League One clubs voted in a majority to implement a £2.5m salary cap as of the 2020/21 season.
The vote was understood to be tight, with 16 clubs in favour, seven against and one withholding their vote.
Despite the new regulation in place as of the 2020/21 season, any contract entered into on or prior to today’s vote will be treated as if they are earning the £113,000 per annum.
Any club found guilty of overspending will be penalised, if a club’s expenditure is within over 5 per cent of the £2.5m cap there will only be financial penalties to pay. If it tops that sum, then sanctions such as points deductions could be implemented.
During a transitional 2020/21 season clubs will be permitted 22-player squads, with the a view to 21 and then 20-player squads in the following seasons, as of typing Town’s first team squad consists of 17 players aged 21 or over.
There will also be allowances for clubs relegated from the Championship with respect of a club’s squad salary cap calculation with the key element of these aimed at addressing committed contracts and within the relegated clubs.
Each club will be able to use an unlimited amount of players under the age of 21. So for example, Armando Dobra would not need to be registered to play as he is only 19, but Alan Judge would.
Wages paid to players under the age of 21 would be exempt from these caps under the plans.
An EFL statement reads: “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 £2.5 million and £1.5 million 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 [understood to be £1,300-a-week for the season ahead] 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 per cent, whereby dependent on the percentage level of the overrun, a financial penalty [reportedly £3] 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.”