At the beginning of the 2020/21 season, the EFL introduced new financial controls in the form of ‘Squad Salary Caps’, designed to address the sustainability and wage inflation problem that threatens the futures of many clubs across its leagues. Whilst regulations were applied League One and League Two with immediate effect, no measures were set in place for the Championship, the division whose clubs, arguably, spend the most recklessly. But as the COVID-19 pandemic starves these teams of much needed income, questions have been raised recently as to whether a salary cap should also be in place for the EFL’s top clubs.
The caps put in place for League’s One and Two respectively, are £2.5m and £1.5m respectively, and that covers: basic wages, taxes, bonuses, image rights, agent’s fees and any other expenses. Some fans and owners argue that salary caps stifle ambition, making it impossible to invest large amounts of money into a business, thus defeating the purpose of owning a football club. Other say that it ensures the futures of clubs, and levels the playing fields across the leagues so that all teams have a fair chance of achieving promotion. It’s no coincidence that larger clubs like Sunderland, Portsmouth and Ipswich Town aren’t in favour, whilst smaller ones like Accrington Stanley are, based on the revenue that they generate. This divide between EFL minnows and giants grows further when looking at the Championship.
As the majority of the clubs in the Championship maximise their playing budgets to the fullest, in hope of reaching the promised land that is the Premier League, some clubs are willing to spend outside of their means to try and achieve this. Look no further than Reading in 2018/19, when their wage bill of £40.75m was 194% of their turnover, compared to the Championship average of 104%, which is still a staggering figure. Sheffield Wednesday, Derby County and Birmingham City, along with Reading, have all found themselves in hot water with Financial Fair Play rules recently, which only strengthens the argument for increased regulation in the second tier.
Added to that, in the 2019/20 season, clubs relegated from the Premier League in recent seasons, like Stoke City, West Bromwich Albion and Swansea City all carried wage bills of over £90m, and found themselves competing against teams with a fraction of that money, such as Luton Town whose wage bill for that season totalled up at £6.4m. Of course, it is through Parachute Payments that these richer clubs can afford to pay such large amounts, but it can be said that these payments widen the chasm between the Premier League and the Championship. How can clubs like Luton, or other League One promotion winners ever challenge to reach the top flight, if there will always be newly relegated sides with 10x the financial backing?
Regardless of the size of the salary cap, there will always be those in favour, and those against it. Limiting the financial muscle of richer clubs in the EFL may upset those with a heavier wage bill, but introducing similar measures to those seen in the leagues below it, would give all teams a fairer chance of being successful which, in spirit, is what football should pride itself on.