In the spring of 2024, Premier League clubs voted in principle to replace the legacy Profitability & Sustainability Rules (PSR) with a new framework anchored to a hard ceiling on first-team spending. The vote was provisional and the rules were not enforced for 2024/25, but the structure has firmed up through 2025/26 and is now widely referred to as the Premier League's anchoring salary cap. The mechanism is unusual: rather than naming a flat figure or tying the cap to a single club's revenue, the league pegs the ceiling to a multiple of the broadcast revenue earned by the bottom club in the table. That multiple is 4.5x.
This piece explains exactly how anchoring works, how it sits alongside the UEFA Squad Cost Ratio (which caps total squad cost at 85% of football revenue), and how the whole package compares to North American salary-cap regimes. We use 2025/26 numbers throughout, with sources cited at the bottom.
What the Premier League actually voted on
The vote, taken at a Premier League shareholders' meeting in April 2024, was on an in-principle move from PSR to a Squad Cost Ratio regime aligned with UEFA, plus an anchoring mechanism layered on top. Sixteen of the twenty clubs voted in favour, three voted against (Manchester United, Manchester City and Aston Villa were widely reported as the dissenters), and one abstained.
The package has three components:
- SCR (Squad Cost Ratio): from 2025/26, clubs cannot spend more than 85% of football revenue plus net profits from player trading on first-team wages, transfer amortisation, and agent fees combined. This mirrors UEFA's domestic SCR which is 70% for clubs in European competition.
- Anchoring: a hard upper bound on total squad cost set at 4.5x the central broadcast revenue of the bottom-placed club. For 2025/26 the bottom-placed club is projected to receive roughly GBP 122M in central distribution, giving an anchored cap of roughly GBP 549M per club.
- PSR top-up: a tightened sustainability backstop that keeps the existing GBP 105M permitted loss across a 3-year window, but with stricter add-backs.
The 16-3-1 vote was a provisional rule change. Implementation phasing means SCR took effect for the 2025/26 season as a "shadow" rule, with full enforcement (and PSR sunset) targeted for 2026/27. The Premier League board has flagged anchoring as the most legally exposed of the three pillars and discussions with the PFA (Professional Footballers' Association) and broadcasters are ongoing.
How an anchoring cap works (the 4.5x math)
Anchoring is the part that is genuinely novel. In all other major team-sport salary caps, the cap is either a flat amount (NHL, MLS, AFL) or a fixed share of league revenue split across teams (NBA, NFL). The Premier League's anchoring cap is different: it ties the ceiling to a multiple of the broadcast cheque earned by the worst-performing club.
| Season | Bottom-club central distribution | Anchored ceiling (4.5x) | Comparable to (top spender) |
|---|---|---|---|
| 2023/24 | GBP 109M (Sheffield United) | GBP 491M | Man City wages alone: GBP 423M |
| 2024/25 | GBP 115M (Southampton) | GBP 517M | Man City total squad cost: GBP 540M |
| 2025/26 (projected) | GBP 122M | GBP 549M | Real Madrid 2024/25: GBP 561M |
| 2026/27 (projected) | GBP 131M | GBP 589M | To be set |
The reason the league chose this design over a flat number is to make the cap self-adjusting: if Sky and TNT bid more for broadcast rights in the next cycle, the bottom club's cheque rises, and the ceiling rises with it. No annual re-negotiation needed.
The reason it pegs to the bottom club rather than the average or the top club is that the league's central distribution mechanism awards the bottom team the smallest cheque. By multiplying by 4.5x, the league is essentially saying "no club can spend more than 4.5 times what a relegation-zone team can spend on its squad." That is a pure competitive-balance argument, and it is the same logic that underpins the NBA's salary floor / ceiling spread.
UEFA Squad Cost Ratio: the 85% rule
The Squad Cost Ratio sits separate from anchoring. It says: your total squad cost (wages + transfer amortisation + agent fees) cannot exceed 85% of your relevant income (broadcast + matchday + commercial + net player-trading profit). UEFA's parallel rule is stricter at 70%, but only applies to clubs in European competition.
The arithmetic is the actually-binding constraint for richer clubs. Manchester City posted GBP 715M in revenue for 2023/24 according to the Deloitte Football Money League 2025. At an 85% SCR, City could spend up to GBP 608M on squad cost. Anchoring caps them at GBP 549M. Anchoring binds first for City. For mid-table clubs like Brentford or Bournemouth with much smaller revenue (GBP 200M-240M range), the 85% SCR caps them around GBP 170M-204M, while the anchoring ceiling is irrelevant. SCR binds for them.
This is intentional. The design tries to slow down the biggest clubs without throttling growth for mid-table clubs that need wages and transfer fees to compete.
