League One and Two clubs set to receive salary cap proposals by Monday
Salary cap proposals will be sent to clubs in League One and Two by Monday, according to the PA news agency.
EFL chairman Rick Parry believes that the Football League are looking at a potential financial hole of up to £200 million by the end of September due to the coronavirus pandemic and the impact it has had within the game.
Parry believes his 71 member clubs must consider a salary cap if they are to escape from the current imbalance between wages and income that threatens to ruin many of them.
Parry told the Digital, Culture, Media and Sport committee last week that a salary cap and other cost control measures were “absolutely essential”.
“There is a lot of debate going on about that at the moment,” he said.
“We have an imbalance in the distribution, we have the parachute payments which cause immense stress within the Championship so yes I do think the distribution model is a problem.
“Any model where wages are 106 per cent of turnover is ridiculous.”
One way which is understood to be under discussion on how to control costs is to introduce a salary cap.
First Green Rovers chairman Dale Vince, believes a salary cap could work and has even mentioned fixed amounts of £3.6 million for League One clubs and £2 million for teams in League Two per a season.
“I have seen the email traffic from clubs and club chairmen and I think it has got strong support and has got a good chance of going through,” he told the PA news agency.
“We can all see the problems every year, there are a couple of clubs that just about make it to the end of the season – or don’t – and go into administration.
“A player wage cap would be a way to control that. The amount of money that gets spent by some clubs would then relieve the pressure on other clubs to match it – it becomes an arms race.
“You get the odd individual who just operates on the very edge of insolvency and legality. With a wage cap, people like that would be more constrained and less able to do real harm.
“It’s something that can be agreed now. We’ve got this downtime to work on the details, and put it in place ready (for the new season).”
An alternative to the fixed amounts for all clubs in the division as mentioned by Vince, would be to calculate the turnover each club generates and produce a figure dependent on the size of the club.
Gillingham boss Steve Evans believes that any potential figure needs to be determined by league stature rather than turnover.
“The only time it doesn’t level the playing field is if you compare 50% of Sunderland’s turnover to 50 per cent of Gillingham. That means they can spend x amount.” Evans told Kent Online.
“The salary cap should be worked out by saying ‘your budget is a maximum amount of x, that’s it, and that has to be reflective of levels.
“Hypothetically the Championship maximum budget could be £15-20m and in League 1 maybe up to £7.5m.
“Teams like Sunderland and Portsmouth and Ipswich blow those figures away but my view is that it if there is a maximum you can spend on your wage bill is x amount. We will never be at the top end of it but at least we know what the maximums are.
“Portsmouth get crowds of nearly 20,000 at home, Sunderland way above that, Ipswich as well. 50 per cent for them (of revenue) would make it a lot easier to sign the best players wouldn’t it?”
At Ipswich, previous figures showing that wages accounted for 108 per cent of the club’s turnover, 2 per cent higher than the figure quoted to be ‘ridiculous’ by EFL chairman Rick Parry.
Although that figure was when the club were operating in the Championship and will be significantly lower this term, with Town’s wage bill understood to be around the £5 – 8 million mark.
To put some context into Parry’s view, Reading, who currently sit 14th in the Championship, are understood to have had a wage-to-turnover ratio of a staggering 226 per cent.