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The Premier League's Profit and Sustainability Rules (PSR) cap how much clubs can lose over three years. Everton and Nottingham Forest both faced points deductions for breaching them. Here's how the rules work.
Financial regulation in football has become one of the most significant off-pitch stories in the Premier League era. The league's Profit and Sustainability Rules — commonly referred to as PSR — are designed to prevent clubs from sustaining unsustainable financial losses that could threaten their long-term viability. In 2023–24, the rules took on dramatic new salience when two Premier League clubs received points deductions for breaching them.
The Premier League's PSR allow clubs to lose a maximum of £105 million over a rolling three-year assessment period — approximately £35 million per year on average. This is not a hard annual cap but a three-year aggregate measure, meaning a club can lose more in one year provided they have compensating profits or smaller losses in other years within the window.
However, certain costs are excluded from the PSR calculation, providing clubs with some flexibility. These allowable deductions include:
These exclusions are designed to encourage clubs to invest in areas with broader social and developmental benefit, rather than penalising them simply for spending on infrastructure.
The 2023–24 Premier League season was the first in which clubs received points deductions specifically under PSR. Both cases attracted significant media attention and raised questions about the consistency and transparency of the enforcement process.
Everton received an initial deduction of 10 points in November 2023 for a breach relating to the 2021–22 financial year — a decision that plunged the club into a relegation battle. An appeal reduced the deduction to six points, though Everton also received a further two-point deduction in early 2024 related to a separate PSR assessment period.
Nottingham Forest received a four-point deduction in May 2024 for breaching PSR by a margin of £34.5 million over the three-year assessment period. The deduction came late enough in the season to affect their final position and underscored that PSR enforcement could have direct sporting consequences even at the end of a campaign.
Both cases were handled by independent commissions operating within the Premier League's rules framework. The size of deductions relative to the scale of breach has been a subject of considerable debate among fans, clubs and football administrators.
It is important to distinguish between the Premier League's PSR and UEFA's separate Financial Fair Play (FFP) — now rebranded as Financial Sustainability Regulations (FSR) — which governs clubs participating in UEFA competitions (Champions League, Europa League, Conference League).
The two systems exist independently and have different thresholds, assessment periods and enforcement mechanisms:
A club could theoretically be compliant with one set of rules while breaching the other, or face concurrent proceedings from both bodies. Manchester City's long-running case relating to alleged UEFA FFP breaches is a separate matter entirely from PSR, handled by an independent arbitration panel under different rules.
PSR has materially affected how Premier League clubs approach the transfer market. Clubs operating close to the £105m limit over their three-year window must balance incoming transfer spending with player sales that generate accounting income. The system of amortisation — spreading the cost of a transfer fee over the length of the player's contract — means that a £60 million player signed to a five-year contract adds £12 million per year to costs, rather than £60 million in year one. This encourages long contracts from a PSR compliance perspective.
The interaction between PSR constraints and competitive ambition has led some clubs to prioritise player sales in certain windows to bring their three-year figures within limits, even when the sporting rationale for selling would otherwise be weak. This tension between financial regulation and sporting competition is likely to remain a defining feature of Premier League discourse for years to come.
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