Squad Cost Ratio – what is it and how does it affect
Cardiff City FC?
Keith Morgan met with a senior club official last week to
get a clearer picture of how Squad Cost Ratio (SCR) is being implemented. After
that discussion, we've put together guidance for Trust members — including a
quick summary below.
Quick Summary for Members
- SCR
is the EFL’s financial control regime for Championship clubs —
introduced for season 26/27, it is essentially the league’s new version of
Financial Fair Play.
- Clubs
can only spend up to 85% of their income on total squad costs (which
includes wages for players ,1st team manager, transfer
fees, agents).
- Income
is tightly defined — only certain profits count, and player?sale
income is based on cash received in any financial year,
not the headline total transfer fees.
- Owners
can inject fresh cash, but only up to £34.3m over three years (max
£16m in any single year).
- Costs
include wages for first?team, Under 21 players (see next point),1st team
manager and cash?basis transfer payments.
- Players
under 21 are excluded until they’ve played 10 qualifying
games, at which point they count fully.
- The
club must submit an SCR pre-season budget and an SCR mid-season forecast
each year, The Club Financial Reporting Unit (CFRU) will commence live
monitoring of the Clubs SCR position from the January 2027 transfer
window.
- Sanctions
apply if a club breaches the ratio, but Cardiff City’s 2026/27 budget
is built on staying within the 85% limit
Full Summary
Squad Cost Ratio (SCR) is the EFL Regulation controlling
Financial Fair Play for Championship clubs. In preparing this summary we’ve
reviewed the relevant sections of the EFL Regulations and discussed them with
Cardiff City’s senior management team responsible for compliance.
What are the rules?
At its core, the rule is simple:
Championship clubs cannot spend more than 85% of their
allowable income on total squad costs.
Squad costs include player and manager related expenditure
and agents’ fees. The detail, however, sits in what counts as income and what
must be included as cost.
Income
Qualifying income includes:
- Matchday
income such as ticket sales, sponsorship, matchday advertising
and car?park revenue.
- Profit (not
gross revenue) from food and beverage, stadium hire for events and
merchandising in-store or online.
- Profit
from player sales are counted for on a cash basis only
— meaning the money received in the financial year, not the full transfer
fee if paid in instalments.
- Fresh
cash injections from the owner, capped at £33.4m over three
years, with no more than £16m in any single year. Note
that debt write?offs or debt?to?equity conversions arising from cash
received in prior years doesn’t count towards the £33.4m or the £16m
Costs
Costs that must be included are:
- First?team
player wages, including basic salary, Signing on Fees, Loyalty Fees,
Agents fees and bonuses, all on a cash basis. For example, promotion
bonuses earned in 2025/26 but paid this season count towards the 2026/27
SCR. and bonuses earned in 26/27 but paid post the year end count in 27/28
for SCR purposes
- Players
under 21 are normally excluded, until they become “Established
Players” — defined as playing 10 senior games (in
Championship) then from game 11 onwards their wages must be included.
- The
full salary of the first?team manager, but not assistant
managers or wider coaching staff, including Academy staff.
- Transfer
fees and related agents’ fees, on a cash basis — all cash paid in the
year counts, even if the total fee is spread across multiple seasons in
the club’s audited accounts.
Monitoring
Each year, prior to the season beginning, the club must
submit an estimated pre-season SCR report , effectively a financial budget ,
followed by a mid-season forecast in December. The CFRU will commence live
monitoring of the Clubs SCR position from the January 2027 transfer window
onwards.
If a club breaches the ratio, sanctions can follow unless
the issue is quickly resolved. Cardiff City’s budget for 2026/27 has been built
on meeting the 85% compliance threshold throughout the season.
Should you have any questions regarding the above, please
don’t hesitate to contact us and we’ll endeavour to answer them.
Regards,
Board of Cardiff City Supporters Trust
