Only four of the 24 second tier clubs in England are believed to have rejected a proposal which was carried on Friday to adopt new Squad Cost Rules (SCR) to replace the existing profit and sustainability (P&S) framework, which had limited teams to losses of £39m across a three-year period.
The SCR system will limit Championship clubs’ spending on player and manager-related costs (including transfer fees) to a set percentage of their income, alongside a limited level of owner funding.
From next season the SCR allowance will be set at 85pc of income, with a flexible equity top-up allowance of £33m over a three-year period (up to a maximum of £15m a season).
Norwich City will release their accounts for 2025/26 later this year but total income in their 2024/25 annual figures was £39.3m, significantly down from the previous year’s turnover of £73.1m, largely due to the conclusion of their Premier League parachute payments.
A ‘green’ and ‘red’ threshold will be in operation to manage clubs who exceed 85pc of income spending on player and manager-related costs. In the event clubs exceed the ‘red’ threshold figure an automatic six-point deduction is applied in the season the offence occurs. The point deduction increases on the size of the breach. For every additional £6.5m spent above the ceiling, an additional one-point penalty is incurred.
The newly adopted measures are expected to favour clubs with larger stadium capacity and lucrative commercial deals who are also able to drive greater revenue streams around matchday income.
City have embarked on a summer programme to revamp hospitality areas at Carrow Road to supplement the on-going financial backing of Mark Attanasio and Norfolk Holdings.
Costs on infrastructure are exempt from SCR, as they were in the P&S calculations.
The Milwaukee Brewers’ principal owner, and Norfolk Holdings, became majority shareholders of the club in March 2025, and the scale of their financial commitment has become clear in the last two sets of published annual accounts.
During the course of the past 2025/26 season, Championship clubs had been operating an SCR system in shadow, alongside the P&S rules to allow clubs to assess the proposed rule changes.
Sixteen of the 24 clubs needed to vote in favour for the rule to change, which will now bring the Championship broadly into line with a similar version of SCR adopted by Premier League clubs in November 2025.
An EFL statement added: “The new framework allows for real-time monitoring during the season, rather than reviewing ‘after the event’, with the aim of giving clubs greater clarity and the Club Financial Reporting Unit earlier visibility over clubs’ financial position.
“The framework also includes safeguards around commercial deals linked to owners or associated parties.
“The changes are intended to create a simpler and more responsive system of cost control within the Championship.
“A version of the SCR framework is also to be introduced in the Premier League for the 2026/27 season, bringing closer alignment between the divisions.”
Meanwhile, League One clubs approved changes to the existing Salary Cost Management protocol (SCMP) which limit spending on player wages to a percentage of a club’s turnover.
The percentage of turnover League One clubs will be able to spend on wages has been reduced from 60pc to 50pc, with manager costs to now also be included within the SCMP calculation.
Clubs relegated from the Championship will be permitted to spend 65pc of turnover on wages during their first season in League One, reduced from 75pc under the current rules.
Oxford United, Leicester City and Sheffield Wednesday were relegated from the Championship in the past season.
