SUNDERLAND will have to adhere to strict new salary cap rules after clubs in Leagues One and Two voted in favour of new financial regulations.

From this point onwards, clubs in League One will only be able to spend an annual sum of £2.5m on salaries, with clubs in League Two being restricted to £1.5m. At this stage, the EFL have not introduced salary cap rules into the Championship, but it remains an option at some stage in the future.

The EFL has said the cap will cover basic wages, taxes, bonuses, image rights, agents’ fees and all other fees and expenses paid “directly or indirectly to all registered players”. Promotion bonuses or incentives for success in cup competitions will not be included, and any income generated from players going out on loan will be deducted from a club’s salary cap calculation.

Players aged under 21 are exempt from the cap, as are players whose deals were agreed before the cap’s introduction. Therefore, for the purpose of calculating Sunderland’s wage expenditure next season, the club’s existing players will be assigned a notional payment value that is the league average – around £91,000-a-year – rather than their actual salary level.

A majority of League One clubs voted in favour of the policy, which has been introduced to protect clubs in light of the financial challenges caused by the coronavirus pandemic and try to prevent a repeat of the situation that saw Bury enter liquidation last season because of unsustainable debts.

However, Sunderland are known to have opposed the introduction of a flat salary cap as they feel it does not take account of the varying income levels within League One. Despite having an annual income that is up to ten times higher than that at the likes of Accrington Stanley or Rochdale, Sunderland will only be able to spend the same sum as each and every one of their rivals in the third tier.

Black Cats officials had argued that the cap should be set at a proportion of a club’s income rather than at an arbitrary set figure, but the EFL have opted to go for a fixed sum of £2.5m.

“The term ‘salary cap’ is an emotive one, creating the impression of a restrictive measure, but we are clear in our view that this is neither the objective nor the likely effect of these changes to EFL regulations,” said EFL chief executive David Baldwin.

“The financial impact of Covid-19 will be profound for EFL clubs and today's vote will help ensure clubs cannot extend themselves to the point that could cause financial instability.”

Players’ union the Professional Footballers’ Association has expressed concerns about the new regulations, and called for further consultation and clarity around the objectives for introducing a cap.




What has been agreed?

A cap of £2.5m has been agreed by a vote of League One clubs. In League Two, the cap has been fixed at £1.5m. It comes into effect immediately.

Does that mean there is a now a maximum player salary?

No. Clubs are welcome to pay individual players whatever they want, provided they stay within the overall cap for the squad.

Why is a cap so vital?

The finances of EFL clubs, particularly at League One and Two level, have been severely impacted by the loss of matchday revenue, with mass gatherings banned since March to limit the spread of coronavirus. EFL chairman Rick Parry talked about a combined £200m "hole" in clubs' finances by the end of September when he addressed MPs in May.

What does the cap cover?

It covers basic wages, taxes, bonuses, image rights, agents' fees and other fees and expenses paid directly or indirectly to all registered players.

Are there any payments which can be made outside the cap?

Promotion bonuses, cup competition success payments and severance pay will not be included.

What other exemptions or exclusions are there?

Players under 21 are excluded from the cap calculations. Deals agreed before the vote are exempt, as is any renewal of that deal on the same terms if the player is still under 24 at that point.

There is also a relegated player exemption. Any deal agreed with a player no later than the end of the January transfer window in the season the club are relegated will be taken into account.

What if there is a slight overspend?

Clubs will be fined on a sliding scale if the breach is anywhere up to five per cent over the agreed cap. The money will then be split amongst the clubs in that league who had complied with the cap.

What if the overspend is more serious?

The club would be referred to an independent disciplinary commission, which could impose sanctions if the salary cap breach is proved.

Have there been any objections to the cap?

The players' union the Professional Footballers' Association says it does not object to cost control measures being introduced to make the game more sustainable, but believes further consideration and consultation should have taken place before adopting the rules.

Who has backed it?

Julian Knight, the chair of the Digital, Culture, Media and Sport (DCMS) committee which had called for a cap, welcomed the move as "common sense breaking out" and called on Championship clubs to follow suit. The move was also welcomed by Forest Green chairman Dale Vince, whose club were one of 22 in League Two to vote in favour.

What about the Championship?

Clubs have held discussions around cost control measures, including a cap, but it is understood there are no current plans for a formal vote on it.