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The EFL is to oppose radical proposals from League One clubs to introduce a £4.7m salary cap and a luxury tax for clubs that overspend.
Eighteen League One clubs wrote to the EFL chair, Rick Parry, this month advocating a fixed squad salary allowance, which they argue is required to get spending under control in a division where the median loss among 24 clubs last season was £5.2m.
The clubs, led by Peterborough and Reading, also proposed a 100% tax on every penny of overspending above the cap, creating a fund that would be redistributed to clubs who complied. Luxury taxes are commonplace in American sport, with Major League Baseball and the NBA using them to enforce salary caps.
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Parry is understood to have acknowledged the letters and expressed willingness to discuss ways of promoting greater sustainability and reducing reliance on owner funding but will not back the changes. The matter is understood to have been discussed on Thursday by the EFL board, which concluded it would not support the clubs’ proposals.
The EFL sought to introduce salary caps in Leagues One and Two four years ago after the Covid pandemic left many clubs facing acute financial problems, but it was thwarted by a legal challenge from the Professional Footballers’ Association.
The PFA is also threatening to challenge the Premier League’s plan to introduce a financial regulation known as anchoring, which would limit each club’s spending on transfers and player wages to five times the central media revenue received by the bottom club in the previous season. Premier League clubs are due to vote on anchoring at their shareholders meeting next Friday.
The EFL Board is understood to have concluded that it would be irresponsible to endorse a salary cap that could also be subject to a PFA legal challenge. There are also misgivings about one division seeking to pursue fundamentally different financial regulations
League One could go it alone, with a two-thirds majority vote of its clubs required to alter the financial regulations, but it is unclear whether they are willing to go against the board’s wishes.
The Championship’s profitability and sustainability rules, which align with those in the Premier League, are different from the salary cost management protocol used in Leagues One and Two but the underlying principles are the same.
The EFL is expected to tell the League One clubs there are other ways in which they could get spending under control. League One clubs can spend 60% of turnover on player expenditure. The limit is 50% in League Two, where spending on managers is also included.
The EFL declined to comment.
