EFL & Premier League Squad Cost Ratio · Glossary
SCR glossary: every term explained
The Squad Cost Ratio caps what a club spends on its squad — wages, transfer
amortisation and agents' fees — at 85% of adjusted football revenue, the
Green Threshold. The Premier League adds a 115% Red Threshold beyond which
points are deducted, built from a 30% allowance that ratchets down after a breach, while
League One clubs still run under SCMP's 50% wages-to-turnover cap.
Every term below links to a fuller definition: what it means, how it is calculated, and where it bites.
| Term | Short answer |
|---|---|
| Squad cost | Squad cost is the figure measured by the Squad Cost Ratio: player and head-coach wages, plus player transfer amortisation and impairment, plus agents' fees. |
| Amortisation | Amortisation is the annual accounting cost of a transfer fee, spread evenly across the length of the player's contract. |
| Impairment | Impairment is an extra write-down of a player's remaining book value when the club no longer expects to recover it, and it counts towards squad cost alongside amortisation. |
| Agents' fees | Agents' fees are payments a club makes to intermediaries on transfers and contract renewals, and they count towards squad cost under SCR. |
| Adjusted football revenue | Adjusted football revenue is the denominator of the Squad Cost Ratio: football income plus profit or loss on player sales, including stadium-hosted non-football events and excluding asset sales to owner-linked entities. |
| Green Threshold | The Green Threshold is the compliance line under SCR: squad cost of no more than 85% of adjusted football revenue, in both the Premier League and the Championship. |
| Red Threshold | The Red Threshold is the Premier League's hard limit under SCR — the Green Threshold of 85% plus the club's own allowance, which starts at 30% and can shrink after a breach. |
| Levy | The levy is the Premier League's financial charge on squad cost between the 85% Green Threshold and the club's Red Threshold, deferred until 2027/28. |
| Feedback Loop (ratchet) | The Feedback Loop is the Premier League mechanism that cuts a club's SCR allowance by the size of any breach of the 85% Green Threshold, then rebuilds it at 10 percentage points a season, capped at 30%. |
| SCR Compliance Test | The SCR Compliance Test is the Premier League's in-season check of a club's projected Squad Cost Ratio, run on 1 March so that it captures the January transfer window. |
| Accounts Confirmation Test | The Accounts Confirmation Test is the Premier League's post-season check of the Squad Cost Ratio against audited accounts, run in June, and it is the test that sets Feedback Loop allowance cuts. |
| SSR (Sustainability and Systemic Resilience) | SSR is the Premier League's Sustainability and Systemic Resilience framework, a set of financial resilience tests on matters such as liquidity, going concern and balance-sheet strength that sit alongside SCR rather than replacing it. |
| Owner top-up (equity allowance) | The owner top-up is the Championship's equity allowance under SCR: an owner may fund squad cost above the 85% limit by up to £16m in a season, and no more than £34.3m across any rolling three-year window. |
| Additional Reporting Threshold (95%) | The Additional Reporting Threshold is the Championship's 95% trigger: a club projecting or exceeding a squad cost ratio of 95% must self-notify the EFL and accept enhanced reporting requirements. |
| Business plan | A business plan is the budget and forecast a club must agree with the EFL when it is over a reporting threshold or in breach, setting out how it will return to compliance. |
| Embargo | An embargo is the EFL's in-season sanction that stops a club registering new players, or limits it to registrations within set conditions, until it is compliant again. |
| Club Financial Review Panel | The Club Financial Review Panel is the EFL's independent panel that considers clubs referred for financial rule breaches and decides what conditions or sanctions should follow. |
| SCMP (Salary Cost Management Protocol) | SCMP is the EFL's spending rule for League One and League Two: player wages are capped at 50% of turnover, rising to 65% for clubs recently relegated from the Championship, with breaches punished by a registration embargo. |
| Parachute payments | Parachute payments are the Premier League's post-relegation payments to a relegated club, worth 55%, 45% and 20% of an equal share of central broadcast money, with the third year paid only to a club that spent more than one season in the Premier League. |
| PSR (Profitability and Sustainability Rules) | PSR is the loss-based system that SCR replaces from 2026/27: it capped a club's losses over a rolling three-year period at £105m in the Premier League and £39m in the Championship. |
| Anchoring | Anchoring was a proposed Premier League rule that would have capped every club's squad cost at five times the central broadcast and commercial distribution paid to the bottom club; clubs rejected it on 21 November 2025 by 7 votes to 12. |
How to use this glossary
The terms are ordered from the mechanics of the calculation — squad cost, amortisation, adjusted football revenue — through the thresholds that judge it, then the tests, sanctions and the rules SCR replaced. If you are starting cold, read squad cost and adjusted football revenue first: they are the numerator and the denominator of every ratio on this site.
Each definition names the competition it applies to. A rule that binds a Premier League club often does not bind a Championship one, and League One is a different regime altogether.
Definitions summarise published EFL and Premier League regulations in plain English; they are
not legal advice and not a substitute for the rulebooks themselves.
Last reviewed 2026-09-10.
SCR explained →
Methodology →