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Appendix 5 - Financial Fair Play Regulations

APPENDIX 5 - FINANCIAL FAIR PLAY RULES

PART 1 – CHAMPIONSHIP PROFITABILITY AND SUSTAINABILITY RULES

Capitalised Terms have the meanings ascribed to them in Regulation 1 or 16 of the Regulations of The League unless otherwise indicated.

The following Rules are supplemental to the Regulations. 1 Definitions

1.1 Capitalised Terms have the meanings ascribed to them in the Articles of Association and the Regulations of The League unless otherwise indicated below:

1.1.1  Accounting Reference Period means the period in respect of which Annual Accounts are prepared.

1.1.2  Adjusted Earnings Before Tax means Earnings Before Tax adjusted to exclude costs (or estimated costs as the case may be) in respect of the following:

(a)  depreciation and/or impairment of tangible fixed assets;

(b)  amortisation or impairment of goodwill and other intangible assets (but excluding amortisation and/or impairment of the costs of players’ registrations);

(c)  Women’s Football Expenditure;

(d)  Youth Development Expenditure;

(e)  Community Development Expenditure; and

(f)  in respect of Seasons 2019/20 and 2020/21 only, COVID-19 Costs.

Each of Youth Development Expenditure, Women’s Football Expenditure, Community Development Expenditure and COVID-19 Costs shall only be excluded from the calculation of Adjusted Earnings Before Tax if separately disclosed:

(i)  by way of notes to the Annual Accounts; or

(ii)  by way of supplementary information which reconciles to the Annual Accounts and which has been subject to independent audit.

1.1.3  Annual Accounts means:

(a)  the accounts which each Club’s directors are required to prepare pursuant to
section 394 of the 2006 Act; or

(b)  if the Club considers it appropriate or the Executive so requests, the group accounts of the Group of which the Club is a member and which it is required to prepare pursuant to section 399 of the 2006 Act, or which it is required to deliver to the Registrar of Companies pursuant to section 400(2)(e) or section 401(2)(f) of the 2006 Act,

provided that in either case the accounts are prepared to an accounting reference date (as defined in section 391 of the 2006 Act) which falls between 31 May and 31 July inclusive. If the accounting reference date falls at any other time, separate accounts for the Club or the Group as appropriate must be prepared for a period of twelve months ending on a date between 31 May and 31 July inclusive, and in such a case “Annual Accounts” means those accounts.

Annual Accounts must be prepared and audited in accordance with all legal and regulatory requirements applicable to accounts prepared pursuant to Section 394 of the 2006 Act.

1.1.4  Cash Losses means aggregate Adjusted Earnings Before Tax after: (a) write back of:

(i)  amortisation and/or impairment of Players’ registrations; and

(ii)  profit or loss on the transfer of Players’ registrations; and

(b) inclusion of net cash flow in respect of transfers of Players’ registrations.

1.1.5  Championship FFP Rules means the Championship Financial Fair Play Rules adopted by Championship Clubs in April 2012.

1.1.6  Community Development Expenditure means:

(a) net expenditure by a Club directly attributable to activities (whether in the United Kingdom or abroad) for the public benefit to promote participation in sport and advance social development; and

(b) donations made by the Club:

(i)  to United Kingdom charities in a form recognised by such charities; and/or

(ii)  for foreign charitable purposes in a form which (had the donations been made to registered United Kingdom charities) would have been recognised as charitable.

1.1.7  COVID-19 Costs means lost revenues and/or exceptional costs incurred by a Club that are directly attributable to the COVID-19 pandemic and that are identified and calculated in accordance with such guidance as issued by the Board;

1.1.8  Earnings Before Tax means profit or loss before tax, as shown in the Annual Accounts.

1.1.9  Fair Market Value means the amount for which an asset could be sold, licensed or exchanged, a liability settled, or a service provided, between knowledgeable, willing parties in an arm’s length transaction.

1.1.10  Group for the purposes of these Rules, has the meaning set out in Section 474(1) of the 2006 Act save that it shall also include any other entity that carries on any material aspect of the football operations of the Club.

