It's designed to hamstring bigger clubs, "levelling the playing field" for smaller clubs, who know that they can't really compete with bigger clubs dropping into that level for long. The EFL and some of the smaller clubs like it, because they reckon it'll make the league more even and more competitive. But all it does is anchor teams down there, teams will struggle to get better quality players capable of playing at a higher level due to not being able to afford the wages, so will still stick with average league one types. Players capable of playing at a higher level will get picked off as sellable assets very quickly, but will probably only be replaced by journeymen, so over all squad quality will start to drop, resulting in a drop in standards in the league. That might make it "competitive" but if its poor standard less people will want to watch it, causing less TV interest which can damage TV rights deals. Due as well to the salary cap, you might find players heading abroad, or to Scotland or even dropping into the conference if the moneys better. The whole thing is a monumental mess up brought in to satisfy the envy and jealousy of some clubs by an organisation not fit for purpose.