PSR vs the cap: two rules, one ledger
Profitability & Sustainability Rules (PSR) were the previous regime. PSR is a profit / loss test, not a spending test. A club can spend whatever it wants on wages as long as it does not lose more than GBP 105M over a rolling 3-year window. Permitted add-backs include youth investment, women's football, infrastructure spend, and Covid-period adjustments.
PSR's weakness is that it is enforced after the fact and the punishments (points deductions) are awarded retroactively. Everton, Nottingham Forest, and Leicester have all faced PSR proceedings in the past two seasons. The new anchoring + SCR regime is meant to enforce in-year: clubs that breach are barred from registering new players in the following window, rather than having points docked retrospectively.
For 2025/26 and 2026/27, PSR runs alongside the new rules as a backstop. From 2027/28 the league plans to sunset PSR and rely on SCR plus anchoring alone.
PL vs NBA vs NFL vs MLB: the cap-design table
Side-by-side, the four caps look very different. The Premier League's design lands closer to MLB's luxury tax model than to NBA or NFL hard caps.
| League | Cap type | Cap value 2025/26 | What it caps | Tied to | Penalty for breach |
|---|---|---|---|---|---|
| Premier League | Soft cap + ratio | GBP 549M (anchor) and 85% SCR | Wages + transfer amortisation + agent fees | Bottom-club broadcast revenue x 4.5 | Transfer ban / fines, plus PSR points deductions |
| NBA | Hard cap (2nd apron) | USD 188.9M (cap), USD 207.8M (1st apron), USD 220.4M (2nd apron) | Player salaries only | Basketball Related Income (51% to players) | Hard ceilings on signings + dollar-for-dollar luxury tax |
| NFL | Hard cap | USD 279.2M per team | Player salaries + signing bonus pro-rations | League-wide revenue (48% to players) | Player not allowed to be signed if it would breach cap |
| MLB | Luxury tax (CBT) | USD 244M (base threshold) | Player payroll (40-man + benefits) | CBA negotiation, increases set in 5-year deal | 22% to 50% tax on overage + draft pick penalties |
| NHL | Hard cap | USD 95.5M per team | Player salaries only | League revenue (50/50 with players) | Hard ceiling on signings, escrow clawback |
Cap ceiling as multiple of cap floor (2025/26)
Higher = more spending inequality permitted
The contrast with the NFL is most striking. Every NFL team operates under an identical USD 279.2M cap. There is zero permitted variance. The competitive-balance argument is "everyone fights with the same wallet." The Premier League's permitted variance is 4.5x because European football has never claimed competitive parity as a goal: the league is built around relegation and an entrenched top six.
The NBA introduced the second apron in the 2023 CBA precisely because the soft cap had become too soft. The first apron (USD 207.8M for 2025/26) triggers limits on sign-and-trade and use of mid-level exception; the second apron (USD 220.4M) is functionally a hard cap with severe penalties on free agency. This is closer to the Premier League's anchoring design than the old NBA single-cap model.
MLB is the closest match philosophically. The Competitive Balance Tax (CBT, often called the luxury tax) does not stop the Dodgers from spending USD 320M; it just charges them a 50% surtax on every dollar over USD 244M. The Dodgers pay it. The threat in MLB is not a hard ceiling, it is the financial cost of breaking it. The Premier League's anchoring cap is harder than that (a transfer ban is a real sporting penalty), but the spirit is similar.
What it means for clubs and player wages
For the biggest clubs (City, United, Liverpool, Chelsea, Arsenal, Tottenham), anchoring is the constraint. They are already at or near the GBP 549M ceiling. Net effect: wage inflation at the top of the market slows materially. Star wages plateau around the GBP 25M-30M / year range. The era of GBP 1M / week packages, briefly threatened during the post-Covid Saudi splurge, is effectively closed for Premier League clubs.
For mid-table clubs, the SCR 85% rule is the constraint and behaviour does not change much; they are not at the ceiling anyway.
For player wages at the median of a Premier League squad, expect compression. A bottom-six Premier League senior player on GBP 50,000 / week (around GBP 2.6M / year) is unlikely to see big rises. Want to see what GBP 50,000 / week actually pays after UK PAYE plus NI? Run it through our UK PAYE calculator: a player on GBP 2.6M / year takes home roughly GBP 1.39M (effective rate ~46.5%), with the marginal rate of 47% (45% additional rate + 2% NI) biting from GBP 125,140 onwards.
Agents, who currently capture a meaningful slice of transfer activity, will also be squeezed. Agent fees count toward SCR. Expect more aggressive negotiation by clubs on agent commission percentages and a shift toward bonus-tied structures so that the cap impact is contingent.
For comparison shopping a club's player wage against US or other-league pay, our global salary calculator and US salary calculator handle the cross-border tax conversion. The same GBP 2.6M gross in California works out very differently than in London once federal, state, FICA, and the cost of living are accounted for.