1.1.11  P&S Calculation means, save as indicated below, the aggregation of a Club’s Adjusted Earnings Before Tax for T, T-1 and T-2. In respect of Season 2020/21 only, the P&S Calculation shall be the aggregation of:

(a)  the mean of the Adjusted Earnings Before Tax of T and T-1; and

(b)  the Adjusted Earnings Before Tax of T-2; and

(c)  the Adjusted Earnings Before Tax of T-3;

1.1.12  Related Party Transaction means a transaction:

(a)  disclosed in a Club’s Annual Accounts as a related party transaction; or

(b)  which would have been disclosed as such except for an exemption under the accounting standards under which the Annual Accounts were prepared, in which case it must be detailed by way of supplementary information which reconciles to the Annual Accounts and which has been subject to independent audit.

Guidance

If the accounting standards applied by the Club do not require the Club to disclose Related Party Transactions within the notes to the Annual Accounts, the transactions should be detailed in a separate schedule and submitted to the Executive.

1.1.13 Secure Funding means funds which have been or will be made available to the Club in an amount equal to or in excess of any Cash Losses which the Club has made in respect of the period from T-2 or is forecast to make up to the end of T+2. Secure Funding may not be a loan and shall consist of:

(a)  contributions that an equity participant has made by way of payments for shares through the Club’s share capital account or share premium reserve account; or

(b)  an irrevocable commitment by an equity participant to make future payments for shares through the Club’s share capital account or share premium reserve account. This irrevocable commitment shall be evidenced by a legally binding agreement between the Club and the equity participant and may if the Executive so requires be secured by one of the following:

(i)  a personal guarantee from the ultimate beneficial owner of the Club, provided that the Executive is satisfied that

1)  he is of sufficient standing; and

2)  the terms of the guarantee are satisfactory;

(ii)  a guarantee from the Club’s Parent Undertaking or another company in the Club’s Group, provided that the Executive is satisfied that

1)  the guaranteeing company is of sufficient standing; and

2)  the terms of the guarantee are satisfactory;

(iii)  a letter of credit from a Financial Institution of sufficient standing and an undertaking from the Club’s directors to The League to call on the letter of credit in default of the payments from the equity participant being made;

(iv)  payments into an escrow account, to be paid to the Club on terms satisfactory to the Executive; or

(v)  such other form of security as the Executive considers satisfactory; or

(c)  such other form of secure funding as the Executive considers satisfactory.

1.1.14 T means the Club’s Accounting Reference Period ending in the year in which assessment pursuant to Rules 2.2 to 2.9 takes place, and:

(a)  T-1 means the Club’s Accounting Reference Period immediately preceding T;

(b)  T-2 means the Club’s Accounting Reference Period immediately preceding T-1;

(c)  T-3 means the Club’s Accounting Reference Period immediately preceding T- 2;

(d)  T+1 means the Club’s Accounting Reference Period immediately following T; and

(e)  T+2 means the Club’s Accounting Reference Period immediately following T+1.

1.1.15  Women’s Football Expenditure means expenditure by a Club directly attributable to activities to train, educate and develop players involved in women’s football teams (including, for the avoidance of doubt, such activities as they relate to female players under the age of 18);

1.1.16  Youth Development Expenditure means expenditure by a Club directly attributable to activities to train, educate and develop Academy Players net of any youth development grant income received by the Club from any of the football governing bodies.

2 Profitability and Sustainability

2.1  Rules 2.2 to 2.9 shall apply with effect from Season 2016/17.

2.2  Subject to Rule 2.2A, each Club shall by 1 March in each Season submit to the Executive:

2.2.1  copies of its Annual Accounts for T-1 (and T-2 if these have not previously been submitted to the Executive) together with copies of the directors’ report(s) and auditor’s report(s) on those accounts;

2.2.2  its estimated profit and loss account and balance sheet for T which shall:

(a)  be prepared in all material respects in a format similar to the Club’s Annual Accounts; and

(b)  be based on the latest information available to the Club and be, to the best of the Club’s knowledge and belief, an accurate estimate as at the time of preparation of future financial performance; and

2.2.3  if Rule 2.5 applies to the Club its P&S Calculation in a form approved by the Executive from time to time and which as at the date of these Rules is set out in Appendix 1.

