EFL to snub League One’s salary cap and luxury tax plans as Rick Parry will not back proposed changes from clubs.
League One clubs’ daring plans to impose a £4.7 million salary ceiling and a luxury tax on overspending clubs will be opposed by the EFL.
In a letter to EFL chair Rick Parry this month, eighteen League One teams argued that a set squad salary budget is necessary to curb spending in a league where the median loss among 24 clubs last season was £5.2 million.
A 100% tax on every penny of spent over the cap was also suggested by the clubs, led by Peterborough and Reading, in order to create a fund that would be reimbursed to clubs that cooperated. Major League Baseball and the NBA use luxury taxes to impose pay limitations, making them widespread in American sports.
Although Parry would not support the reforms, it is believed that he has recognised the letters and indicated a desire to talk about methods to promote better sustainability and lessen dependency on owner investment. The EFL board reportedly reviewed the issue on Thursday and decided not to back the clubs’ recommendations.
Four years ago, after the Covid pandemic caused severe financial difficulties for many clubs, the EFL attempted to implement salary ceilings in Leagues One and Two. However, this attempt was blocked by a legal challenge from the Professional Footballers’ Association.
Additionally, the PFA is threatening to oppose the Premier League’s proposal to implement a financial rule known as anchoring, which would restrict each club’s expenditure on player salaries and transfers to five times the central media revenue earned by the poorest club during the previous season. Next Friday, Premier League clubs will vote on anchoring during their shareholders’ meeting.
It is believed that the EFL Board determined that endorsing a salary cap that would also be challenged in court by the PFA would be reckless. Concerns have also been raised regarding one division attempting to implement essentially separate 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.