EFL Warns That Uncontrolled Financial Losses Threaten Long-Term Club Viability After PFA Legal Action

A previous plan for salary caps to be introduced in League One and League Two was withdrawn in 2021 after the PFA argued the proposed rules would be unlawful and unenforceable.

The PFA has expressed reluctance to accept the latest changes, warning they could impact members’ salaries.

“The PFA insists the new rules could suppress wages and restrict squad spending; that concern deserves to be heard,” Birch added.

However, doing nothing only perpetuates the challenges clubs face, particularly as owners are unwilling or unable to meet increased funding requirements.

“The purpose of these controls is not to limit ambition, but to put appropriate guardrails in place so clubs can invest responsibly, remain competitive, and avoid spending that threatens their long-term future,” Birch explained.

Sheffield Wednesday spent most of last season in administration after the club’s then owner, Dejphon Chansiri, withdrew funding. The Owls were deducted 18 points for financial breaches and came close to going out of business, raising questions about the impact on divisional competitiveness.

Birch said fans want clubs to have “the means and security to remain at the very heart of its community in the future.”

He added: “Supporters want ambition, but they also want hope that feels real, jeopardy that feels fair, and competitions that remain open, credible and exciting, whether watched from the stands or on television.”

They want promotion and relegation stories that matter, local pride that endures, and clubs that last beyond a single ownership cycle.

“Litigation is not the answer. It will not solve the underlying challenge facing the game: a financial model in which too many clubs are asked to chase success through losses that owners are expected to absorb indefinitely. It is not sustainable,” Birch warned.

Birch also emphasized that a fairer and more equitable distribution model with the Premier League would be crucial for EFL clubs, noting that the solidarity agreement has remained unchanged since 2019.

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