Guidance

The Executive will in due course consider the Annual Accounts for the Accounting Reference Period in respect of which information pursuant to Rule 2.2.2 is submitted and in particular examine whether any material variances indicate that the estimated financial information was not prepared in accordance with Rule 2.2.2(b).

2.2A In respect of Season 2019/20:

2.2A.1  the deadline for submission of the information required by Rule 2.2 shall be 26 August 2020; and

2.2A.2  there shall be no obligation on each Club to submit the information referred to in Rule 2.2.3.

Guidance

The review of Clubs’ P&S Calculations for 2018/19 against actual figures in Clubs’ Annual Accounts (and supporting information) will still be undertaken by the EFL. The adoption of Rule 2.2A.2 does not release any Club from liability relating to any breach of these Rules relating to Season 2018/19 or any prior Seasons. The EFL Board will continue to seek sanctions in line with the existing sanction guidelines.

2.3  The Executive shall determine whether consideration included in the Club’s Earnings Before Tax arising from a Related Party Transaction is recorded in the Club’s Annual Accounts at a Fair Market Value. If it is not, the Executive shall restate it to Fair Market Value.

2.4  The Executive shall not exercise its power set out in Rule 2.3 without first having given the Club reasonable opportunity to make submissions as to:

2.4.1  whether the said consideration should be restated; and/or

2.4.2  what constitutes its Fair Market Value.

2.5  If the aggregation of a Club’s Earnings Before Tax for T-1 and T-2 (or in the case of Season 2020/21 T-2 and T-3) results in a loss, any consideration from Related Party Transactions having been adjusted (if appropriate) pursuant to Rule 2.3, then the Club must submit to the Secretary its P&S Calculation.

2.6  If the P&S Calculation results in a loss of up to the Lower Loss Threshold (calculated in accordance with Rule 3), then the Executive shall determine whether the Club will, until the end of T+1, be able to fulfil its obligations as set out in Regulations 16.19.8(a), (b) or (c).

2.7  Where the Executive determines, in its reasonable opinion and having considered any information provided to it by the Club, that the Club may not be able to fulfil its obligations as set out in Regulations 16.19.8(a), (b) or (c), the Executive shall have the powers set out in Regulation 16.20.

2.8  If the P&S Calculation results in a loss that exceeds the Lower Loss Threshold, then the following shall apply:

2.8.1  the Club shall provide, by 31 March in the relevant Season, Future Financial Information to cover the period commencing from its last accounting reference date (as defined in section 391 of the 2006 Act) until the end of T+2 and a calculation of estimated aggregated Adjusted Earnings Before Tax until the end of T+2 based on that Future Financial Information;

2.8.2  the Club shall provide such evidence of Secure Funding as the Executive considers sufficient; and

2.8.3  if the Club is unable to provide evidence of Secure Funding as set out in Rule 2.8.2, the Executive shall have the powers set out in Regulation 16.20.

2.9  If the P&S Calculation results in a loss that exceeds the Upper Loss Threshold (calculated in accordance with Rule 3) then:

2.9.1  the Executive may exercise its powers set out in Regulation 16.20;

2.9.2  the Club shall be treated as being in breach of these Rules and accordingly The League shall refer the breach to the Disciplinary Commission in accordance with section 8 of the Regulations.

3 Loss Thresholds

3.1 Save for Rule 3.4, the Lower Loss Threshold and Upper Loss Threshold for each Club shall be calculated based on the aggregation of the Annual Lower Loss Thresholds and Annual Upper Loss Thresholds set out in the following table, by reference to the league of which the Club was a member in the Season covered by the applicable Accounting Reference Period:

 

Annual Lower Loss Threshold

Annual Upper Loss Threshold

Premier League

Subject to Rule 3.2, £5 million

Subject to Rule 3.2, £35 million

The League

Subject to Rule 3.3, £5 million

Subject to Rule 3.3, £13 million

Guidance

By way of example a Club that was a member of The League in 2016/17, the Premier League in 2017/18 and The League in 2018/19, will have:

(a)  a Lower Loss Threshold of £15m; and

(b)  an Upper Loss Threshold of £61m (using the figures set out in Rule 3.1).

