Clubs in both League One and League Two have voted in favor of introducing a salary cap, with the new caps taking effect immediately.
The new regulations will see clubs fined, or face further sanctions, if they do not adhere to the spending limits, which are now £2.5m for League Two and £1.5m for League One. has been set.
The landmark decision will also affect wages, bonuses or any other fees for players aged 21 and over, although any income from promotion or the pursuit of extended cup runs will be exempt.
EFL statement: ‘Squad salary caps’ introduced at @SkyBetLeagueOne and @SkyBetLeagueTwo. #EFL https://t.co/MMQUp72rtE
— EFL Communications (@EFL_Comms) August 7, 2020
A statement from the official English Football League said: “This decision has been taken following extensive and comprehensive consultation with all clubs in relation to addressing the issues of sustainability and wage inflation in the EFL, which began in March due to Covid-19. Were started before the suspension of football after 19. The spread and continues during the summer.
“These discussions culminated in today’s divisional vote, with representatives from League One and League Two clubs choosing to implement new measures to replace the current Salary Cost Management Protocols (SCMP).”
The statement further noted that the third and fourth tier clubs are “discussing additional measures aimed at addressing the financial stability of the club, while maintaining their own ‘financial controls'” in the Championship. Discussions are also taking place.
Agreed salary cap in EFL: £2.5m wage bill maximum per club in League One, £1.5m in League Two. Image rights + agents fees included.
— Martin Ziegler (@martynziegler) August 7, 2020
Chief executive David Baldwin added: “The term salary cap is an emotive one, giving the impression of a restrictive measure but we are clear in our view that these changes to EFL regulations are neither intended nor Potential impact.
“The financial impact of COVID-19 will be profound for EFL clubs and today’s vote will help ensure that clubs do not overextend themselves to a point that could cause financial instability.
“Discussions between clubs in both Leagues One and Two over the past two weeks have been healthy and constructive, allowing us to reach a clear consensus and I am delighted that the clubs have committed to a new approach. . We will now work together with everyone. Clubs, the PFA and, where appropriate, other stakeholders will continue our efforts to implement the new rules and bring long-term sustainability to the EFL.”
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