In The Money: Player Development Key Under New Regulations
Squad Cost Ratio (SCR) and Sustainability and Systemic Resilience (SSR) Rules will increase the importance of Premier League clubs implementing effective player development strategies, to boost net profit on player sales.
The advent of the Independent Football Regulator is casting a shadow over English football, with clubs giving the green light to rule changes that position them ahead of the curve.
One of the most significant developments is the end of PSR regulations in the Premier League, in favour of Squad Cost Ratio (SCR) and Sustainability and Systemic Resilience (SSR) tests, from next season.
Fourteen clubs voted in favour of implementing the SCR rules, which will align domestic rules more closely with UEFA requirements for Champions League, Europa League and Conference League competitions, while every club voted in favour of SSR rules.
The new framework provides a revenue-based cost-control model, focused on clubs’ on-pitch spending, compared to what it earns from football activities.
Revenue will be front and centre in terms of club competitiveness under the new regulations. Clubs will have to keep their spending on wages, transfer fees (spread over the length of contracts), and agent commissions within a strict percentage of their football-related income.
A club’s squad spending will be capped at 85% of football-related revenue and net player trading profit. For teams competing in UEFA’s competitions, that cap will be 70%, a figure that mirrors UEFA’s model.
Linking the wage bill to income is less attractive to clubs with lower financial resources, as it ensures the highest-earning clubs will retain the highest spending limits. Understandably, Bournemouth, Brentford, Brighton, Crystal Palace, Fulham and Leeds voted against SCR, as a result.
Including net profit on player sales within the Adjusted Revenue base, means player trading will become even more important as a means to comply. This new regulatory structure will reward clubs that both develop players and maximise profits in the transfer market. Many clubs may look to reassess their player development strategies to ensure that not only are all departments aligned, but that they are well positioned to extract maximise returns.
Omar Chaudhuri, Chief Intelligence Officer at Twenty First Group, tells fcbusiness: “Profit on player sales will clearly be a critical area of revenue growth – indeed transfer income for clubs is rising at a much higher rate than all other income streams.
“To realise profits, clubs will clearly need to buy low or develop through the academy, and sell high – however, this is much easier said than done, with fees for under-23 players accelerating at a much faster rate than the rest of the market. In other words, there has never been more importance associated with buying young, but also never more risk.
“In this new environment, sustainable success hinges on the meticulous and often unglamorous work of building robust internal processes.
“Success in this new landscape requires a resolute commitment to process. This is not about simply having access to data but about its consistent and disciplined application to avoid costly mistakes. The data, in essence, is a tool; its value is realised only through a consistent process that helps guide decision-making, rather than being treated as a one-off luxury.”
The most significant source of value in football is often created not through buying players but through improving them. A chronic under appreciation of player development at a number of clubs is one of the most significant blind spots in modern football spending.
“Clubs with highly effective development systems such as Brighton, can achieve an astonishing average value growth of over 50% on their players,” adds Chaudhuri. “They don’t just get players in the door; they have a cohesive, club-wide process to improve them and make them attractive to the market.
“This relies on a club culture where everyone – from the manager and sporting director to the performance staff – is aligned on a shared strategy.”
Premier League clubs with lower turnovers will also assess opportunities for growth in matchday, commercial and broadcast revenues.
BDO partner and head of professional sports Ian Clayden, speaking in the firm’s survey of football finance directors 2025, says: “For clubs to remain competitive or increase competitiveness, they would likely need to increase their player spend. Under these new rules, for a club to increase player spend and not be in breach of the SCR ratio, the club will need to generate higher revenues.
“With the latest broadcasting deals for the EPL seeing a slight stagnation, clubs will fall on a need to generate increased football revenue from other means. Whilst this might include things like new commercial sponsors, it is likely the larger, more successful clubs will be those who are able to attract the greatest return from sponsorship.
“You may therefore find that for the mid to lower table teams to compete, they have to generate higher revenues from more traditional areas such as ticket prices, shirt sales or the cost of a pie.”
Meanwhile, SSR moves beyond the cost-control focus of PSR to address essential financial health metrics, aiming to guarantee the structural solvency and viability of clubs in the short, medium and long term. It is a blatant nod to the new Regulator.
It will function as the Premier League’s governance backbone and focuses on ensuring that clubs have adequate liquidity and capital structure to withstand unforeseen operational difficulties. They are specifically intended to promote “systemic resilience,” to give the league, protection from the failure of individual clubs.
Despite its promise, the new framework does raise concerns, including risk around player valuations. SSR gives regulatory weight to ‘squad market value’, which is a loosely defined metric. Without clear standards, player valuations could legitimately diverge by tens of millions of pounds. This could open a large loophole around player valuations, which are difficult to audit and relatively simple to manipulate.
Nonetheless, as domestic football enters a regulated era that will redefine how clubs operate, they will have to prove financial resilience, governance discipline and heritage protection – not just in principle but through auditable evidence.
This is a structural shift from informal and inconsistent norms to codified standards on ownership scrutiny, financial risk management, governance reporting and fan engagement.
The smartest in the room will likely include those who can maximise revenue streams – particularly from the development of players and optimising opportunities in the transfer market.
Words: Alex Miller
Images: Getty Images
Squad Cost Ratio
The SCR limit restricts club spending on player wages, transfer fee amortisation and agent commissions to a fixed percentage of revenue from football club operations. This percentage is set to be 85% (albeit clubs in Europe may face a tougher 70% restriction, in line with the UEFA regulations).
An additional 30% multi-year rolling allowance will be in place to differentiate between what are seen as minor and major breaches, albeit this percentage is expected to reduce over time.
* Green Threshold – set at 85% of revenue from football operations, if a club breaches the Green Threshold but remains within the Red Threshold, the club will be subject to a financial penalty.
* Red Threshold – clubs who breach both the 85% and 30% allowance will face an automatic six-point deduction, with a further point deduction for every £6.5m spent over the Red Threshold.
* Whilst it was suggested that a further intention of the rule was to bring domestic rules in line with UEFA regulations, the usage of different threshold percentages (70% vs 85%+30%) does now lead to a dual system for those competing in Europe.
Sustainability and Systematic Resilience (SSR) tests
Aimed at improving club’s financial sustainability, three tests are to be introduced.
Working capital test – clubs will be required to demonstrate that for each month of a season, the total cash balance and qualifying working capital funds is at least £12.5m.
Liquidity test – a stress test will be put in place, requiring clubs to evidence that they will have sufficient liquidity to manage an £85m hit to earnings (to reflect a negative event such as loss of Europe or relegation).
Positive equity test – a ratio will be put in place to compare the relative size of a club’s assets and liabilities with the ratio reducing from 90% in the 26/27 season down to 80% by the 28/29 season.
