League One clubs, including Hull City, will vote on the introduction of a new salary cap today and the result promises to have sizable implications for years to come.
It has been proposed that no club will be allowed spend more £2.5m on wages per year in the third tier, with the annual figure falling to £1.5m in League Two.
That will be a far cry from City’s big spending days when staff costs topped £61m for the most recent Premier League campaign and it would also represent a fraction of the wages spent during last season’s relegation from the Championship.
The proposed £2.5m salary cap has already encountered opposition from unhappy clubs in League One but there is still a high chance it will be passed in time for the 2020-21 season beginning next month.
There will be caveats and exceptions within the new framework but what will it mean for City?
What will be voted on by League One clubs?
The financial turmoil witnessed in the lower leagues over recent times has demanded change and the proposal is to introduce a salary cap that, in theory, would limit the damage done.
An annual £2.5m limit for wages was first suggested last year but the coronavirus pandemic has brought the financial difficulties facing clubs back to the fore.
The decision will ultimately rest with the League One clubs, who must pass the proposal with a majority vote when coming together.
What does that £2.5m cover?
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Wages, primarily, but also agent fees, signing on fees and player bonuses. Players aged 21 or under from the club’s academy are set to be exempt from the figure, which would also not include wages given to management and coaching staff or transfer fees.
Being limited to an annual spend of £2.5m on wages should help level up the playing field and prevent clubs throwing money at signings when chasing promotion.
For context, City would have been looking at a £2.5m spend on the salaries of Markus Henriksen and Kamil Grosicki alone last season had they not departed the KCOM Stadium in January. The financial landscape could be transformed for 2020-21.
What about the historic contracts that a club takes into the 2020-21 season?
This is where it gets complicated. Any player on an existing contract would be classified on the terms of an average League One wage, thought to be in the region of £1,300 a week.
That would ensure clubs already over the £2.5m annual mark could still be allowed to strengthen this summer without fear of being hit with punishments.
That flexibility provides clubs with the ability to work around the new framework but it would become a balancing act in the years to come as legacy deals expire and can no longer be written off at the League One average.
The expectation is that the new rule could come into play immediately if clubs decide to vote it through. The punishments for exceeding the £2.5m salary cap have not been made public but one recent report suggested it could be a fine of three times whatever the excessive spend totals.
Will the vote be passed?
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Sunderland, Portsmouth and Ipswich, three clubs whose wage bills far exceed the £2.5m figure last season, have all been vocal opponents to the proposals and they have attempted to encourage others to follow their lead. Oxford are another club believed to be against the plans.
City, Wigan and Charlton will all get a vote after relegation but the division’s smaller clubs, such as AFC Wimbledon, Accrington, Rochdale, Lincoln and Shrewsbury would all inevitably benefit from spending limits being applied to others.
A two-thirds majority is needed for the vote to be passed and it is currently unclear if it will attract the necessary support.