Clubs in the Championship have voted (with three clubs voting against) to introduce a fair play tax from next season. Any club that is promoted to the Premiership will have to pay the tax based on a percentage of the sum by which they have exceeded a losses threshhold. There will also be a transfer embargo from 2014/15.
Losses of Championship clubs are limited to £10m from next season. Within this loss, shareholder equity investment cannot exceed £6m. The permitted loss is then reduced each season to £5m in 2015/16.
Clubs in the Championship have voted (with three clubs voting against) to introduce a fair play tax from next season. Any club that is promoted to the Premiership will have to pay the tax based on a percentage of the sum by which they have exceeded a losses threshhold. There will also be a transfer embargo from 2014/15.
Losses of Championship clubs are limited to £10m from next season. Within this loss, shareholder equity investment cannot exceed £6m. The permitted loss is then reduced each season to £5m in 2015/16.
Money raised from the fair play tax will be distributed to Championship clubs who have kept to the rules. Clubs relegated from the Premiership will be exempt in their first season providing they have complied with Premier League financial rules.
Salary caps have already been introduced in Leagues 1 and 2 but Football League chairman Greg Clarke said it was ‘impossible’ to make that work in the Championship.
The key question is whether the plan will drive down wages which are the game’s biggest cost. There is some anecdotal evidence of players being prepared to negotiate longer-term deals in return for less money. But one consequence is a widening gulf between wages in the Premier League and the Football League.
Tom Glick, chief executive of Derby County, said that what was attractive about the scheme was that it gave club options: ‘We are not being told how big our squad needs to be. Some will choose to run a tight squad, some will want to invest more in youth development.’
The three clubs which are understood to have voted against the scheme are Reading and Southampton, one already promoted to the Premiership, and the other likely to be, along with Leicester City, a benefactor club.
Debt across the three divisions of the Football League has reached £1bn and is projected to double in five years.