Luton will face new financial control rules after EFL clubs approve changes

Luton will have to abide by new financial rules in League One next season after the EFL announced that clubs approved changes to the existing Salary Cost Management Protocol (SCMP) rules this afternoon.

With Town having failed to reach the play-offs despite a final day 3-2 victory over Bolton Wanderers, it means they will be lining up in the third tier once more next term. They will be faced with new regulations when doing so, as a statement released by the EFL today said: “League One Clubs approved changes to the existing Salary Cost Management Protocol (SCMP) rules, with the aim of reducing losses and the reliance on owner funding in the division. The long-standing SCMP rules limit spending on player wages to a percentage of a Club’s Turnover.

“As part of the amendments to SCMP, the percentage of Turnover that Clubs in League One will be able to spend on wages has been reduced from 60% to 50%, with Manager costs to now also be included within the SCMP Calculation. Clubs relegated from the Championship will be permitted to spend 65% of Turnover on wages during their first season in League One, reduced from 75% under the current rules. League One Clubs also approved a change to remove the staggered approach to equity injections in the division, meaning that all equity injections will be included within the calculation at 50%.

"As an example, this means that if an Owner invests £500k into the Club, a maximum of £250k (in addition to that already permitted as a percentage of Turnover) can be spent on wages. This approach is intended to encourage investment into other areas of Club operations, such as infrastructure and youth development. The new rules further strengthen financial control and are another important step towards helping Clubs to operate on a more sustainable basis.”

Speaking recently about the new rules that are now in place, Town chief executive Gary Sweet was behind the proposals, as writing in his programme notes, he added: “Looking beyond even next season, the wider game is moving into a period of major change. The proposed framework around the Independent Football Regulator with new licensing requirements is set to reshape the way clubs will be required to operate in pursuit of community protection and sustainability – a direction we very much welcome.

“There’s no avoiding the conversation around struggling finances in football. Across League One and beyond the numbers are becoming increasingly difficult to ignore. Losses are growing, wage levels are rising and there’s a clear sense that the current model is being pushed to its limits. For the first time, we’re now seeing club owners across the game aggressively beginning to challenge the game’s financial structure.

"For a long time, we’ve sat slightly on the edge of that debate. Not because we disagree – quite the opposite – but because our financial position, supported by parachute funding in recent years, has naturally changed our financial landscape, helping us deliver our priority objective – to take this club to a heightened level by building our new home.”