Oversimplified and Brief Explanation of SCR vs PSR
As we are gearing up for Transfer season, we're seeing a lot of posts about selling players and the impact on PSR, with a number of people talking about the impact of selling at a loss being "disastrous" for our position.
While this would be true in a PSR world, the impact is different going forward under SCR, so I thought I'd do a very simple post explaining the difference and how it works.
Disclaimer: This is very simplified, obviously there are additional complications, and some numbers will be used for example purposes.
Amortisation
Transfer fees spent are still split equally across the duration of the contract to a maximum of 5 years.
Deductibles:
Academy Spend, Women's Football Spend and Infrastructure spend do not count under either set of rules, so you can spend what you want on these.
Spending Main Difference:
- PSR - Clubs cannot make a loss of greater than £105m over a rolling three year period. Size of revenue is not important, this is a pure loss/profit check.
- SCR - Clubs cannot spend more than 85% of their revenue on their Squad (wages/transfer) over a single season.
As such, SCR rewards revenue growth (generate more and you can spend more) and also is season by season, so a bad year hurts you for that season only* (more on this later).
Calculating your Spend Limit
As spending is linked to Revenue, clubs no longer work with a fixed target, so how do we calculate you spending limit?
This is a little different from PSR as the SCR rules separate Core Revenue and Player Trading over the current and previous 2 seasons. Player trading is the now split, to allow flexibility over a longer period. So if in 2025/2026 you make £90m profit on players, you would receive 1/3 of that in 25/26, 1/3 in 26/27 and 1/3 in 27/28. Loss on players is accounted for in the year it happens as an immediate deduction.
So to calculate you limit:
- Core Revenue - Core commercial revenue, matchday revenue, tv revenue, prize money.
- Add Player Trading - 2 Seasons Ago
- Add Player Trading - Previous Season
- Add Player Trading - Current Season
- Add any negative transfers - Current Season
This gives you your total Revenue, your spending limits are calculated using this figure.
Example time (reasonable but not confirmed NUFC numbers)
- Core Revenue: £400m
- Player Trading 24/25: £10m (1/3 of £30m profit)
- Player Trading 25/26: £25m (1/3 of £75m profit from Isak)
- Player Trading 26/27: £0 (we haven't sold anyone yet)
- Negative Transfers: £0 (we haven't sold anyone yet)
Limiting Revenue: £435m.
Spend Limit: £369.5m
Penalties
Penalties are now fully transparent as far as Points Deductions are concerned (which is good). But the limits vary.
We now have three levels of compliance:
- Below 85% - No penalty, happy days.
- Above 85% but above Upper Threshold - Financial Penalty, No Points Deduction
- Above Upper Threshold% - Points deduction of one point per £6.5m
The Upper threshold for the first season is 115%, if you breach it, the limit is reduced by the same amount next season, so the problem is worse for repeat offenders. You can increase the limit back to 115% of Revenue by 10% each compliant season.
Also, for next season to assist with complying with new rules, no financial penalties will be applicable next season, so if you need to dump a loss. Now is the time.
What Does This Mean?
SCR has significant benefits for us:
- Doesn't punish previous mistakes (assuming you don't clear 115%), so a bad window can be moved on from immediately rather than taking 3 years.
- Supports revenue based growth (rather than being linked to an arbitrary figure)
SCR has risks:
- Because of how the maths works, PSR punished high transfer spend, SCR punishes bad contracts. So wage discipline is important.
So when we talk about selling at a loss, it's never good, but the pain is quicker. So if you move Wissa on, at a 20m loss, we suffer 16m spending cut this season, and then the year after, it's gone.
I hope this has been somehow helpful, as a quick-ish explanation of SCR.