3.2  The Loss Thresholds for any Accounting Reference Periods relating to Seasons when Clubs were members of the Premier League shall be calculated on the basis of the three year aggregated figures set out in Premier League Rules E.57 and E.59 respectively (as amended, extended or replaced from time to time in accordance with the Rules of the Premier League) divided into three equal annual instalments.

3.3  Where there is an adjustment to the Premier League’s Annual Lower Loss Threshold and/or Annual Upper Loss Threshold, as described in Rule 3.2, then The League’s Annual Lower Loss Threshold and/or Annual Upper Loss Threshold for the equivalent period shall be adjusted by a percentage equal to the percentage change applied by the Premier League.
Guidance
By way of example, if for Season 2019/20 the Premier League introduce an Annual Lower Threshold of £6m and an Annual Upper Threshold of £36m then the Thresholds for The League in that Season will be £6m and £13.37m. For ease, threshold figures will be rounded up to the nearest £10,000.

3.4  In respect of Season 2020/21, the Lower Loss Threshold and Upper Loss Threshold for each Club shall be calculated based on the aggregation of the Club’s Annual Lower Loss Threshold and Annual Upper Loss Threshold for T, T-1, T-2 and T-3 as per the figures set out table in Rule 3.1 as amended by dividing those figures by 4 and then multiplied them by 3.

4 Duty of Disclosure

4.1  The Executive may require a Club to provide such further information as the Executive deems necessary (acting reasonably) for the purposes of enabling the Executive to assess whether a Club has met (as applicable) the Profitability and Sustainability Rules or not. By way of example, and without limitation, additional information may be requested where:

4.1.1  any submission is incomplete;

4.1.2  there are insufficient assumptions; or

4.1.3  additional evidence is required to support certain assumptions.

4.2  Any such request shall be made in writing (including by email to the Finance Director or equivalent) and shall be responded to in full within 5 Normal Working Days of any such request being made.

4.3  Without prejudice to the right of The League to refer any breach of rules to the Disciplinary Commission in accordance with section 8 of the Regulations, where any Club is in breach of any requirement of these Rules relating to the provision of information, the Executive may refuse any application by that Club to register any Player or any new contract of an existing Player of that Club.

4.4 Each Club shall, at all times and in all matters within the scope of these Rules, behave with the utmost good faith both towards The League and the other Clubs (provided always that only The League shall have the right to bring any action whatsoever for any alleged breach of this requirement). Without prejudice to the generality of the foregoing, Clubs shall not manage their affairs or submit information which is intended to seek to or take any unfair advantage in relation to the assessment of fulfilment (or non-fulfilment) of the requirements of the Rules.

5 Clubs Ceasing to be Members of the Championship

5.1 If a Club is promoted or relegated out of the Championship Division that Club shall, notwithstanding promotion or relegation, remain bound by these as if it were still a Championship Club, until such time as it has complied with all of its obligations relating to its last Season as a Championship Club.

6 Review Applications

6.1  Where in these Rules there is any reference to the Executive making a determination, including by way of example and without limitation:

6.1.1  assessment of Secured Funding; and

6.1.2  determinations by the Executive in accordance with Rule 2,

the Club shall subject to the provisions of Rules 6.2 and 6.3, have a right to have such decision reviewed by the Disciplinary Commission.

6.2  The only grounds on which a Club may present an application to the Disciplinary Commission for a review of a decision by the Executive shall be that the decision:

6.2.1  was reached outside the jurisdiction of the Executive; or

6.2.2  could not have been reached by any reasonable Executive which had applied its mind properly to the issues to be decided; or

6.2.3  was reached as a result of fraud, malice or bad faith; or

6.2.4  was contrary to English Law; and

directly and foreseeably prejudices the interests of the Club.

6.3  Any application for a review must be presented within 14 days of the date of the decision to be reviewed (time of the essence).

6.4  Any Disciplinary Commission convened pursuant to or otherwise in relation to any matter covered by these Rules shall include at least one member who holds a nationally recognised qualification as an accountant or auditor (but who shall not sit as the chairman of the Disciplinary Commission, who shall be qualified as set out in Regulation 90.3.1) (the Finance Member).

