Battle looming for L1 clubs & why Cats could face a challenge
consequences for the future of the game, and particularly for clubs such as Sunderland for as long as they remain in the third tier. Salary caps increasingly look to be an inevitability in the bottom two divisions of the league pyramid.
EFL chairman Rick Parry came out strongly in favour of them in his appearance before the DCMS committee last month, while Salford City coowner Gary Neville (whose club opposes them) said last weekthattheappetiteforthem amongst clubs is strong.
Sunderland, for their part, have made their stance clear.
CEO Jim Rodwell has insisted that there must be transitional arrangements put in place and it’s obvious why.
It has been reported that playing budgets in League One will be capped at around £2.5 million, including agent fees.
It’s worth remembering with that in mind that when Jack Ross took charge, he was inheriting a wage bill well in excess of £30 million. Over the course of their first season back in League One, Sunderland’s spend on agent fees alone was just short of £3 million.
While both of these figures areofcourseskewedbythelegacy of the Premier League era, andtheclub’scommitmentsin bothdepartmentsarenowsignificantly reduced, the touted capwouldstillmeanastarkreadjustment.
In fact, Rodwell says that without a transition period, it would be ‘impossible’.
The broader debate about whether it is right to oppose a uniform cap is one that will gatherpacewhenanydecision (understood still to be some wayoff)movescloser.Thebenefits for many clubs is obvious.
It makes the playing field level, and reduces the obligation on smaller clubs to overstretch to compete.
For the clubs with larger fanbases, though, it would put them at a major disadvantage.
A uniform cap will prevent them from utilising the power of their supporters, meaning that money isn’t invested into the club when owners at smaller clubs can potentially use their own financial power to push their budget up to the cap.
It’s a curious debate, when the current EFL rules actually serve to ensure all clubs should be sustainable. The issue is simply that they aren’t enforced, and aren’t applied to the division where they are most needed.
League One and League Two clubs currently operate under the SCMP rules, which mean they can only spend 60% of their turnover on wages.
The issue is that owners can easily get around this by injecting funds either as donations or equity. As such, Parry believes the average third-tier clubisspendingaround80%of their income on wages.
Removing the loophole would mean all clubs are living within their means, but also that those who are bringing in money sustainably from their supporters are not punished.
Doing it this way is not necessarily all in favour of the bigger clubs, either.
A club’s turnover also includes sales and so those who recruit smartly and bring throughtalentfromtheiracademy are rewarded when they bring in a profit from selling those players on. Those who also serve the game’s wider development by offering regular opportunitiestoyoungloanees would also excel.
Wages of academy players couldbeexcludedfromthecap (and the players themselves excluded from any squad-size cap)tofurtherincentivisegood practice. Any change to the regulations must also ensure there is uniformity across the divisions.
The Championship currently operates under a different set of rules, whereby total losses are limited over a threeyear period. The enforcement (or otherwise) of these rules has proven hugely controversialandtheyhaveonthewhole been largely ineffectual.
In a stark reflection of their failure, Parry told the DCMS committee that he believes second-tier clubs are spending in excess of 100% of their turnover on wages.
If spending is limited in League One but not in the Championship, then the already widening gap between the two divisions is only going to grow.
If a uniform gap is imposed onLeagueOneandnotthesecondtier,thenthetransitionbetweenthetwodivisionsisgoing tobecomevirtuallyimpossible to manage.
Cost controls, properly enforced, are long overdue and they are also an absolute necessity as the game makes the readjustments it needs in light of the COVID-19 crisis.
Budget cuts across the board are inevitable and offer allclubsthechancetoreassess some of the worst excesses of recent years.
In the divided third tier, though, it will be another contentious issue.
The EFL have some crucial decisionstomakeandintruth, their current rules are a good place to start.
The key is in strengthening them, not tearing them up altogether. A uniform cap would have major implications not just for Sunderland, but also for the wider game.