CHAMPIONSHIP: Clubs scrap financial loss rules — replacing them with a new system that could reshape how Swansea City and rivals spend

Championship clubs have voted to adopt new Squad Cost Rules (SCR) from next season, scrapping the Profit and Sustainability Rules that had governed spending in the second tier of English football.

The old rules — known as PSR — limited Championship clubs to losses of £39m across a rolling three-year period. The new system works differently: instead of measuring profit and loss, it measures what proportion of a club’s total football income is spent on the squad.

Under SCR, clubs will be permitted to spend up to 85% of their income on player and manager-related costs, including transfer fees. The higher a club’s income, the more it can spend — meaning clubs with larger stadiums, bigger attendances and more lucrative sponsorship deals will have more headroom than smaller ones.

Sixteen of the 24 Championship clubs needed to vote in favour for the rule change to pass.

The vote comes after a torrid set of financial results across the division. Of the 22 clubs that have submitted their accounts for 2024-25, the combined losses total £317m — underlining why so many clubs backed a framework they hope will give them more clarity and flexibility.

Only three Championship clubs recorded a profit in 2024-25. One of those, Stoke City, only did so because a £90m loan was written off by new owner John Coates — without that, Stoke would have posted a £29m loss.

Swansea City’s own accounts showed a £21.6m loss for 2024-25, with the ownership group pumping in £21m to keep the club afloat. The Swans’ backers include hip-hop legend Snoop Dogg, who has outlined an ambitious ten-year plan to turn the club into a global name, and Martha Stewart, who joined as co-owner in December 2024.

Under the new rules, owners will be permitted to inject additional funds through an equity top-up allowance of £33m over a three-year period, with no more than £15m usable in any single season — giving ambitious ownership groups a defined mechanism to spend beyond what income alone would allow.

The English Football League said the new framework would allow real-time monitoring of clubs’ finances during the season, rather than reviewing accounts after the fact — giving both clubs and regulators earlier visibility of any problems.

The change broadly mirrors what the Premier League approved for its own clubs in November, bringing the two divisions into closer alignment on how financial rules are structured.

The new rules will also include safeguards around commercial deals involving owners or associated parties — an attempt to prevent clubs from artificially inflating their income through related-party transactions.

SCR benefits clubs with bigger stadiums and more lucrative commercial arrangements, as their higher income base creates a larger budget to spend on players. For Swansea City, growing commercial revenue — including through the club’s celebrity ownership profile — could therefore translate directly into greater spending power on the pitch.

In League One, clubs will now be limited to spending 50% of their turnover on wages — down from 60% previously — under modifications to the Salary Cost Management Protocol.

Clubs relegated from the Championship into League One will be given some breathing room, permitted to spend 65% of turnover on wages in their first season down — reduced from the previous allowance of 75%.

League Two clubs were also asked to vote on adopting the same revised wage calculation, but the proposal did not gain enough support to pass.