The English Football League, the governing body of League 1 and League 2, have announced that a salary cap will be introduced for teams within these competitions to the amount of £2.5m per year per squad for the former and £1.5m for the latter.
The cap takes into account basic wages, taxes, image rights, agents fees, bonuses, and other fees involved in player contracts.
The vote was taken by the clubs in order to combat the financial damage caused by the worldwide pandemic and hopefully make lower leagues more sustainable.
“Clubs in League One and League Two have today voted for the introduction of new financial controls in the form of ‘Squad Salary Caps’ into their respective divisions which take effect immediately,” a released statement from the EFL said.
“The decision follows extensive and comprehensive consultation with all clubs in respect of addressing sustainability and wage inflation issues across the EFL which were initiated prior to the suspension of football in March following the COVID-19 outbreak and have continued during the course of the summer.
“Those discussions culminated in today’s divisional vote, with representatives of League One and League Two Clubs opting to implement the new measures in place of the existing Salary Cost Management Protocols (SCMP), with fixed caps of £2.5million and £1.5million respectively.
“Discussions continue with Championship Clubs in respect to amendments to their own financial controls. League One and Two Clubs are also going to continue discussions towards the introduction of additional measures aimed at addressing Club financial sustainability.”
Two clubs vehemently opposed to the salary cap were reportedly Portsmouth and Sunderland, with the latter having a mammoth wage bill of over £10m last season.
Should clubs breach the wage budget, they will be subjected to fines.
Sunderland 
Portsmouth 
