Championship clubs to introduce financial fair play system
Championship clubs are set to introduce their own financial fair play system where teams can only spend what they earn.
The Football League chairman Greg Clarke has revealed that the Championship clubs have voted in principle to mirror the Uefa system that will affect clubs in European competition from 2014.
The system will be proposed at the Football League's AGM in Cyprus tomorrow, where it will also be put forward that League One clubs move towards the introduction of the salary cap currently in force in League Two, where teams can spend a maximum of 60% of their turnover on wages.
Clarke told Press Association Sport: "The Championship clubs voted to look at financial fair play and in principle decided that was the road they wanted to go down.
"I think it's essential, and the energy to solve this is coming from the clubs themselves.
"It's a perfect storm in that a lot of things have come together to make this happen, including of course the level of debt in the game - £700million in the Football League, most of that in the Championship - and big losses being racked up by the clubs."
Clarke said if the proposal was passed the next six months would be spent on developing a system and ensuring it was fair and transparent.
He admitted that there had been some opposition to the move but a strong majority had been in favour.
It is understood that Leeds chairman Ken Bates is among those backing the system.
"These things are never unanimous and a couple of the clubs would rather not have constraints on how mach money they can spend," added Clarke.
"I would hope this could lead to a return to the days when local communities could own the clubs rather than rely on offshore benefactors.
"There is also a proposal for League One clubs to shadow the League Two system in the coming season with a view to their adopting it the season afterwards."
The proposed spending constraints also reflect concern over income - the League's new £195million domestic TV deal is a 26% drop on the previous one.
Clarke added: "Football finances are difficult and the UK television deal is less than the last one, and there are no signs that the economy is going to recover quickly."
One area where income has gone up is in parachute payments to clubs relegated from the Premier League - now they can earn up to a maximum of £48million over four years.
There have been fears that could have a distorting effect and lead to yo-yo clubs but Clarke said there had been little evidence of that so far.
He said: "Largely the parachute payments are absorbed by the club paying their debts and players. Last year three clubs came down and did not make the play-offs.
"This year we have two financially-distressed clubs relegated in West Ham and Birmingham, while Blackpool have run quite a tight ship, and it will be interesting to see whether the financial distress overcomes the parachute payments in terms of giving them a competitive advantage."
The Football League have often taken the lead in bring in new systems - their track record includes: the fit and proper person's test for directors; clubs disclosing agents' payments; an independent chairman and independent directors; the spending constraints operating in League Two.
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