League One clubs seek tighter spending limits as budgets rise
On 11 November 2026 League One clubs moved to pursue additional restrictions on spending in the third tier of English football, The Guardian has learned. Two models under consideration are a three-year cap on allowable losses and a ‘‘luxury tax’’ that would see 50% of owner investment above a set threshold redistributed to rival clubs.
Clubs in the division voted last summer to tighten financial rules by cutting spending limits from 60% to 50% of turnover and removing a staggered approach to owner injections. That change also limited the portion of equity injections that could be used on squad costs to 50%, with the remainder earmarked for infrastructure projects. The push for further measures was accelerated by last month’s State of the Game report, which found 94% of clubs in the EFL and National League were loss-making and that 32 of the 96 surveyed would not survive for a month without owner funding.
Two specific proposals are reported to be under active consideration: a cap on the cumulative amount a club can lose over a three-year period, and a luxury tax mechanism. Under the luxury tax concept, half of any owner investment above a capped threshold would be redistributed to other clubs in the division. Sources described the three-year losses cap as the preferred option among the models being discussed.
The push for tighter controls comes amid a running legal dispute with the Professional Footballers’ Association, which launched proceedings in August alleging clubs had failed to abide by the terms of their membership of the professional negotiating and consultative committee. Previous efforts to impose salary caps were withdrawn after challenge: an attempt in 2021 by League One and League Two to introduce salary caps of £2.5m and £1.5m respectively was abandoned after the PFA referred the matter to an independent arbitration panel.
Financial pressures cited by clubs include average League One losses of £7.5m per club last season, up from £5.3m the previous season. Last summer’s regulatory changes reduced the share of clubs’ income that can be spent on wages and, for the first time, included managers’ salaries within that calculation. One owner told The Guardian that further regulation was necessary because clubs had repeatedly shown they could not restrain themselves, pointing to a 15% rise in League One wage bills this season and saying a top-six budget from five years ago would now rank in the bottom three.
Views within the division are divided: Reading and Peterborough have long campaigned for tighter spending controls, while clubs such as MK Dons and Wycombe oppose further limits. A source at another League One club warned of an unintended ‘‘cliff edge’’ with the Championship, noting that league loosened its rules last season by permitting owners to inject up to £33m over three years and that this equity allowance does not count towards the 85% wage spending/revenue limit. League Two clubs are not formally involved in the current discussions, but sources indicated they would probably follow the direction of League One.
It remains unclear whether any new proposal would secure the two-thirds majority required for implementation, and The EFL declined to comment.