League One clubs push new spending caps as losses hit £7.5m a club

League One clubs lost an average of £7.5m each last season, up from £5.3m the year before, and now a bloc of owners wants to cap those losses over a rolling three-year period. The Guardian has learned that two proposed models are under consideration: a limit on aggregate losses across three years, and a luxury tax under which 50% of owner investment above a capped threshold would be redistributed to rival clubs. The loss cap is the favoured outcome, according to the report.

The push comes less than six months after clubs in the division voted to tighten existing rules. Last summer they cut spending limits from 60% to 50% of turnover and scrapped a staggered approach to owner investment. Under the revised terms, only 50% of equity injections can be spent on squad costs; the rest must go to infrastructure projects. Managers' salaries were brought inside the wage calculation for the first time.

Why are clubs demanding more curbs now?

Discussions over stricter controls have run for some time, but last month's State of the Game report gave them fresh impetus. The first publication from the Independent Football Regulator found that 94% of clubs in the EFL and National League are loss-making, and that 32 of the 96 would not survive a month without owner funding.

One League One owner told the Guardian that further regulation was necessary because clubs had repeatedly shown they could not restrain themselves. The owner pointed to hard numbers: League One wage bills have risen 15% this season, and a top-six budget in the division five years ago would now rank in the bottom three.

Reading and Peterborough have long campaigned for tighter spending controls. They face opposition from clubs including MK Dons and Wycombe, and it's unclear whether any proposal would clear the two-thirds majority required for adoption.

What about the legal risk?

The move toward more curbs lands while the existing rules face a legal challenge. The Professional Footballers' Association launched proceedings in August, arguing clubs had failed to abide by the terms of their membership of the professional negotiating and consultative committee.

This isn't the first courtroom fight over EFL cost control. In 2021, League One and League Two withdrew planned salary caps of £2.5m and £1.5m respectively after the PFA took them to an independent arbitration panel.

Could stricter rules backfire?

A source at another League One club warned of an unintended consequence: a financial cliff edge with the Championship. English football's second tier loosened its own regulations last season, permitting owners to inject up to £33m over three years — an equity allowance that sits outside the Championship's 85% wage-spending-to-revenue limit. A tighter League One could widen the gap for clubs moving between the divisions.

League Two clubs are not formally part of the discussions at this stage, but sources indicated they would probably follow League One's direction. The EFL declined to comment.

Any vote will test whether the division's majority can hold against the clubs that see owner spending as a competitive lifeline rather than a problem — and whether new rules survive the PFA's ongoing legal attack on the old ones.