Uefa has serious concerns about the impact of the Premier League’s new financial rules on the rest of Europe.
England’s top-flight clubs have voted to adopt a system called the squad cost ratio (SCR) next season.
This allows teams to spend 85% of their income on player costs, although a complicated set of factors means clubs could go as high as 115%.
Uefa’s SCR spending limit is 70%, which all clubs in the Champions League, Europa League and Conference League must adhere to.
There is no universal SCR or percentage across the top leagues, but others have more stringent rules than the Premier League.
It means Premier League clubs not in Europe would have much higher spending power.
UEFA, European football’s governing body, fears that it could undermine financial stability measures.
Clubs on the continent may be forced to take additional risks – facing higher costs and losses – to retain their players.
But the Premier League rejects the claim, insisting its new rules will ensure competitive balance. It is against a uniform financial fair play system.
‘A worrying concentration of talent’
Premier League clubs voted for the new financial rules in November, during an unprecedented campaign in Europe.
A record nine teams qualified for this season – six of them in the Champions League.
All nine have made it through to the last 16 in their respective competitions, with the round beginning this week.
No other league comes close. Spain has six active teams, Germany has five, and France and Italy have four.
When Premier League clubs not in Europe gain additional spending power, UEFA believes it could increase their ability to attract players.
That could weaken other European teams and make English football even stronger.
Andrea Traveso, Uefa’s director of financial sustainability and research, outlined some of the concerns at the Financial Times Business of Football Summit last month.
“The Premier League alone now generates a quarter of all European club revenues,” he said.
“With more spending power on top, this will create tensions in the market.
“The objective at Uefa is financial sustainability. The objective in the Premier League is competitiveness.”
Traveso highlighted how “40% of the top-value players in the world” are at English clubs.
“But many are sitting on the bench or, even worse, in the stands,” he said.
“This is an extraordinary and worrying concentration of talent.”
Traverso said an “inconsistent application of financial regulations” could make matters worse.
Last week, the German Bundesliga voted to move to a 70% cost threshold.
Italy’s Serie A focuses on economic sustainability relative to costs, but it is discussing aligning with Uefa.
In France, where the picture is complicated by the collapse of the league’s TV deal, the emphasis is on audited financial viability. Clubs must demonstrate solvency and budget control.
Since 2022, Spain’s La Liga has operated the 1:1 rule, a strict domestic financial control model. Each club gets a specific financial limit based on the money it has generated.
La Liga president Javier Tebas, a regular critic of the Premier League’s financial power, said last month: “The regulations will cause more inflation and more problems.
“Someone has to harmonise all of this. Financial fair play for La Liga, the Bundesliga, UEFA – this isn’t rocket science.”
Mid-table Premier League clubs such as Brentford and Fulham can easily rival Italian clubs AC Milan and Juventus in the transfer market.
It may become harder for those traditional powerhouses to attract and keep players as the budgets of such Premier League clubs increase.
We prioritise jeopardy in competition – Masters
The Premier League wanted a higher compliance bar to provide a level playing field,for those clubs not in Europe.
It says the 85% rule will “allow clubs that do not regularly participate in European competitions to have sufficient headroom to compete for qualification”.
A club in the Champions League might get more money, but, as they have to comply with UEFA, they can spend only 70%.
A team not in Europe could spend 85%, or up to 115%, with small financial sanctions. Go over the 115% mark, and points penalties come into play.
It is all about competitive balance.
Uefa believes a Premier League club spending more than 85% of its revenue on wages would sustain significant year-on-year losses.
But the Premier League argues that the rule will “allow a club to plan and invest over multiple seasons”.
Premier League chief executive Richard Masters said clubs have chosen a system which “prioritises jeopardy in competition”.
“Independence of leagues, our ability to work out what’s best for English football should be maintained,” he said.
“Alignment is good. That’s different to harmonisation. That’s what we’ve just achieved by passing the squad cost ratio.
“We have a very competitive league, and that is the difference [with La Liga].”
‘Snarkiness’ towards Premier League
Football finance expert Kieran Maguire says he questioned how effective Uefa’s rules could be at curbing losses.
“It completely ignores your non-football-related costs, non-player-related costs,” he told BBC Sport.
“What happens if you’re borrowing money at huge rates of interest?
“What happens if you’ve had a disastrous overspend in terms of some of your maintenance and infrastructure costs?
“I’m not convinced with the central tenet of the argument, but UEFA, to its credit, has not been bothered about having a competitive product.
“UEFA has given away so many concessions to the bigger clubs to effectively ring-fence it as far as the Champions League is concerned.”
Maguire said there is always a “sort of snarkiness” towards the Premier League because of its success.
He said a key difference is that Premier League clubs take their own decisions, rather than being decided by a managing body, as is the case with La Liga.
It means that Premier League clubs “will always do what’s in their own short-term best interest”.
Maguire said different percentage thresholds could cause problems, especially for the club in the Conference League.
“The money you’ll make from winning that – you’re probably talking no more than £20m,” he said.
“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.”
The Premier League clubs in this competition could be at a competitive disadvantage, still working towards UEFA’s 70% but with minimal additional income.
Yet that seems to be an exceptional case.
With the Premier League’s huge commercial finances, its clubs were already a step ahead.
Another boost to spending power is the last thing rival clubs want.
What is Squad Cost Ratio and how will it affect clubs?
While profit and sustainability rules (PSR) were about a club’s balance sheet of all revenues over a three-year period, SCR is just about team costs on a seasonal basis.
The new rules will operate a dual system, with clubs in European competition having to adhere to UEFA’s SCR limit of 70% – so a club could be sanctioned by UEFA but be compliant in the Premier League.
The higher limit is intended to protect the Premier League’s competitive balance, given the increased income those clubs competing in Europe will receive.
Chelsea and Aston Villa were both handed heavy fines by UEFA for breaches during the 2024-25 campaign, and that was when the limit in Europe was 80%.
The Premier League has added some wriggle room, too, with a multi-year rolling allowance of 30% that permits clubs to spend beyond the limit. It allows clubs to invest ahead of revenue and variance or sporting underperformance.
An assessment is made each March, and the allowance is crucial in determining any sporting sanctions applied in the same season.
The 85% marker is known as the Green Threshold. Spend above that and you incur a financial penalty, though it will be far less punitive than Uefa’s.
The Red Threshold is 85% plus the allowance. Go beyond that, and it is a fixed six-point deduction, increasing by one point for every £6.5m spent over the Red Threshold.
Think of it this way – every club will start next season on 85% + 30% allowance, so effectively 115%.
Any clubs that spend above 85% will face a fine, but they would need to be in excess of 115% to lose points.
But those percentages will change for 2027-28.
If a club spends 105% on their squad next season, it means they have used 20% of their allowance, and for 2027-28 their maximum spend before potential sporting sanction is 95%.
If a club spend less that 85%, they can increase the allowance again to the maximum of 30%.
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