EFL says losses not sustainable after PFA legal action

Chief executive Trevor Birch of the English Football League (EFL) has warned that the financial losses faced by clubs are unsustainable in the long term. This caution comes after the Professional Footballers' Association (PFA) initiated legal action against the EFL over alterations to financial regulations in League One. In May, the EFL announced that the Profitability and Sustainability (P&S) financial framework would be replaced by external Squad Cost Rules (SCR) starting in 2026-27.

Among the changes, the percentage of a club's turnover that could be spent on wages was reduced from 60% to 50% in League One. Birch, a former player, acknowledged the temporary nature of a football career but stressed that the current financial situation for EFL clubs is not viable. Over the past five seasons, average player expenditure in League One has surged from £3.8m to £8.0m, while losses have risen from £2.3m to £7.3m.

The average losses in the Championship reached £21.6m last season. Birch emphasized that financial stability and player protection are not contradictory; rather, they are interdependent. A financially secure club is more likely to honor contracts, pay wages promptly, invest in facilities, and provide long-term career prospects. This issue extends beyond League One; the Championship faces an even more dire situation.

A previous proposal for salary caps in League One and League Two was abandoned in 2021 due to concerns from the PFA that the new rules would be unlawful and unenforceable. The PFA remains opposed to the latest changes, fearing they could lead to wage suppression and restrictions on squad spending. While the PFA's concerns are valid, Birch stressed that inaction would only exacerbate the challenges clubs already face, with owners unwilling or unable to provide additional funding.

The purpose of these financial controls is not to limit ambition but to establish reasonable guidelines, enabling clubs to invest responsibly, remain competitive, and avoid financial ruin. Birch emphasized that the primary objectives are to ensure clubs can contribute positively to their communities and maintain their existence beyond one ownership cycle.

He added that litigation is not a solution; it will not resolve the fundamental issue at hand, which is a financial model in which too many clubs are expected to chase success through unsustainable losses that owners must bear indefinitely. A fairer and more equitable distribution model, with the Premier League's solidarity agreement remaining unchanged since 2019, would be essential to support EFL clubs.