As part of the Football League’s summer conference, held last week, the member clubs from League One have agreed to adopt the Salary Cost Management Protocol (SCMP). The SCMP has been in place in League 2 since 2003 and is a means of regulating the amounts that teams spend on player wages in order to prevent overspending that may lead to financial difficulties.
In agreeing to adopt this rule, which is to be implemented in the forthcoming season, the clubs in the third tier will be restricted on how much they are permitted to spend on player wages. Each team will be limited to spending 55% of their total annual turnover on their player wage bill for the season. In basic terms a club generating £10M of income for example would have a total of £5.5M to spend on player salaries.
It is unclear exactly what sanctions will be brought against teams failing to adhere to this rule but transfer embargos are one option whilst repeat offenders could potentially risk points deductions. Hartlepool fell foul of the rule when in League 2 in 2006 and as a result they were prevented from signing players until their wage bill was reduced accordingly.
This rule would appear to be of benefit to the Owls in simple terms. Attendances, sponsorship, corporate revenue and merchandise sales at Hillsborough will be amongst the biggest in the division next season and in accordance the club would potentially have the scope to have one of the largest wage bills. Most other clubs in the division will not have the same spending power in this respect.
One possible negative is that while Wednesday and all other clubs in League One will be restricted to the 55% figure the rule does not yet apply to the Championship and so clubs in that division do not have such a limit on what they can offer players in terms of actual rules.
It remains to be seen how this will affect the clubs that have fallen into League One from last season’s Championship. Though they may have healthy turnovers in comparison with other League One outfits their wage bills are also likely to be significantly higher as things stand.
Deloitte Sports Business Group recently reported that Championship clubs averaged an alarming 88% wages to turnover ratio with a third of the clubs in 2009/10 spending more on salaries than they received in revenue.