Sunderland have lost their battle against the EFL's restrictive salary cap proposals, with League One clubs restricted to wage budgets of £2.5 million for the season effective immediately.
Sunderland will have a grace period to cut their wage bill, with the wages of players already signed for the upcoming season been counted as an agreed divisional average, rather than their average wage. That will last until the end of the current contract.
So, for example, recent signing Bailey Wright's wage will be counted towards a divisional average for the two years that the contract he just signed lasts. However, should Sunderland remain in League One for the 2022-23 season, then any new deal Wright signed would count in full towards the salary cap.
Sunderland's wage bill currently eclipses the £2.5m threshold, but their superior revenue allows them to run sustainably with a far higher wage budget than their League One rivals.
However, going forward Sunderland will be capped at the same level as clubs like Accrington Stanley and AFC Wimbledon, who are able to generate far less than the Wearsiders and who would be effectively running beyond their means were they to hit the maximum wage cap allowance.
When calculating total salary spending, the ‘cap’ includes:
· Basic Wages;
· Taxes;
· Bonuses;
· Image rights;
· Agents’ fees and;
· Other fees and expenses paid directly or indirectly to all registered players.
Payments directly linked to a Club’s progression in cup competitions or promotion are excluded from the Cap, while any income generated from players going out on loan is deducted from the Club’s Salary Cap calculation.
EFL CEO, 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.”
Sunderland have long since made their objective stance to the measures known.
In an interview last month, CEO Jim Rodwell told Chronicle Live: ""We don't think that the proposed flat cap on salaries makes sense.
"We are all for running sustainable football clubs, but sustainability is not the same as levelling the playing field.
"Next thing you know there will be conversations about sharing gate receipts like they did in the early 1980s!
"I think the EFL are oversimplifying the sustainability issue.
"For a lot of clubs in League One, a £2.5m cap on wages is highly attractive, but our argument is that as a big football club we can generate more revenue and therefore we should be able to spend that revenue on players while remaining sustainable.
"This issue is not supposed to be about level playing fields, it is supposed to be about sustainability and trying to avoid what has happened to Wigan this week, and to Bury [who were expelled from the EFL due to financial problems] last summer."
The PFA have also strongly hit out at the proposals.
But a majority of League One clubs have voted in favour of it, meaning Sunderland have been powerless to stop it.
An EFL statement confirmed 'discussions continue with Championship Clubs in respect to amendments to their own financial controls.'.
Meanwhile, they also confirmed that players under the age of 21 are not included in the salary cap, while promotion bonuses and cup bonuses are also not included in the calculations.
