Championship clubs have voted in favor of adopting a new financial framework called Squad Cost Rules (SCR), set to take effect from next season. The move aligns the second tier of English football more closely with the Premier League, which approved its own version of SCR in November.
The new rules replace the previous profit and sustainability regulations, which limited clubs to losses of £39 million over three years. Under SCR, the focus shifts from profit and loss to a club's total football-related income and the proportion spent on squad costs.
Sixteen of the 24 Championship clubs voted in favor, meeting the required majority. The change comes amid widespread financial struggles, with only three Championship clubs reporting a profit in the 2024-25 season. Combined losses among the 22 clubs that submitted financial results reached £317 million, excluding Stoke City's adjusted figures.
SCR will cap spending on player and manager-related costs—including transfer fees—at 85% of income. Owners can provide a flexible equity top-up of up to £33 million over three years, with a maximum of £15 million in any single season. The rules also include safeguards for commercial deals linked to owners or associated parties.
The English Football League stated that the new framework allows for real-time monitoring during the season, offering clubs greater clarity and enabling earlier detection of financial issues.
In addition, League One clubs approved modifications to the Salary Cost Management Protocol (SCMP), reducing the allowable wage spending from 60% to 50% of turnover. Clubs relegated from the Championship can spend 65% of turnover on wages in their first season in League One, down from 75%. However, a similar proposal for League Two clubs failed to gain enough support.