profitability and Sustainability Rules from 2026 to 27 with a new system focused on real time cost control. The key change is the squad cost ratio, which limits spending on wages, agent fees and transfers to 85 percent of football revenue. New sustainability checks will assess liquidity, working capital and equity strength.

After the Premier League confirmed its biggest financial rule overhaul in years, the competition is preparing to replace the long-used Profitability and Sustainability Rules with a new system focused on real-time cost control and stronger financial foundations. From the 2026 to 27 season, clubs will operate under a squad cost ratio that limits spending on wages, agent fees and transfer amortisation to 85 percent of football revenue.

For example, a club earning £300 million can allocate about £255 million to its first team squad. Overspending could lead to points deductions, while academy and infrastructure spending remains exempt to encourage long term development. A second pillar called sustainability and systemic resilience introduces deeper financial health checks. Clubs must pass a working capital test to prove they can meet monthly commitments, a liquidity test showing they can absorb an £85 million financial shock, and a positive equity test that gradually replaces owner loans with direct investment.

These measures aim to reduce reckless debt, improve transparency and protect clubs from collapse. Concerns persist over competitive disadvantages in Europe and the risk of clubs manipulating player valuations. However, the Premier League hopes this flexible, revenue linked model will curb the financial arms race without resorting to a hard salary cap.