A push by a majority of League One clubs to implement a strict salary cap and a penalty system for overspending is set to be rejected by the English Football League’s leadership.
The proposal, spearheaded by clubs including Peterborough United and Reading, called for a fixed annual squad wage limit of £4.7 million. To enforce it, the plan included a so-called “luxury tax,” where any spending above the cap would be taxed at 100%, with the resulting funds redistributed among clubs that stayed within the limit. This model is inspired by financial regulations in major North American sports leagues.
The clubs argue that such drastic measures are necessary to curb unsustainable financial losses within the division. Data indicates that the median loss for League One clubs last season exceeded £5 million.
EFL Chairman Rick Parry has reportedly engaged with the proposal but will not endorse it. The league’s board discussed the matter and concluded it could not support the changes. A primary concern is the potential for a legal challenge from the Professional Footballers’ Association, which successfully opposed previous attempts to introduce salary caps in the lower leagues.
There is also apprehension about one division operating under a fundamentally different financial framework from the rest of the EFL.
While League One clubs could theoretically adopt the rules independently if two-thirds of them vote in favor, it remains uncertain if they would proceed without the board’s backing.
The EFL is expected to advise clubs that the existing financial controls, which limit player spending to a percentage of a club’s turnover, are the appropriate tools for managing costs. Currently, League One sides can spend up to 60% of their revenue on player wages.