Football’s spending rules, explained

In one lineEurope’s main rulebooks now cap what a club spends on its squad as a share of what it earns, instead of only capping how much money it may lose.

Why football has spending rules

Clubs compete for the same players. When one club spends more, its rivals feel pressure to follow. If spending runs ahead of income, owners or lenders must fill the gap. When they cannot, clubs miss wage payments or collapse. Spending rules try to stop that gap becoming a danger to the club and to the competition.

For many years the main tool was a loss limit: a cap on how much money a club could lose over a set period. The newer tool is a cost ratio: a cap on squad spending as a percentage of income. Both UEFA and the Premier League have now moved to cost ratios. LaLiga uses a different method: a budget-based limit set club by club before each season.

The key idea: squad cost

Squad cost is what a club spends on the people who play and coach. The rulebooks differ in detail, but they all count three main things:

• Wages of players and the head coach, including bonuses and benefits.
• Amortisation, which is how a transfer fee is spread across the years of a player’s contract in the accounts. A player signed for €50m on a five-year contract adds €10m a year to squad cost, not €50m in one go.
• Agents’ fees, the payments to intermediaries who help arrange transfers and contracts.

The squad cost ratio is squad cost divided by relevant income. At 70%, every €100 earned pays €70 of squad cost.

UEFA: three pillars

UEFA’s Executive Committee approved new Club Licensing and Financial Sustainability Regulations on 7 April 2022. They replaced the older financial fair play regulations and rest on three pillars.

1. Solvency. No overdue debts to other clubs, employees, tax and social security authorities, or UEFA.
2. Stability: the football earnings rule. Football earnings are relevant income minus relevant expenses, added up over three reporting periods. The basic allowed deficit, called the acceptable deviation, is €5m. It can rise to €60m if the excess is fully covered by contributions, such as money put in by owners, or by the club’s equity. It can rise by up to €10m more for each reporting period in which the club passes extra tests of financial health and has no disciplinary measure or settlement agreement with UEFA’s financial watchdog.
3. Cost control: the squad cost rule. Squad cost must not exceed a set share of income. The limit was phased in: 90% for 2023/24, 80% for 2024/25 and 70% from 2025/26 onwards.

Under UEFA’s rule, the top of the ratio is wages and benefits of players and the head coach, plus amortisation, plus agents’ costs. The bottom is the club’s adjusted operating revenue plus its net profit or loss from selling players. Player-sale profit is averaged over three years, which smooths out one-off big sales. The main figures are measured over the calendar year ending 31 December.

A club that breaks the squad cost rule faces a financial penalty and may face further measures. UEFA’s rules apply only to clubs taking part in its competitions.

Premier League: from PSR to SCR

The Premier League’s Profitability and Sustainability Rules (PSR) were a loss limit: no more than £105m over three seasons, of which only £15m could be absorbed without guaranteed owner funding. Clubs with recent seasons in the second tier had lower limits.

On 21 November 2025, at a shareholders’ meeting, Premier League clubs voted to replace PSR from the 2026/27 season. The new system has two parts:

• Squad Cost Ratio (SCR). Squad cost is capped against the club’s football revenue plus its net profit or loss on player sales. Here squad cost counts what the club pays its players and head coach, the fees it pays agents, and the yearly write-down of transfer fees (amortisation or impairment). Revenue covers the club’s own matchday and commercial income plus the money paid out by the League and by the cup and other competitions it plays in.
• Sustainability and Systemic Resilience (SSR). Three tests of a club’s short, medium and long-term financial health: a working capital test, a liquidity test and a positive equity test.

SCR works with two thresholds:

• Green Threshold, 85%. At or below it, a club is compliant.
• Red Threshold, starting at 115%. Every club, including a newly promoted one, starts with an allowance of 30 percentage points above the Green Threshold. When the check on a club’s end-of-season accounts shows it above 85%, the allowance for the following season shrinks by the size of the breach, until it runs out. A club that later complies with the Green Threshold again gets 10 points of allowance back for each compliant season, up to the full 30.

A club that ends up between the two thresholds is liable for a financial charge called a levy, payable from 2027/28, but loses no points. A club above the Red Threshold faces a six-point deduction, plus one more point for every £6.5m spent over the threshold. A separate proposal, known as top-to-bottom anchoring, did not win enough support.

Premier League clubs that play in Europe must also meet UEFA’s stricter 70% rule.

LaLiga: the squad cost limit

LaLiga’s system is called the límite de coste de plantilla deportiva, or squad cost limit. It is part of LaLiga’s economic control rules. Spain’s Sports Law 39/2022 gives professional leagues the power to supervise the finances of their members.

The rules work through budgets, set in advance:

1. Before each season, every club presents its budget to LaLiga under the league’s budgeting rules, the Normas de elaboración de presupuestos.
2. Each club proposes its own limit. A validation body, the Órgano de Validación, approves it or corrects it to the amount it considers safe for the club’s financial stability. The stated aim is that each budget reaches a break-even point.
3. The limit is a euro amount: the most the club may spend on its sporting staff that season.

The limit covers the registrable squad: the players registered with LaLiga, plus the head coach, assistant coach, fitness coach and staff in similar roles. It also covers the non-registrable squad: reserve teams, the academy, women’s football and the club’s other sports sections. It counts pay, fixed or linked to results, along with social security contributions, team bonuses, the cost of signing players (agents’ commissions included) and amortisation.

The same rules govern when clubs are authorised to register new players. They also set out how a limit can rise, for example after a player sale or a new commercial contract. First-division clubs are assigned a limit of at least 30% of their accepted budgeted revenue even when the budget does not break even, subject to conditions; the figure is 40% in the second division.

LaLiga publishes the limits on its transparency portal, with archives going back to 2019/20.

The three systems side by side

Why ratios instead of loss limits

A loss limit is a fixed number. The same £105m applied to a club earning £100m a year and to one earning £700m. A ratio grows and shrinks with the club’s own income, so the cap fits the size of the club.

A ratio also targets the cost most likely to run out of control: wages and transfer fees. Other spending is left alone. Under UEFA’s rule, for example, money spent on stadiums, training grounds or women’s football sits outside the squad cost figure.

Ratios can also be checked during a season, not only once accounts are published.

There is a trade-off. Because a ratio ties spending to income, clubs with larger incomes can spend more in absolute terms.

Where to go next

• How clubs make money explains the income that sits under every ratio.
• TV rights, explained shows where the largest share of that income comes from.
• Who owns football clubs covers the owners who fund any gap.