EFL Clubs Approve New Financial Rules To Replace P&S System From 2026/27

Championship clubs have approved a new financial framework that will replace the current Profitability and Sustainability (P&S) rules from the 2026/27 season.

Throughout the 2025/26 campaign, clubs have been operating the proposed Squad Cost Rules (SCR) system in shadow alongside existing P&S regulations. This allowed teams and the EFL to assess how the new structure would work before formally adopting it.

Under the new system, clubs will be limited in how much they can spend on player and manager-related costs, including transfer fees, based on a percentage of their income plus a capped level of owner funding.

From the start of the 2026/27 season, Championship clubs will be allowed to spend up to 85% of income under SCR rules, with an additional flexible equity top-up allowance of £33m across three years, capped at £15m per season.

The EFL says the framework will provide real-time financial monitoring during the season rather than relying on retrospective reviews. The aim is to give clubs greater clarity while allowing the league’s Financial Reporting Unit earlier visibility of financial issues.

Additional safeguards covering commercial agreements linked to owners or associated parties have also been included.

The changes are designed to create a more straightforward and responsive financial control system within the Championship.

A similar version of the SCR model is set to be introduced in the Premier League from 2026/27, bringing greater alignment between the divisions.

League One clubs also voted through amendments to the existing Salary Cost Management Protocol (SCMP) rules in a move aimed at reducing losses and lowering reliance on owner funding.

Under the updated rules, League One clubs will now only be able to spend 50% of turnover on wages, reduced from the previous 60% threshold. Manager costs will also now be included within the calculation.

Relegated Championship clubs will be permitted to spend 65% of turnover on wages during their first season in League One, down from the current 75% allowance.

League One clubs also approved changes to equity injection rules. Moving forward, all owner equity injections will count at 50% within the calculation.

For example, if an owner invests £500,000 into a club, only £250,000 can be added to the wage budget on top of the amount already permitted through turnover calculations.

The EFL says the changes are intended to encourage investment into infrastructure, academies and wider club operations rather than solely into wages.

Meanwhile, League Two clubs voted against proposals to mirror the new League One approach to equity injections.

Full details of the Squad Cost Rules and updated Salary Cost Management Protocol regulations for the 2026/27 season are expected to be published in due course.