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Championship clubs to vote on rules to widen gap in spending power to League One
TL;DR
EFL clubs will vote on changes to financial regulations that could widen the spending gap between Championship and League One. The proposal includes a new squad cost ratio system for the Championship, allowing increased spending capacity.
Key points
- EFL clubs vote on financial regulations changes
- Proposal to cap Championship spending at 85% of revenue
- League One considering reducing salary cost management to 50%
- Average League One investment increased from Ā£2.6m to Ā£9.6m
- Aim to attract more external capital into the EFL
EFL clubs will vote on Friday on significant changes to their financial regulations that would widen the gap in spending power between the Championship and League One. Championship clubs are voting on a proposal to align with the Premier League from next season by replacing their profitability and sustainability (P&S) rules with a squad cost ratio system, that would cap spending on player costs at 85% of football revenue.
The proposed change would permit an annual equity injection of about Ā£10m to count towards a clubās revenue and increase spending capacity, whereas under P&S rules, losses are capped at Ā£39m in the Championship over a three-year period.
League One clubs, in contrast, are voting on whether to have greater alignment with League Two by reducing permitted spending under the salary cost management protocol (SCMP) from 60% to 50% of turnover. A number of League One owners wanted to go further by introducing a salary cap underpinned by a so-called luxury tax for clubs breaching it, but those proposals will not be put to a vote. A reduction in the SCMP limit is seen as a compromise, with clubs in the division largely in agreement over the need to reduce costs.
The average investment by League One club owners this season was Ā£9.6m, up from Ā£2.6m four years ago, and many owners are reluctant to continue bankrolling such losses. A League One source said controlling costs would increase the value of clubs in that division in the medium-term and lead to greater interest from potential buyers, with the ultimate goal of bringing more external capital into the EFL.
Championship clubs want greater freedom to speculate and invest in the hope of winning promotion to the Premier League. The existing P&S rules were introduced at the start of the 2017-18 season. West Brom were docked two points by an independent commission last month for exceeding the loss limits by about Ā£2m in the three-year period to June 2025. Leicester, Sheffield Wednesday, and have been found guilty of P&S breaches in the past.
Q&A
What financial changes are Championship clubs voting on?
Championship clubs are voting on a proposal to replace profitability and sustainability rules with a squad cost ratio system, capping player costs at 85% of football revenue.
How will League One clubs' spending rules change?
League One clubs are considering reducing the salary cost management protocol from 60% to 50% of turnover to align more closely with League Two.
What are the implications of these financial regulations for EFL clubs?
The changes aim to allow Championship clubs greater investment potential while controlling costs in League One, potentially increasing club values and attracting external investment.
