The one-sentence version
A club may spend no more than a set share of its football revenue on its squad. Everything a squad costs — player wages, the head coach's wages, transfer fees spread over contract length, and agent fees — is divided by football revenue plus profit from player sales. If the answer is above the limit, the club is in breach.
The two limits, and why clubs have different ones
UEFA sets 70% for clubs in its competitions. The Premier League adopted its own version from 2026/27 at 85% for clubs outside Europe. A club in the Champions League is therefore held to the stricter number, which is the opposite of what most people assume: qualifying for Europe brings more revenue but also a tighter rule. Above the green limit sits a red line — 100% for UEFA, 115% domestically — where sanctions escalate sharply.
What counts as squad cost
Wages of players and the head coach, but not the wider staff bill. Transfer amortisation, which is the fee divided across the contract. Agent and intermediary fees. Loan fees paid. A loaned-in player counts through the wages the borrowing club actually pays, which is why loans are the standard tool for a club near its limit — the fee is nil and there is no amortisation, only the wage share.
What counts as revenue
Matchday, broadcast and commercial income — the football business. Not player sales as turnover, but profit from player sales is added to the denominator, and that is the crucial detail. Selling an academy player for £40m adds close to £40m of profit, because a player the club developed has almost no book value left to deduct. It is why clubs sell homegrown talent to comply.
What happens if a club breaches
Not an automatic points deduction. The club enters a sanctioning process: for UEFA that has meant fines, a portion suspended against agreed targets, and settlement agreements that restrict registering new signings while the balance is negative. Aston Villa's £19.4m fine in 2026, two thirds of it suspended, is the clearest recent example — the money mattered less than the registration restrictions that came with it.
Why it changes on a Saturday
Because revenue is the denominator. Prize money, European progress and gate receipts all raise it, so a winning season lowers the ratio without a single sale. A club that gets relegated sees the reverse, violently and immediately.
See it applied
Every club page works these numbers through for a real squad, with the sources and the caveats attached.
Questions
What is the squad cost ratio?
A limit on squad spending as a share of football revenue. Player and head-coach wages, transfer amortisation and agent fees are divided by football revenue plus player-trading profit. Clubs in UEFA competition must stay under 70%; other Premier League clubs are held to 85%.
Is the squad cost ratio the same as FFP?
It is the rule that has largely replaced what people called FFP. The older regime tested three-year losses; the squad cost ratio tests spending against income each year, which bites faster and is harder to fix with accounting.
What happens if a club goes over 70%?
It moves into the sanctioning process rather than being deducted points automatically. In practice that has meant fines, partly suspended against improvement targets, and settlement agreements limiting new registrations.
Do loan players count towards the squad cost ratio?
Yes — through the wages the borrowing club pays, plus any loan fee. There is no amortisation because no transfer fee is capitalised, which is why loans suit clubs near their limit.