6.5  The Finance Member shall be selected by the Independent Directors of the Board from a panel of Finance Members approved by a simple majority of the member clubs in the Championship division as at the date the panel is presented for approval. For the purposes of Regulation 90.3.2, the Finance Member shall be deemed to be the member appointed by The League.

7 Confidentiality

7.1 Information provided by a Club to the Executive in accordance with these Rules shall only be made available to such members of the Executive as are required to know such information in order to fulfil their duties to The League (and who are bound by obligations of confidentiality as part of their contract of employment).

8 Implementation and Transition

8.1  For the purposes of Rule 2, the first ‘T’ Season will be 2016/17, and as a consequence these Rules are effective (in so far as they relate to T-1 and T-2) for the 2014/15 and 2015/16 Seasons.

8.2  If:

8.2.1  a Club’s Adjusted Earnings Before Tax resulted in losses of £13 million (or greater) in Season 2014/15 and/or Season 2015/16; and

8.2.2  that Club was sanctioned in accordance with the Championship FFP Rules in respect of the applicable Season,

then, but not otherwise, the Adjusted Earnings Before Tax loss for that Club for that Season (for the purposes of these Rules) will be capped at £13m.

8.3  The Championship FFP Rules remain in force for Seasons 2014/15 and 2015/16.

Appendix 5 - Regs image.png

Part 2 – Board Statement

In accordance with the requirements of the Championship Profitability and Sustainability Rules of The League, we, the Directors of XYZ Football Club Limited (the Club), hereby report in respect of the [Club’s] OR [the Group’s (of which the Club is a member)] accounting period of ♦ months ended on ♦ 20♦ that [with the exception(s) noted below]:

(1)  the [Club / Group] has operated internal financial control policies and procedures which are designed to meet the Championship Profitability and Sustainability rules of The League (the Rules);

(2)  the Profitability and Sustainability Calculation of the directors of the [Club / Group] (the Calculation) as set out above has been prepared in accordance with the Rules;

(3)  the other information provided by the [Club/Group] has been prepared in accordance with the Rules.

[The exception(s) referred to above is/are as follows: • .....]

For and on behalf of the Board of XYZ Football Club Limited:

[Signature of Director and date of signing]

 

PART 2 - SALARY CAP RULES LEAGUE ONE

1 Definitions

1.1 Capitalised terms have the meanings ascribed to them in the Articles of Association and the Regulations of The League unless otherwise indicated below:

Approach to Sanctioning Guidelines          

means the Approach to Sanctioning guidelines set out at Schedule 5;

Broadcast Agreement

means each new domestic “live” broadcast agreement; 

Committed Contract Salary Cap Player

has the meaning given to it Rule 3.1.1;

Connected Party

has the meaning given to it at Schedule 4;

Declaration

means the Declaration contained at Schedule 6;

Divisional Average Salary

has the meaning as set out in paragraph 2 of Schedule 3;

Embargo
means a registration embargo such that a Club shall not be permitted to register any Player or any new contract of an existing Player with that Club without the prior written consent of The League;

Employment Benefit Trust

means any trust established by a Club or any third party, in relation to which any Club or Connected Party of that Club makes any payment;

Excess

means any amount in excess of the Squad Salary Cap;

Excluded Items 

has the meaning given to it at Schedule 2;

Ex-Player

means any person who was previously a Player of a Club in any Salary Cap Year;

Investigators

means any third party appointed and/or instructed by The League from time to time for the purposes of carrying out such investigations or inquiries as set out in these Salary Cap Rules;

Investigatory Audit

means an audit carried out by The League (or where relevant by Investigators) in connection with a suspected breach of these Salary Cap Rules;

Loan Income

has the meaning given to it at paragraph 1.2 of Schedule 3;

Overrun

means any Excess up to 5% of the Squad Salary Cap;

Overrun Tax

has the meaning given to it at Rule 7.3;

Relegated Club

means a League One Club that was relegated from the Championship in the immediately preceding Salary Cap Year;

Relegated Salary Cap Player

has the meaning given to it at Rule 3.2.1;

