What does the EFL salary cap withdrawal mean for League One and Two clubs?

| 09 February 2021

A panel ruled against the cap on Tuesday.

The EFL has been forced to withdraw its salary caps for Leagues One and Two after an independent arbitration panel decision.

Here the PA news agency provides the lowdown on Tuesday's shock development.

What has happened?

PFA welcomes the withdrawal of salary cap rules.

Salary cap withdrawn following a decision by an independent arbitration panel.

Full statement here: https://t.co/w1olwl21KP

— Professional Footballers' Association (@PFA) February 9, 2021

The caps per club of £2.5million for League One and £1.5million for League Two, which were voted through last August, have had to be withdrawn with immediate effect following an arbitration panel ruling. The arbitration was triggered after the Professional Footballers' Association immediately challenged the decision to impose the cap, describing it as "unlawful and unenforceable".

What was the purpose of the cap?

The EFL, whose chairman Rick Parry is pictured, was found to have breached the PFNCC's constitution by not consulting it over the salary cap (Mike Egerton/PA)

The EFL saw it as a means to ensure the sustainability of its clubs amid the profound pressure placed on revenues by the coronavirus pandemic.

What did the panel say?

An independent arbitration panel has upheld a claim from the @PFA that the @EFL was in breach of the constitution of the Professional Football Negotiating and Consultative Committee by introducing 'Squad Salary Caps'.#EFL https://t.co/wL314NIrsj

— EFL Communications (@EFL_Comms) February 9, 2021

That the EFL was in breach of the Professional Football Negotiating and Consultative Committee's (PFNCC) constitution in introducing the cap, by not giving the committee the opportunity to give the cap "proper consideration and consultation".

What is the PFNCC?

First established as the PFNC in 1978 with equal Football League and PFA representation.
Renamed the PFNCC in 1992 to include the Premier League and the FA.
Independently chaired.
Designed to discuss all matters affecting the game and its players.

It is made up of representatives from the EFL, the PFA, the Premier League and the Football Association and it is considered to be the appropriate forum for any decision-making related to the regulations around the employment of professional players.

How have EFL bosses reacted?

I'm assuming this now means it gets dumped. Bad news – as the whole purpose was financial stability for clubs in leagues 1 and 2. https://t.co/A7WoOmvWoS

— Dale Vince (@DaleVince) February 9, 2021

The chairman of Forest Green, Dale Vince, an advocate of the cap, told PA he was "shocked" by the decision and suggested the EFL could leave the PFNCC and reimpose the cap. Portsmouth chief executive Mark Catlin described the cap as a "blunt instrument" and said the EFL and its clubs needed to come up with a "self-sustainability" approach which took into account the differing size of clubs.

What happens next?

PFA chief executive Gordon Taylor says his union hopes to be involved in a dialogue over measures to ensure the sustainability of the EFL (Steven Paston/PA)

In the long run, further negotiations. The PFA said on Tuesday that it "hopes to open constructive dialogue to agree reasonable and proportionate cost control measures for the future". In the meantime, EFL clubs will need to revert to abiding by the Salary Cost Management Protocol (SCMP) which was in place for the 2019-20 season.

What are the rules around SCMP again?

The EFL's SCMP rules tie player-related spending to turnover (Martin Rickett/PA)

It basically looks to keep player-related spending at a certain proportion compared to a club's turnover in Leagues One and Two. Failure to follow the protocol can lead to clubs being barred from registering new players.