Pompey joy as Leagues One and Two salary caps withdrawn following arbitration panel ruling

The EFL salary cap for Leagues One and Two has been withdrawn following a decision by an independent arbitration panel.

By Mark McMahon
Tuesday, 9th February 2021, 2:45 pm
Updated Tuesday, 9th February 2021, 7:10 pm
Pompey will no longer have to operate under a salary cap.
Pompey will no longer have to operate under a salary cap.

Although vehemently opposed by Pompey at the time, the caps were voted through by third and fourth-tier clubs in August last year and were set at £2.5million per club in League One and £1.5million per club in League Two.

However, the Professional Footballers’ Association immediately challenged the caps, saying they were ‘unlawful and unenforceable’, and an independent panel has now forced the caps to be withdrawn.

To date, the Blues have been unable to agree new deals with those players whose contracts expire at the end of the season, including Tom Naylor and Jack Whatmough, because of the regulations.

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That cast huge doubt over their long-term futures at Fratton Park, with pay cuts required to keep them on the south coast if the Blues remained in League One for the 2021-22 campaign.

That should change, though, with clubs immediately reverting back to Salary Cost Management Protocols (SCMP), which links player related expenditure to turnover.

Those rules say a club can only spend 60 per cent of its turnover on wages. Owners can also inject equity to support turnover under these rules.

Explaining today's announcement, a statement from the EFL reads: ‘An independent arbitration panel has upheld a claim from the Professional Footballers’ Association (PFA) that the EFL was in breach of the constitution of the Professional Football Negotiating and Consultative Committee (PFNCC) by introducing ‘Squad Salary Caps’.

‘In August 2020 following an extensive and comprehensive consultation process with EFL Clubs, Leagues One and Two voted to adopt new financial controls that replaced the previous Salary Cost Management Protocols (SCMP).

‘The PFA argued that the PFNCC’s remit to consider matters relating to the employment of, and any associated rules and regulations to professional players employed by EFL Clubs, was not properly considered as part of the process to introduce the new rules and as a result served a notice of claim to that effect.

‘The EFL and PFA then agreed to refer that matter to arbitration and after hearing submissions from both parties, an independent panel concluded that the EFL was in breach of its agreement as a member of the PFNCC.

‘At the time of the adoption of the Salary Cap Rules, the EFL included a provision to ensure that any decision such as this would have the effect of reinstating the SCMP rules that were in operation during season 2019/20, which links player related expenditure to turnover.

‘The EFL will now discuss the matter of financial controls and implications linked to this outcome at a series of meetings with its Member Clubs later this week.’