League One & League Two clubs vote to introduce salary caps
Salary caps will come into force immediately; PFA "disappointed" and calls measures "unlawful and unenforceable"
Last Updated: 07/08/20 4:08pm
League One and League Two clubs have voted in favour of introducing financial controls in the form of salary caps.
An EGM was held by the EFL (English Football League) on Friday afternoon where a proposal for salary caps of £2.5m in League One and £1.5m in League Two was passed by the clubs.
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The EFL says the caps - which will come into effect immediately - will help to address issues regarding sustainability and wage inflation in the leagues.
Expenditure that will contribute towards the salary cap includes wages, taxes, bonuses, image rights, agents' fees and other fees paid directly or indirectly to registered players.
Payments directly linked to promotion or a club's performance in cup competitions are excluded from the cap, while income from players leaving on loan will be deducted.
EFL chief executive 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."
Talks with League One and Two clubs over additional financial control measures are continuing, while the EFL says it remains in talks with Championship clubs over introducing a salary cap in the second tier.
Championship clubs met in July to hold preliminary talks over introducing an £18m cap and it remains a possibility this move could come in ahead of the start of the 2020/21 campaign on September 12.
An EGM for Championship sides would also be required if alterations to the current regulations are proposed.
Some Football League sides have been facing financial trouble because of the economic effects of the pandemic, despite furloughing playing and non-playing staff, as well as temporary wage cuts and deferrals.
League One and Two clubs voted to curtail their 2019/20 seasons, with the financial cost of completing their remaining matches being a key reason for finishing their campaigns prematurely.
Additionally, MPs have warned in a stark DCMS (Department for Digital, Culture, Media and Sport) report that up to 15 clubs could go out of business.
EFL chairman Rick Parry has previously stated all 72 sides are facing a collective £200m financial hole because of coronavirus.
Newcastle boss Steve Bruce recently urged Premier League clubs to fund a rescue package for their struggling EFL counterparts amid a growing financial crisis.
PFA: Salary caps 'unlawful and unenforceable'
After the vote on Friday the Professional Footballers' Association claimed the EFL "ignored its legal obligation to consult with the PFA", adding that the measures were "unlawful and unenforceable".
"We are disappointed at the outcome of today's votes," a PFA statement read.
"The EFL has ignored its legal obligation to consult with the PFA and the Professional Football Negotiating and Consultative Committee (PFNCC).
"As such, the legal advice we have received is clear that the salary cap envisaged by the EFL would be unlawful and unenforceable.
"The PFA has already served its Notice of Arbitration on the EFL and until such time that arbitration is determined one way or another the new regulations should have no effect.
"While we share the league's commitment to protecting the long-term sustainability of the Leagues, the salary cap proposals voted on today have been rushed through without the proper consideration or consultation."
Meanwhile, prior to the meeting between clubs and the EFL on Friday, the PFA sent a report to club chief executives and the league, and has criticised the measures being proposed, as well as the timing of the talks.
The players' union wrote to its members in April stressing it was "vitally important" players spoke to their union before accepting any wage cuts enforced by individual clubs.
A statement read: "The report has raised concerns that the proposed cap is being rushed through, without proper consideration or consultation.
"Like everyone involved in football, we want to see sustainable clubs at all levels. We absolutely understand and appreciate the huge economic pressure that clubs have come under due to the COVID-19 crisis.
"However, we have significant reservations about the measures being proposed and the speed at which these are being implemented.
"The introduction of a salary cap in English football represents a seismic change. It is a change that will have far-reaching and significant impacts right across the professional game. We must take the time to ensure that these are properly considered and understood.
"We have been surprised and disappointed at the level of consultation and engagement around these proposals so far.
"It is, undoubtedly, in the best interests of the clubs, the leagues and the players that we work together on this important issue.
"Today, we have invited the EFL to a period of expedited arbitration in August, before the next season starts and the transfer window closes, in order to reach a shared agreement on the way forward.
"The EFL has a legal obligation to consult with the PFA and the Professional Football Negotiating and Consultative Committee (PFNCC), over any potential changes to a player's conditions.
"This consultation has not happened, and as such, we are gravely concerned that any cap brought in will be unlawful and unenforceable, which will ultimately be detrimental to everyone involved."
Sky Sports News has contacted the EFL for comment concerning the PFA's response to the wage cap proposals.