Championship clubs back new squad spending rules

TL;DR

Championship clubs have approved new Squad Cost Rules (SCR) starting next season, aligning with the Premier League's financial framework. The new rules will focus on total earnings from football operations instead of profit and loss calculations.

Key points

Championship clubs voted for new Squad Cost Rules (SCR)
SCR aligns with Premier League's financial framework
Focus shifts from profit and loss to total earnings and squad spending
Sixteen of 24 clubs needed to approve the change

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 (SCR) for Championship clubs?

The new SCR will assess clubs based on their total earnings from football operations and their spending on the squad, replacing the previous profit and sustainability limits.

How will the SCR impact financial management in the Championship?

The SCR aims to provide a more flexible financial framework for clubs, allowing them to manage squad spending based on earnings rather than strict loss limits.

How many clubs voted in favor of the new SCR in the Championship?

Sixteen out of the 24 Championship clubs voted in favor of the new Squad Cost Rules for them to be implemented.