League One clubs consider loss caps and luxury tax as spending rises

League One clubs are discussing another round of financial restrictions as rising wage bills and losses prompt calls to limit owner-funded spending, according to The Guardian. The talks come less than six months after clubs tightened their existing rules, and include competing proposals for controlling losses or redistributing some investment to other teams in the division.

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The Guardian's Matt Hughes reported that one option would cap losses over a three-year period. Another would introduce a luxury tax, with half of owner investment above a specified threshold distributed among rival clubs. A limit on losses is understood to be the preferred approach, but neither proposal has been approved. It remains uncertain whether either could secure the required two-thirds majority.

The discussions follow changes agreed last summer, when clubs lowered their spending allowance from 60% to 50% of turnover. They also changed the treatment of owner equity, allowing half of those injections to fund squad costs while directing the remainder towards infrastructure. Managers' pay was brought into the wage calculations for the first time as part of that tightening.

Despite those measures, average losses in League One reached £7.5m per club last season, compared with £5.3m a season earlier, the report said. An owner who spoke to The Guardian said wage bills had risen by 15% this season. The owner also said a budget sufficient for a top-six position five years ago would now rank among the division's bottom three.

There is already a legal dispute over the current restrictions. The Professional Footballers' Association began proceedings in August, arguing that clubs had not followed their obligations under the professional negotiating and consultative committee. Earlier attempts to impose salary caps of £2.5m in League One and £1.5m in League Two were withdrawn in 2021 after the union pursued independent arbitration.

Reading and Peterborough have supported stronger controls, while MK Dons and Wycombe are among the opponents, according to the report. A source at another club warned that tighter restrictions could widen the financial gap with the Championship. League Two clubs are not formally part of the talks, although sources suggested they would probably follow League One's direction. The EFL declined to comment.