The Premier League’s financial framework changes significantly from the 2026/27 season. The existing Profitability and Sustainability Rules (PSR) are being replaced by two new systems: Squad Cost Ratio (SCR) and Sustainability and Systemic Resilience (SSR).
The change matters to every Premier League club, including Liverpool, because the new rules move away from a three-year overall-loss test and place much greater emphasis on annual squad spending and financial resilience.
How Squad Cost Ratio works
Under SCR, Premier League clubs are generally limited to spending 85% of football-related revenue plus net profit or loss from player sales on squad costs. Those squad costs include player and head-coach wages, agents’ fees and the amortisation or impairment of transfer fees.
Clubs competing in UEFA competitions must also comply with UEFA’s separate 70% squad-cost threshold. The Premier League system includes monitoring during the season, making compliance a more immediate issue than under the former PSR framework.
What replaces the old PSR test?
PSR assessed clubs over a rolling three-year period. From 2026/27, the Premier League’s new Sustainability and Systemic Resilience rules instead include tests covering working capital, liquidity and positive equity.
The aim is to identify financial stress earlier and give the league tools to intervene before a club’s financial position becomes unsustainable. Measures can include enhanced monitoring, business plans and spending restrictions, with sporting sanctions possible under the wider rules framework.
What this means for Liverpool
For Liverpool and other clubs, transfer strategy can no longer be understood simply through the old £105 million PSR loss limit. Squad wages, transfer amortisation, player-sale profits and football revenue now interact directly within the SCR calculation.
Off-pitch investment such as stadium improvements is treated differently from squad spending, giving clubs more freedom to invest in infrastructure and fan experience while still controlling football costs.
The key point for supporters is that the regulatory language has changed. Articles that continue to describe PSR as the Premier League’s current operating system after the start of 2026/27 are outdated.
Source: Premier League, “New Premier League financial system explained”, published 21 November 2025.
