PSR has been one of the most talked-about acronyms in Everton’s recent history, sitting behind the 2023-24 points deduction, the club’s ongoing appeal against Burnley, and a fair chunk of the financial caution that’s shaped recruitment under multiple owners.
But PSR’s days are numbered. From next season, it’s being scrapped entirely in favour of a new system. Here’s everything Evertonians need to know about both.
What is PSR?
Profit and Sustainability Rules, introduced by the Premier League in 2013, limited how much money a club could lose over a rolling three-year period. The rules cap permitted losses at £105 million across that three-year cycle, working out to roughly £35m per season on average, though clubs could offset losses in one year against profits in another within that window.
Crucially, PSR looked at a club’s overall profit and loss position – everything from transfer activity and wages through to stadium costs, commercial deals, and even asset sales to companies under the same ownership.
That last point became notorious during Chelsea’s sale of two hotels and their women’s team to companies under the same ownership, a manoeuvre used to boost recorded revenue and still stay compliant. A loophole, in other words.
For Everton, PSR sits at the heart of two separate sagas: the 2023-24 points deduction (10 points, reduced to six on appeal) for a breach relating to the 2021-22 accounting period, and the club’s current appeal against being ordered to pay Burnley £35m in compensation, after Burnley successfully argued the breach contributed to their relegation.
Read the full background in our PSR appeal explainer, and catch up on Everton’s wider financial picture in our Everton finances pages.
Why PSR is being replaced
PSR has long been criticised for being slow, retrospective, and difficult to enforce fairly. Breaches are often only confirmed and punished years after they happened – Everton’s sanction in late 2023 related to spending from 2022, a gap that’s fuelled plenty of fan frustration and, as the Burnley case shows, opened the door to lengthy legal disputes.
As one financial law firm put it, the complexity of PSR combined with poor drafting led to protracted legal disputes that undermined public confidence in the league’s governance. Familiar, right?
In November 2025, Premier League clubs voted, by a narrow 14-6 margin, to scrap PSR from the 2026-27 season onwards, replacing it with two new frameworks: the Squad Cost Ratio (SCR) and Sustainability and Systemic Resilience (SSR).
How Squad Cost Ratio (SCR) actually works
The biggest shift is philosophical, not just technical. As one Premier League finance lawyer summed it up, PSR measured an accounting figure rather than actual financial health, and invited creative compliance rather than prroper financial management. SCR instead focuses on squad spending relative to football income.
From 2026-27, clubs will be allowed to spend a maximum of 85% of their football-related revenue on squad costs – covering player and head coach wages, amortised transfer fees, and agents’ fees.
Clubs competing in UEFA competitions face a stricter 70% cap, aligning the Premier League with UEFA’s existing financial sustainability rules. Spending on infrastructure, academies, or commercial operations sits outside the calculation entirely, giving clubs more freedom to invest off the pitch without it counting against them.
Compliance checks will also come around far more often than under PSR. Assessments take place each March, intending to resolve breaches within the same season rather than several years later. Clubs that go over the 85% threshold but stay within an extra 30% buffer face fines rather than points deductions; only those that breach the upper so-called ‘red threshold’ risk sporting sanctions.
Running alongside SCR is SSR – a separate set of liquidity and balance-sheet checks designed to make sure clubs aren’t simply solvent on paper while running short of actual cash, including a positive equity test that tightens each season progressively through to 2028-29.
What it means for Everton
The transition matters for Everton specifically because profits from player sales will now be spread over three years under SCR, rather than booked immediately as they were under PSR – a change that hits clubs reliant on trading players to balance the books, and worth bearing in mind given Everton’s own summer business, including the ongoing Thierno Barry sale talks.
On the flip side, debt interest and non-squad costs no longer count against compliance, which could ease pressure for clubs carrying heavier financing costs.
For the 2025-26 season, PSR still applied in full, with SCR running in “shadow” form alongside it so clubs can adjust before the real switch arrives in 2026-27. That means Everton’s current PSR appeal against Burnley still falls under the old rules – but every transfer decision the club makes from this summer onwards will be judged under this new system instead.
For more on how this affects Everton specifically, read our Burnley PSR appeal explainer.
