Lincoln City are set for a changed financial landscape in the Championship next season, after clubs voted in favour of Squad Cost Rules (SCR) next season.
It replaces the controversial Profit and Sustainability (P&S) rules, aiming to bring the second tier of English football closer to the Premier League’s financial regulations.
Twenty of the 24 sides in the Championship voted in favour, significantly higher than the two-thirds backing that was needed to pass the changes.
It was surprising to see it pass that convincingly, given that an indicative vote had one fewer than the number needed to succeed.
Lincoln weren’t part of this particular vote, as we aren’t officially a Championship side until the EFL’s AGM in early June. It does feel weird that clubs voted on this decision knowing full well it wouldn’t impact them in the immediate future, but it is obviously the fairest way to conduct proceedings. You can’t have teams like Stockport County and Bolton Wanderers split between two leagues, and waiting until next month isn’t an option, given the summer transfer window opens very soon.
What Are The New Rules?
Writing this is actually a blessing, because it gives me the chance to research something I’m not massively certain about. During the most recent campaign, clubs in the second tier had been operating under a shadow version of the SCR system, with a view to its introduction this season. While it still had to be voted through, it now has the backing of the majority of the division, so it’s clear that its premise is supported.
New rules mean that teams can now spend 85% of their income on their squads, which includes costs relating to players and managers. Additionally, there is a flexible equity top-up allowance of £33m over the course of three years. However, a maximum of £15m can be used from that pot per season.
Some of the early fears are that it will still be a bigger benefit to the bigger clubs with the highest revenues. Wrexham, for example, are expected to see a multi-million-pound increase in their spending powers next year. Ultimately, their vast budget wasn’t enough for the Red Dragons to win a record fourth successive promotion, but it leaves them in a better position to go again next year.
Financial rules have also been altered in League One. While it won’t be our concern for at least the next 12 months, it is something that’s worth noting. We have been operating under the Salary Cost Management Protocol (SCMP), which allowed clubs to spend up to 60% of their turnover on player wages. However, that will drop to 50% from next season onwards, and manager costs will now be included. Equity injections from owners will also be treated similarly going forward. This means that a £200,000 investment will equate to £100,000 spent on player wages.
For a club like Lincoln, we aim to run as sustainably as possible. It would be amiss for me to say that and not mention that any business losing millions of pounds a year isn’t sustainable by its very definition. However, relative to a lot of League One sides, we lost a significantly lower figure in the most recent accounts. These new rules aren’t likely to be a great benefit to us compared with the rest of the Championship, but we were always going to be on an uneven financial playing field.
That was the case last year, and look where it got us!