League One Clubs Demand Stricter Spending Rules Amid Losses
League One is tightening its own belt – and many inside the division want it pulled another notch.
Less than six months after clubs voted through stricter cost controls, a fresh drive is under way to clamp down further on owner spending and club losses, in a move that could reshape the financial landscape of the third tier.
From wage caps to loss caps
Last summer, League One sides agreed to reduce the proportion of turnover that can be spent on squad costs from 60% to 50%. They also scrapped the staggered system that allowed owners to drip-feed extra money into the playing budget. Now, only half of any equity injection can go on the squad; the other half must be channelled into infrastructure.
It was billed as a reset. It hasn’t been enough.
The Guardian has learned that clubs are now weighing up two new models. The first – and currently the preferred option in boardrooms – would impose a hard cap on how much a club is allowed to lose over a three‑year period. The second is a so‑called luxury tax: any owner investment above an agreed threshold would trigger a 50% levy, with that money redistributed to rival clubs.
The message is blunt. If owners want to spend big, the rest of the league wants a slice.
Legal storm clouds in the background
All of this is happening with a legal challenge already in motion.
The Professional Footballers’ Association launched proceedings in August, arguing that the latest rules were brought in without properly following the terms of the professional negotiating and consultative committee. The PFA has history here. When League One and League Two tried to force through hard salary caps of £2.5m and £1.5m in 2021, the union took the fight to an independent arbitration panel. The caps were withdrawn.
Despite that backdrop, clubs are pushing again. They see the numbers and they don’t like what they see.
A league addicted to owner money
The Independent Football Regulator’s first State of the Game report has jolted the conversation. The figures are stark: 94% of clubs across the EFL and National League are loss‑making. Of the 96 in those competitions, 32 would not last a month without owner funding.
League One sits right in the middle of that crisis. Average losses in the division hit £7.5m per club last season, up from £5.3m the year before. Wage bills keep climbing – one owner pointed to a 15% rise in League One this season alone – and the inflation is brutal. A budget that would have put a club in the top six five years ago would now be fighting to stay out of the bottom three.
“Clubs have repeatedly shown they could not restrain themselves,” that owner told the Guardian, arguing that only firmer regulation will stop the spiral.
Divided dressing room in the boardroom
Not everyone agrees on how far to go.
Reading and Peterborough have long argued for tighter spending controls and see the new proposals as overdue protection. On the other side sit clubs such as MK Dons and Wycombe, wary of rules that could lock in the status quo or punish ambitious ownership.
Any new system would need a two‑thirds majority to pass. At the moment, that threshold looks far from guaranteed.
Behind the voting blocs lies a deeper fear: that League One could end up stranded between a more liberal Championship and a more compliant League Two.
The Championship gap – and a looming cliff edge
One senior figure at a League One club warned of a “cliff edge” opening up between the third and second tiers if stricter curbs come in. The Championship relaxed its own rules last season, allowing owners to inject up to £33m over three years in equity that does not count towards its 85% wages‑to‑revenue limit.
That gives ambitious Championship owners room to manoeuvre. League One is talking about taking that room away.
The concern is clear. Clamp down too hard and promotion could come with a brutal financial jump, where newly promoted clubs find themselves miles behind in spending power before a ball is kicked.
League Two, for now, sits on the sidelines. The fourth‑tier clubs are not formally part of the current talks, but insiders suggest they are likely to fall in line with whatever League One eventually decides.
For the moment, the EFL has declined to comment. The debate, though, is already raging inside club boardrooms. League One must decide what it fears most: the risk of owners overspending, or the cost of falling even further behind.
