Championship clubs approve 85% squad-cost cap to replace PSR

Championship clubs have voted to introduce a squad-cost ratio (SCR) framework from next season, shifting the EFL’s second tier towards the same core cost-control model now used by the Premier League.The new system limits clubs to spending a maximum of 85% of their revenue on first-team squad costs, replacing the profitability and sustainability rules (PSR) that have been in place since 2017.The change passed with 20 clubs in favour and four against, exceeding the two-thirds majority required.Under the Championship’s SCR, squad costs will include wages for first-team players and coaching staff, plus amortised transfer costs and agents’ fees.A key design feature is an equity allowance that lets owners top up revenues by up to £33m over a three-year period, with a cap of £15m in any single season.The EFL said the new model is intended to improve oversight and reduce delayed enforcement by allowing financial positions to be tracked during the season.An EFL statement said: “The new framework allows for real-time monitoring during the season, rather than reviewing ‘after the event’, with the aim of giving clubs greater clarity and the club financial reporting unit earlier visibility over clubs’ financial position.“The changes are intended to create a simpler and more responsive system of cost control within the Championship.”The previous PSR system was based on limiting losses over a rolling three-season period, with clubs permitted to exclude certain spending on infrastructure, community programmes, women’s football and youth development.Clubs that breached PSR have faced sporting sanctions, with Birmingham City, Derby County, Leicester City, Reading and Sheffield Wednesday among those to receive points deductions during the period the rules were in force.Critics of SCR argue that a revenue-based cap favours clubs with higher turnover, potentially widening competitive imbalance by giving the biggest commercial operators more room to spend.Supporters say it creates a clearer link between spending and earnings, and gives regulators a better tool to identify risk earlier in the cycle.League One clubs also voted through tighter cost controls, reducing the proportion of turnover they can spend under the Salary Cost Management Protocol from 60% to 50% from next season.Relegated clubs will have reduced flexibility, with the permitted ratio falling from 75% to 65% in their first season in League One.League One also voted to treat equity injections on the same 50% basis, limiting how much owner funding can be recycled straight into wages.League Two clubs rejected a proposal to adopt the same equity-injection approach as League One, meaning their existing method will remain in place.