Sheffield United face tighter financial restrictions as Championship clubs vote on new spending rules
Sheffield United and their Championship counterparts will have to adhere to a new financial system from next season.
Championship clubs have voted in favour of a squad cost ratio [SCR] system being introduced in England’s second tier, marking an important change in the division’s financial rules.
All 24 second tier clubs were scheduled to vote on Friday morning on the introduction of an SCR system, and it has been reported by John Percy of The Telegraph that 20 of them voted in favour, meaning clubs will be limited to spending 85 per cent of their “football revenue” from next season.
An SCR system, which will replace profitability and sustainability (P&S) rules, was voted through in the Premier League last November, with 14 of the 20 top flight clubs voting in favour of new the rules coming into force ahead of next season. It means Championship clubs have now voted to align with the Premier League ahead of the start of the 2026/27 campaign.
A statement released by the EFL on Friday afternoon said: “Championship Clubs have approved a new Squad Cost Rules (SCR) financial framework that will replace the current Profitability and Sustainability (P&S) rules from Season 2026/27.
“During the course of the 2025/26 season, Championship Clubs have been operating an SCR system in shadow, alongside the P&S Rules, to allow Clubs to assess the proposed rule changes and provide the League with further information to enable wider consultation with stakeholders.
“The SCR system limits Clubs spending on Player and Manager-related costs (including transfer fees) to a set percentage of their income, alongside a limited level of owner funding.
“From the 2026/27 season the SCR allowance for Clubs will be set at 85% of income, with a flexible equity top-up allowance of £33m over a three-year period (up to a maximum of £15m a season).
“The new framework allows for real-time monitoring during the season, rather than reviewing ‘after the event’, with the aim of giving Clubs greater clarity and the Club Financial Reporting Unit earlier visibility over Clubs’ financial position.
“The framework also includes safeguards around commercial deals linked to Owners or associated parties. The changes are intended to create a simpler and more responsive system of cost control within the Championship.
“A version of the SCR framework is also to be introduced in the Premier League for the 2026/27 season, bringing closer alignment between the divisions.”
On the flip side, the introduction of an SCR system risks widening the gap in spending power between clubs in the Championship and in League One.
Under P&S rules, clubs in the Championship are currently permitted to make losses of up to £39m across a three-year cycle of second tier football. West Bromwich Albion were recently found guilty of breaching that threshold by just under £2million, triggering a two-point deduction last month.
Sheffield United lost £16m in the Championship in 2024/25, but player sales turned this into a £2.6m pre-tax profit, meaning they are not under any real pressure to meet the £39m cap across a three-year cycle.
However, the introduction of an 85 per cent limit on their spending will impact their looming loss of parachute payments which dominated their income in the last financial year.
Much will depend on the exact definition of “football revenue." Arguably all the income any club generates could be described as such, with the Bramall Lane outfit posting total revenue/turnover of almost £80m in the last accounts.
If that turnover broadly reflected the SCR definition of football revenue, which remains unclear at this stage, it would theoretically limit United’s spending to around £67m. Their operating costs in the last accounts were around £58m, meaning they could be afforded some wiggle room.
But crucially, their income was dramatically influenced by the parachute payments, with the theoretical spending cap falling substantially without them. Second-year parachute payments are estimated to be worth as much as £40m - and the loss of that figure could effectively wipe £34m from United's spending power under the new rules.