What's the deal with Liverpool and SCR?

The Premier League will welcome new financial regulations from next season

There once was a glorious period in time when PSR wasn’t part of the everyday vernacular in football.

But as the game got bigger, and the numbers eye watering, the regulations that had been in place for years previous failed to keep pace with a rapidly changing football landscape, and plenty of teams had to undertake all kinds of financial gymnastics to stay on the right side of the law. And so grew the clarion call to bring about some kind of change.

Last month, Premier League clubs voted 14–6 in favour of overhauling the financial rules that have governed English football’s top flight for more than a decade. Profit and Sustainability Regulations (PSR), introduced after Portsmouth’s near-collapse in 2009, were long a niche concern but have since entered the mainstream of fan debate.

Under PSR, clubs were permitted to lose up to £105m over three years, with deductions allowed for areas such as infrastructure, academies, women’s football, and community projects. That limit has remained unchanged for 15 years, even as the financial landscape of the game has transformed. Wages and transfer fees have soared, broadcast revenues have risen sharply, and yet clubs such as Everton (twice) and Nottingham Forest have still been penalised with points deductions for breaches.

The rules also constrained ambitious clubs like Newcastle United and Aston Villa, whose wealthy owners were unable to invest at the scale they desired despite breaking into the Champions League places and challenging the established “big six.” Even some of the Premier League’s historic heavy hitters, such as Chelsea and Manchester United began to feel the restrictions, fuelling the perception that PSR had become a handbrake on ambition. Calls for reform grew louder, and only last month did consensus emerge on what should replace it.

From the 2026/27 season, PSR will give way to two new frameworks: the Squad Cost Ratio (SCR) and Sustainability and Systematic Resilience (SSR). SCR aligns the Premier League more closely with UEFA’s financial controls, though with greater flexibility. It measures the proportion of adjusted revenue spent on first-team costs, such as wages, head coach salaries, amortisation, and agents’ fees. Adjusted revenue includes matchday, broadcast, and commercial income, plus profits from player sales and stadium events, but excludes asset disposals.

Clubs will be expected to keep their SCR below 85% of adjusted revenue, the so-called ‘Green Threshold’. Spending can rise to 115% (the ‘Red Threshold’) through an additional 30% allowance, though this incurs a levy. Breaching the Red Threshold risks sporting sanctions, making it a hard cap. The system is designed, it is hoped at least, to try and balance financial discipline with flexibility, allowing clubs with greater ambitions than to just tread water, to invest ahead of revenue growth and absorb some short-term volatility while maintaining competitive balance.

For clubs competing in UEFA competitions, like Liverpool, stricter limits apply, but those rules have been in situ for some time now, and seldom been a concern for the biggest sides in the Premier League. To take part in UEFA competition, clubs must meet a 70% Green Threshold and a 100% Red Threshold, reflecting the higher revenues generated by Champions League participation.

Alongside SCR, the unanimously approved SSR will assess clubs’ financial health through three tests: Working Capital, Liquidity, and Positive Equity. These aim to safeguard stability across the short, medium, and long-term.

Of the 20 Premier League clubs, six voted against SCR—Bournemouth, Brighton & Hove Albion, Brentford, Crystal Palace, Fulham, and Leeds United. Notably, three of those clubs currently report the highest squad cost ratios in the division, exceeding UEFA’s 70% benchmark and the Premier League’s Green Threshold, though none surpass the Red Threshold.

So what does all of this mean for Liverpool?

There was never going to be a set of financial regulations to emerge that would please all of the owners of the 20 Premier League clubs that make up its shareholders, and the fact that three of the clubs who voted against have high SCR already should be instructive.