EFL chief executive Trevor Birch warns that the financial losses sustained by clubs in the football pyramid are creating a systemic insolvency risk. This comes as the Professional Footballers' Association (PFA) has taken legal action against the EFL over changes to financial rules in League One. The EFL's new Squad Cost Rules (SCR) will replace the Profitability and Sustainability (P&S) framework from 2026-27, reducing the percentage of turnover clubs can spend on wages in League One from 60% to 50%.
The PFA argues that the league cannot implement these changes without full agreement from the Professional Football Negotiating and Consultative Committee (PFNCC). Birch, a former player, acknowledges the short career of football but emphasizes the unsustainable financial situation for EFL clubs. Over the past five seasons, average player expenditure in League One has increased from £3.8m to £8.0m, while losses have risen from £2.3m to £7.3m. The situation is even more dire in the Championship, where average losses reached £21.6m last season.
Birch highlights the importance of financial sustainability and player protection, stating that a financially secure club is more likely to honor contracts, pay wages on time, invest in facilities, and provide long-term career opportunities. He argues that the current financial model, where clubs are expected to chase success through losses that owners are expected to absorb indefinitely, is not sustainable. The PFA's concern about suppressed wages and restricted spending is valid, but Birch suggests that doing nothing will only perpetuate the challenges faced by clubs.
The recent temporary registration embargo placed on Oxford United for failing to comply with the new rules and the administration of Sheffield Wednesday, which led to a 18-point deduction and a near-business closure, underscore the urgency of the situation. Birch believes that fans want clubs to have the means and security to remain at the heart of their communities, with ambition, hope, and fair competition. He concludes that litigation is not the solution and calls for a fairer and more equitable distribution model with the Premier League, as the current solidarity agreement has remained unchanged since 2019.
