'Squad Salary Caps' introduced in League One and League Two

Clubs in League One and League Two have today voted for the introduction of new financial controls in the form of ‘Squad Salary Caps’ into their respective divisions which take effect immediately.

The decision follows extensive and comprehensive consultation with all Clubs in respect of addressing sustainability and wage inflation issues across the EFL which were initiated prior to the suspension of football in March following the COVID-19 outbreak and have continued during the course of the summer.

Those discussions culminated in today’s divisional vote, with representatives of League One and League Two Clubs opting to implement the new measures in place of the existing Salary Cost Management Protocols (SCMP), with fixed caps of £2.5million and £1.5million respectively.

Discussions continue with Championship Clubs in respect to amendments to their own financial controls. League One and Two Clubs are also going to continue discussions towards the introduction of additional measures aimed at addressing Club financial sustainability.

When calculating total salary spending, the ‘cap’ includes:

• Basic Wages;
  
  
• Taxes;
  
  
• Bonuses;
  
  
• Image rights;
  
  
• Agents’ fees and;
  
  
• Other fees and expenses paid directly or indirectly to all registered players.

Payments directly linked to a Club’s progression in cup competitions or promotion are excluded from the Cap, while any income generated from players going out on loan is deducted from the Club’s Salary Cap calculation.

Transition arrangements have been incorporated in respect of a Club’s squad salary cap calculation with the key element of these aimed at addressing committed contracts and relegated Clubs. Any contract entered into on or prior to today’s vote will be capped at an agreed divisional average until that contract expires. Moving forwards, Clubs that are relegated will be permitted to cap all contracts at the divisional average prior to the Club’s relegation until those contracts expire.

An ‘overrun’ concept is also included if a Club’s total squad salary payments exceed the Cap by up to 5%, whereby dependent on the percentage level of the overrun, a financial penalty would be payable for every £1 in excess. Clubs exceeding the ‘overrun’ would be referred to an Independent Disciplinary Commission, although the EFL will monitor the Cap on a real-time basis throughout the season as is the current position with SCMP measures across the two divisions. Where breaches do occur, sanction guidelines are in place to be considered as appropriate by an independent Disciplinary Commission.

EFL CEO, David Baldwin said: “The term ‘salary cap’ is an emotive one, creating the impression of a restrictive measure but we are clear in our view that this is neither the objective nor the likely effect of these changes to EFL Regulations. The financial impact of Covid-19 will be profound for EFL Clubs and today’s vote will help ensure Clubs cannot extend themselves to the point that could cause financial instability.

“Over the last two weeks the discussions amongst Clubs in both Leagues One and Two have been healthy and constructive, allowing us to reach a clear consensus today and I am pleased that the Clubs have determined to adopt the new approach. We will now work with all Clubs, the PFA and, where appropriate, other stakeholders to implement the new rules and continue our efforts to bring long-term sustainability to the EFL.”

https://www.efl.com/news/2020/august/squad-salary-caps-introduced-in-league-one-and-league-two/

that's us ****ed then

 

Clearly they can’t implement it immediately, there’s got to be a period as many clubs will currently be way over this.

There’s surely a legal issue, you can’t just say to folk ‘yeah you’re contracts being halved’, that’s clearly against employment law, and would also entitle players to free transfers under the rule.

It’s get out of this league now or be forever a yo-yo club between Championship and League One if they do work around the legalities, £2.5 million is an absolute scandal considering our gate receipts alone exceed £20million.

One size fits all simply doesn’t work in this situation, if anything it should have been a lowering of the ‘percentage of turnover’ that’s already in place.

Yet again, it’s going to protect and indeed enhance the status quo of the Premier League.

 

The PFA seemed to pipe up last night eventually about the legitimacy of it all. See what happens I guess.

 

take effect immediately according to sky sports yellow ticker

 

****ing hell, that’s serious for us, Portsmouth and Ipswich.

You’re gonna struggle to get a player to sign outside the Championship, you’re talking around £2,300 week on average, based on a 20 man squad.

 

Despite the vote I can’t see this going through, as the PFA mentioned the EFL haven’t realised the wider ramifications of bringing in such a wage cap and have totally ignored the correct procedure...as in discussed with the PFA.

 

There’s got to be a legal aspect, you can’t just slash someone’s pay with no consultation.

If you think of players like Gooch who been around since the PL days he’s likely on 10k a week, so if it went through that’s giving us a max squad of 16 based on the average. It’s not plausible.

 

Everyone signed before this start date will be classed as earning no more than £1.5k I think it is unless they are on less than that already. It won't effect us at all as 18 players all earning that is about 1.2 million leaving us able to spend 1.3m on 4 players to fill our squad quota. That's around 6.25k a week each for those four players and very few will sign and earn that much in this league.
It's bollocks mind, and I imagine the likes of us and Pompey may be seeking legal advice on it (probably have been already in fact)

 

Gooch will be classed as earning £1.5k/week as he had his contact before this was introduced

 

Am I misreading this? Is it £2.5 million per player? I’d read it as £2.5million week total budget.

 

2.5 million in total over a year

 

1.5k/week which most of our players will be classed as earning as they'll be mostly on more than that and signed before this introduction works out at 1.2 million for 18 players over a full year

 

Per player? This is the part I’m maybe misreading.

It does say players already in a contract will be automatically capped at the divisional agreed rate.

 

2.5 million a week would be 130 million over a year

 

well they goes our transfer window we are totally ****ed

 

Aye I’m aware of that I’m just trying to work it out, I’m saying is it ‘£2.5million per player max per year’ or ‘£2.5 million entire wage bill per year’

Obviously £2.5 million a year is 48k per week ain’t nobody getting that in League One.

Mind, £2,500 a week is still decent going, in real terms, but still be 50% tax on that.

 

It's 2.5 million in total for your full squad of 22 players. Earning a total of that would be an average weekly wage of about £2185/week for each squad member. As most of our squad will be on more than that and signed contracts before this cap being introduced their salaries will be deemed to be £1.5k a week. Players signed after this cap introduction will have their full wage counter towards the total

 

No we aren't

 

yes we are it starts today man

 

Gotcha, so the £1.5k is kind of a false ceiling to not penalise clubs beyond control.

So, the fact remains we need to get the **** out of this league. Not sure that signing a player from Everton will now be feasible.

It’s workable as long as we get this season right as we will have problems renewing any talented lads.