EFL says losses not sustainable after PFA legal action

EFL chief Trevor Birch warned that the financial losses endured by clubs pose a systemic insolvency risk to the entire football pyramid. This concern arose after the Professional Footballers' Association (PFA) initiated legal action against the EFL over modifications to financial regulations in League One. In May, the EFL unveiled external Squad Cost Rules (SCR) to replace the Profitability and Sustainability (P&S) financial framework starting from 2026-27, lowering the percentage of turnover that clubs could spend on wages from 60% to 50%.

Birch, a former player, acknowledged the transient nature of a football career but stressed that the present financial state of EFL clubs is unsustainable. Over the past five seasons, average player expenditure in League One surged from £3.8m to £8.0m, while losses expanded from £2.3m to £7.3m. Last season, average losses in the Championship hit £21.6m.

Birch emphasized that financial wellness and player welfare are mutually dependent and integral to club operations. A financially stable club is more likely to honor contracts, ensure timely payments, invest in infrastructure, and provide long-term career prospects.

The issue extends beyond League One, as the Championship faces an even more pronounced challenge. A previous proposal for salary caps in League One and League Two was abandoned in 2021 due to PFA concerns that the new rules would be unlawful and unenforceable. The PFA remains opposed to the latest changes, fearing they could suppress wages and limit spending on squads.

Birch acknowledged these concerns but argued that inaction would only exacerbate the clubs' struggles, with owners reluctant or unable to provide the necessary funding increases.

Birch clarified that the objective of these controls is not to restrict ambition but to establish appropriate safeguards, enabling clubs to invest responsibly, maintain competitiveness, and avoid spending that jeopardizes their long-term future. League One's Oxford United was temporarily barred from registering players last month for breaching the new rules, hindering their ability to sign players, including loans or free transfers.

Sheffield Wednesday nearly went bankrupt last season after their owner withdrew funding, accumulating 18 points deduction for financial infractions. Birch emphasized that fans desire clubs to have the means and security to remain central to their communities, aspiring for ambition, hope, fairness, and enduring competitiveness. He stressed that litigation is not the solution, as it fails to address the fundamental challenge: a financial model that forces too many clubs to chase success through unsustainable losses.

A more equitable distribution model, including a fair solidarity agreement with the Premier League, is essential for EFL clubs' financial stability.