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Championship clubs back new squad spending rules
TL;DR
Championship clubs have approved new Squad Cost Rules allowing them to spend up to 85% of their income on squad costs starting next season. This change aligns the Championship's financial framework more closely with that of the Premier League.
Key points
- Championship clubs voted for new Squad Cost Rules
- Clubs can spend 85% of income on squad costs
- New rules align Championship with Premier League regulations
- SCR replaces previous profit and sustainability limits
- Previous limit was £39 million loss over three years
Championship clubs will be able to spend up to 85% of their income on squad costs from next season [Getty Images]
Championship clubs have voted in favour of moving to new financial framework of Squad Cost Rules (SCR) from next season.
It broadly brings the second tier into line with the Premier League, which approved its own version of SCR in November.
SCR will replace profit and sustainability in the Championship, which had limited teams to losses of £39m across a three-year period.
The assessment will now be based on a club's total earnings from football operations and how much of that is spent on the squad, rather than a profit and loss calculation.
Sixteen of the 24 clubs needed to vote in favour for the rule to change.
Just three Championship clubs recorded a profit in 2024-25 and one of those, Stoke City, only did so because a £90m loan was waived by new owner John Coates to offset what would have otherwise been a £29m loss.
The 22 clubs who have submitted their books for 2024-25 lost a combined £317m, if you take into account Stoke's underlying numbers without the £90m written-off loan.
SCR will limit clubs' spending on player and manager-related costs (including transfer fees) to 85% of income.
Owners will be permitted to make a flexible equity top-up allowance of £33m over a three-year period, of which no more than £15m can be used in any one season.
The regulations will include safeguards around commercial deals linked to owners or associated parties.
"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," an English Football League statement said.
SCR benefits clubs with bigger stadiums and lucrative sponsorship deals as it effectively creates a larger budget to spend on players.
Modifications have also been made to the Salary Cost Management Protocol (SCMP) rules in League One, with the percentage of turnover that clubs will be able to spend on wages reduced from 60% to 50%.
Clubs relegated from the Championship will be permitted to spend 65% of turnover on wages during their first season in League One, reduced from 75%.
However, a vote among League Two clubs to adopt the same SCMP calculation did not gain enough support.
Q&A
What are the new Squad Cost Rules for Championship clubs?
The new Squad Cost Rules allow Championship clubs to spend up to 85% of their income on squad costs.
How do the Squad Cost Rules compare to previous financial regulations?
The Squad Cost Rules replace the previous profit and sustainability regulations, which limited teams to losses of £39 million over three years.
When will the new Squad Cost Rules take effect in the Championship?
The new Squad Cost Rules will take effect from the start of the next season.