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Part 3 · Section 8 of 10
Money, and who else is affected
The financial rules, and what breaking them means
Football’s financial rules all start from one document: the club’s accounts. By the end of this section you can say what the old rules required, what replaced them in 2026/27, how a breach is now punished, and why a misstatement breaks more than one rule at once.
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How do football's financial rules work, and what follows a breach?
Every financial rule reads from the club's accounts. The old rules capped losses at £105 million over three seasons; from 2026/27 a squad-cost ratio and three sustainability tests replace them.
A squad-cost breach now costs points by formula, imposed by the Board rather than a Commission. And one misstated figure can break several rules at once.
What did the old rules require?
Two things above all. Every club had to file annual accounts prepared and audited to the legal standard, giving a true and fair view (Core Decision, paras 38 to 39). And under the Profitability and Sustainability Rules a club could lose no more than £105 million, in aggregate, over three seasons (para 43).
Breaking the loss limit meant a Commission and, usually, points. Everton’s loss of £124.5 million against the £105 million threshold cost it ten points in November 2023 (League statement). The rules looked backwards: the breach was found once the accounts were in, often a season or more later.
What replaced them?
Two new tests, from 2026/27. The clubs agreed to replace the profitability rules with “Financial Regulations” from 5 June 2026 — but the old rules still govern 2025/26 and every season before it, and the League keeps its power to enforce them (Rules E.47 to E.48 and guidance, Handbook 2026/27). Clubs must still file their 2025/26 figures by 31 October 2026 (E.48).
The Squad Cost Ratio. A club’s squad costs — wages, transfers, agents’ fees — are measured against its football revenues. The “green threshold” is 85% of estimated revenues; above it, each club has an error margin of up to 30%, and the “red threshold” is 85% plus that margin (Appendix 2, A.1.17, A.1.31, A.1.48). Compliance is tested on 1 March each season (A.1.57). Financial levies for overspending start only in 2027/28 (Appendix 2, A, para 1).
Sustainability and Systemic Resilience. Three tests of financial health — working capital, liquidity and positive equity (Appendix 3, Sections C to E). A club that keeps failing faces escalating measures from the Board: an agreed budget, approval of new contracts, a spending limit, refused registrations, then disciplinary action (F.2). A director whose financial misconduct caused repeated failure can be disqualified (F.3).
How is a squad-cost breach punished?
By formula, not by a Commission. A club over its red threshold receives a Breach Notification from the Board, and loses points: six, plus one for every £6.5 million of overspend above the red threshold, rounded up (Appendix 2, F.1, F.4). Breach again the next season and the deduction is multiplied by 1.3; a third season, by 1.6 (F.5).
The deduction takes effect at once unless challenged in time — seven days to challenge a Board decision, 14 days to challenge the revenue figures — and the challenge goes to arbitration (F.2 to F.3, G.1). The discretion that sat with a Commission under the old rules now sits, largely, in the arithmetic.
Check yourself
On 1 March a club is £13 million over its red threshold, and it breached last season too. How many points does it lose?
What about deals with a club’s own associates?
They are tested at fair market value. Since 2021 the League has required transactions with a club’s associated parties to be assessed against what unconnected parties would pay. The rules exist, in their own words, to ensure “the veracity of the costs and revenues reported by Clubs” (guidance to Rules E.49 to E.79, 2026/27).
A tribunal tested those rules in 2024, on a club’s challenge. It held them unlawful under the Competition Act 1998 for one reason — they left out shareholder loans — and held later pricing changes unlawful too. It also found one procedural flaw: clubs could not comment on the comparable-transaction data before the League decided. Every other challenge failed (Partial Final Award, paras 592 to 593 and declarations).
Why does a misstatement break more than one rule?
Because every test reads from the accounts. Overstate revenue and the accounts are not true and fair; the loss calculation built on them is wrong; and, under the new rules, so is the squad-cost ratio. One false figure becomes several breaches. That is why the accounts-submission rule sits at the head of every financial case.
As at 2026-10-07. Rules are cited by Premier League Handbook edition and rule number; decisions and judgments by date and paragraph; commentary is attributed and never stated as the law. probative.io is a research and investigations practice, not a law firm, and does not provide legal advice; nothing here is a view on any particular matter.