EFL chief says club losses are unsustainable after PFA begins legal action
EFL chief executive Trevor Birch issued an open letter on Friday as the new EFL season kicked off with Wolves hosting Blackburn, responding to legal action brought by the Professional Footballers' Association over changes to League One financial rules. Birch warned the level of losses at clubs has created "a systemic insolvency risk" for the football pyramid.
The PFA has begun legal proceedings against the EFL after the league announced in May that external Squad Cost Rules (SCR) would replace the Profitability and Sustainability (P&S) framework from 2026-27. As part of those changes the allowable percentage of turnover clubs may spend on wages in League One was cut from 60% to 50%, and the PFA says the league could not implement such changes "unless there was full agreement" with the Professional Football Negotiating and Consultative Committee (PFNCC). Birch, who was a player until the age of 23, said he recognised football was a short career but added the financial situation for EFL clubs was "not sustainable".
The EFL set out numbers showing steep rises in spending and losses: over the past five seasons average player expenditure in League One has climbed from £3.8m to £8.0m while losses have increased from £2.3m to £7.3m, and last season average losses in the Championship reached £21.6m. Birch wrote: "Financial sustainability and player protection are not opposing ideas," adding, "They are inseparable." He continued within the letter that "A club that is financially secure is more likely to honour contracts, pay wages on time, invest in facilities and provide long-term career opportunities."
The EFL recalled a previous attempt to impose salary caps in League One and League Two that was withdrawn in 2021 after the PFA argued the proposal would be "unlawful and unenforceable". The players' union has said it will not accept the latest SCR changes because it believes they could affect members' pay, and Birch acknowledged that "The PFA insists the new rules could suppress wages and restrict spending on squads. That concern deserves to be heard." He added in the same letter: "But there is also a legitimate concern that doing nothing only perpetuates the challenges our clubs face, with owners unwilling or unable to provide increased funding requirements."
The EFL highlighted immediate consequences of the new rules, noting League One club Oxford United was placed under a temporary registration embargo last month for failing to comply and is currently unable to sign players, including loans or free transfers, with the club indicating it will take months to meet the obligations. The league also cited Sheffield Wednesday, which spent most of last season in administration after owner Dejphon Chansiri withdrew funding, was deducted 18 points for financial breaches and came close to going out of business, prompting questions about the division's competitiveness.
Birch framed the reforms as aimed at protecting clubs and supporters, writing that fans want clubs to have "the means and security to remain at the very heart of its community in the future." He added: "Supporters want ambition, but they also want hope that feels real, jeopardy that feels fair and competitions that remain open, credible and exciting, whether watched from the stands or on television." He also wrote: "They want promotion and relegation stories that matter, local pride that endures and clubs that last beyond one ownership cycle." On legal action he warned: "Litigation isn't the answer. It will not solve the underlying challenge facing the game: a financial model in which too many clubs are asked to chase success through losses that owners are expected to absorb indefinitely." Birch said a "fairer and more equitable distribution model" with the Premier League would be crucial to EFL clubs and noted the solidarity agreement has been unchanged since 2019.
The PFA has begun legal proceedings against the EFL over the League One rule changes, a dispute that remains unresolved as the new league season starts on Friday when Wolves host Blackburn.
