EXPLAINED: How the new squad salary caps in League One will affect clubs including Doncaster Rovers

Effective immediately, League One clubs including Rovers will have a fixed cap of £2.5million to cover squad salaries. The League Two cap is set at £1.5m.

Discussions over potential controls began in March following the suspension of football due to the Covid-19 pandemic, with serious concerns over the sustainability of clubs through the crisis and beyond.

The EFL have also confirmed that discussions between clubs in the bottom two tiers will continue over other measures to ensure financial sustainability, while Championship clubs will have their own discussions over controls.

Here, we break down what the cap will mean for clubs.

WHAT DOES THE WAGE CAP COVER?

The cap does not stop at basic wages, in a bid to prevent clubs circumnavigating restrictions by offering bonuses and incentives.

The cap includes

- basic wages

- taxes

- bonuses

- image rights

- agents’ fees

- other fees and expenses paid directly or indirectly to players.

WHAT DOES THE CAP NOT COVER?

Wages paid to any players under the age of 21 are not covered by the squad cap.

Also, any players not declared as part of their club’s squad list will also see their wages exempt.

The cap does not include financial incentives and bonuses offered for progress in cup competitions or promotion.

Any severance payments paid to players to end their contracts will also not be counted as part of the restricted cap.

SO WHAT RESTRICTIONS ARE THERE ON WHAT A PLAYER IS PAID?

The cap covers the entire squad, meaning that as long as the £2.5m annual wage bill is not breached, effectively a club can pay any individual player what they like.

Hypothetically, a club could pay a player £2.5m per year but they would need the rest of the squad to play for free.

WHAT ABOUT PLAYERS UNDER CONTRACT OR WHOSE CONTRACTS WERE AGREED BEFORE AUGUST 7?

Existing contracts for players will be included as part of the squad cap. However, the total contribution of individual wage will be capped at an amount agreed by all the clubs in the division.

For example, clubs may collectively agree that the upper limit for existing wages is £3,000 per week. So any player contracted to their club prior to August 7 who is paid more than that amount will see only £3,000 of their weekly wage count towards the squad cap.

Such players will be termed as Committed Contract Salary Cap Players in EFL regulations.

Clubs offering contract extensions to players under the age of 24 will also see the individual’s contribution to the overall cap restricted to the amount agreed between clubs.

WHAT IF A PLAYER LEAVES ON LOAN?

Should a player leave on loan, the percentage of their wages covered by the loaning club will be deducted from the total going towards the cap.

For example, a player earning £1,000 per week is loaned out for the season. The club he joins agrees to pay 80 per cent of his wages. Therefore, his contribution towards the wage bill at his parent club is reduced to £200 per week.

HOW ARE RELEGATED CLUBS AFFECTED?

The squad salary cap will apply immediately to any club relegated from the Championship or League One, with any signings taking place in the summer transfer window prior to the start of their season in their new division included.

Relegated clubs will also see existing contracts covered by the Committed Contract Salary Cap Players rules, so individual contributions will be capped at an agreed amount.

HOW WILL CLUB SPENDING BE MONITORED?

The EFL have pledged to monitor the cap in a ‘real-time basis’ to prevent clubs from signing players that would see them breach the restrictions.

HOW WILL CLUBS BE PUNISHED FOR BREACHING THE CAPS?

Fines for breaching the squad cap by up to five per cent have been set by the EFL.

In League One, clubs face a set fine for overrunning their wage bill by up to £125,000.

The fines are set as follows

- Between zero and two per cent overspend - 50p for every £1 over spent.

Example: A club breaches the League One cap by £25,000. They will be fined £12,500.

- Between two and four per cent overspend - £1 for every £1 over spent.

Example: A club breaches the League One cap by £75,000. They will be fined £75,000.

- Between four and five per cent overspend - £3 for every £1 over spent.

Example: A club breaches the League One cap by £125,000. They will be fined £375,000.

Any club overspending by more than five per cent will be immediately referred to an independent disciplinary commission, who will determine the punishment.

The EFL have warned of ‘serious consequences for intentional misconduct.’

WHAT HAPPENS TO THE FINES?

The EFL have termed the fines as a ‘luxury tax.’ The total amount of the fine will be redistributed to clubs who comply with the restrictions.

WHAT HAVE THE EFL SAID?

Chief executive David Baldwin said: “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.

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.

“Over the last two weeks the discussions amongst clubs in both Leagues One and Two have been healthy and constructive, allowing us to reach a clear consensus today and I am pleased that the clubs have determined to adopt the new approach.

“We will now work with all clubs, the PFA and, where appropriate, other stakeholders to implement the new rules and continue our efforts to bring long-term sustainability to the EFL.”

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