PFA considers legal action after League One and Two wage cap vote

PFA considering legal action after League One and Two clubs narrowly vote to introduce £2.5m and £1.5m limits on wages with Sunderland and Portsmouth among dissenting voices

  • Clubs in League One and Two have voted in favour of squad salary caps 
  • The cap will be set at £2.5million in League One and £1.5million in League Two 
  • It is understood 22 League Two clubs were in favour of a cap, with two against 
  • But the League One vote was close, with Pompey and Sunderland against it 
  • The PFA has expressed concerns and will consider legal action on the caps

The PFA are considering legal action after EFL clubs voted through landmark salary caps.

Sportsmail understands the players’ union will explore the option to apply for a halting of the process or to review the regulations through arbitration.

In one of the boldest moves for decades, League One voted for a hard annual squad cap of £2.5million at an EGM, with fourth-tier sides approving a £1.5m cap. 

Those came down by £800,000 and £400,000 respectively from initial plans devised prior to the coronavirus pandemic. 

Clubs in League One and Two have voted in favour of squad salary caps, the EFL announced

The coming season, due to start next month, will effectively act as a transitional year, with players’ earnings accounted for at a divisional average. 

As such, there has been a flurry of transfer activity this week, with new signings landing contracts ahead of the introduction of the new regulations.

As revealed by Sportsmail in May, the cap includes individual clauses in contracts – such as bonuses based on appearances, goals or clean sheets. Salaries on players under the age of 21 will be exempt.

Clubs still have the opportunity to offer huge incentives for promotion and progression in cup competitions outside of the ring-fenced budget. 

That offers something of a sporting advantage to teams boasting larger matchday and commercial revenues.

Yet there was still discord from bigger clubs, including Sunderland and Portsmouth, in a tighter League One vote than had been anticipated. 

Dale Vince, chairman of Forest Green in League Two, is pleased that the salary cap has been introduced

While claiming the regulations are strong and accepting a need for change, sources are unhappy with the ‘rushed’ process. 

Others have argued that clubs in the London area are at an immediate disadvantage because they are expected to pay a location premium.

Fears also exist that future commercial revenue will decrease, with the renegotiation of sponsorship contracts trickier given wage bills, clubs’ highest expenditure, are fixed.

‘The term salary cap is an emotive one, creating the impression of a restrictive measure,’ EFL chief executive Dave Baldwin said. ‘But we are clear in our view that this is neither the objective nor the likely effect of these changes.

‘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.’ 

The cap will be set at £2.5million in League One and £1.5million for clubs in League Two

A statement from the PFA read: ‘We are disappointed at the outcome of today’s votes.

‘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, 22-man squad size limits in the bottom two divisions will be discussed at a meeting on August 19.

EFL CEO David Baldwin says the vote means clubs can’t spend ‘to the point of instability’

EFL STATEMENT IN FULL

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.’ 




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