Relevant Records

means the any record, document and any other information held by or in the control of a Club and which are reasonably considered by The League to be relevant the Salary Cap Rules;

Salary

has the meaning given to it at Schedule 1;

Squad Salary Cap Calculation

means the excel spreadsheet in a form as determined by The League from time to time;
Salary Cap Rules

means this Part 5 of Appendix 5;

Salary Cap Player

means any Registered Player at the Club that is not excluded in accordance with Rule 4.1;

Salary Cap Player Value

has the meaning given to it at paragraph 1.1 of Schedule 3;

Salary Cap Year

means the 12-month period from 1 July in one calendar year to 30 June in the following calendar year (inclusive);

Sanction Guidelines

means the Sanction Guidelines agreed by the Board;

Squad Salary Cap

has the meaning given to it at Rule 2.1; and

Squad Salary Cap Value

has the meaning given to it at paragraph 3.1 of Schedule 3.

2 Squad Salary Cap

2.1  Each Club must ensure that, at any time during the Salary Cap Year, its Squad Salary Cap Value does not exceed £2,500,000 (the “Squad Salary Cap”).

2.2  Any payment or benefit in kind which falls within the definition of Salary shall be deemed to be made in the Salary Cap Year in which the payment is contracted to be paid or in which the service is provided.

Guidance

Regulation 63.14 requires signing on fees to be paid in equal annual instalments over the period of the contract, therefore the equal annual instalment should be the amount included within the Squad Salary Cap Calculation for the relevant Salary Cap Year.

2.3  The Squad Salary Cap shall be adjusted in the Salary Cap Year that each new Broadcast Agreement comes into effect, in accordance with the following calculation:

2.3.1 where the income payable in accordance with the terms of the Broadcast Agreement exceeds the income payable in accordance with the terms of previous Broadcast Agreement, by a percentage equal to the increase that the Division receives in accordance with Article 39.3; or

2.3.2 where the income payable in accordance with the terms of the Broadcast Agreement does not exceed the income payable in accordance with the terms of previous Broadcast Agreement, by a percentage equal to the decrease that the Division receives in accordance with Article 39.3.

Guidance

If, as was the case in Season 2019/20, rebate is required to be paid in accordance with the terms of the Broadcast Agreement, this Rule will not apply to reduce the Squad Salary Cap for that Season.

3 Capped Salary Cap Players

3.1 Committed Contract Salary Cap Players

3.1.1 A committed contract salary cap player is a Salary Cap Player who has entered into a contract with the Club and which has been registered with The League (and has been provided to The League in accordance with Regulation 46.1) on or before the later of 6 August 2020 or the date that these Salary Cap Rules come into effect (a “Committed Contract Salary Cap Player”).

Guidance

This Rule has been introduced to ensure that Club’s calculations are adjusted to reflect pre- existing commitments.

3.1.2  A Committed Contract Salary Cap Player‘s Salary Cap Player Value shall be capped at the relevant Divisional Average Salary.

3.1.3  Save for where when Rule 3.1.4 applies, where a Club and Committed Contract Salary Cap Player agree to amend the terms of the Committed Contract Salary Cap Player’s contract to either:

(a)  increase the Salary payable to the Committed Contract Salary Cap Player; and/or

(b)  to extend the term of the Committed Contract Salary Cap Player’s contract (including where the Club chooses to exercise an option to extend the contract),

on or after the 6 August 2020 or the date that these Salary Cap Rules come into effect, then that Committed Contract Salary Cap Player’s Salary shall no longer be capped at the Divisional Average Salary and the Salary Cap Player Value in respect of that Salary Cap Player shall be calculated in accordance with paragraph 1.1 of Schedule 3.

Guidance

Squad Bonus Schedules

Where Clubs enter into squad bonus schedules and the bonus schedule is applicable to all professional Registered Players, then subject to The League’s further review this will not be considered to be an increase to the Salary of Committed Contract Salary Cap Players. Therefore those Players will remain capped at the Divisional Average Salary.

The League retains the right to review such bonus schedules and should The League determine that the updated squad bonus schedule is a substantial increase in salary in comparison to the squad bonus schedule for the previous Season, The League shall have the right to make a determination that this is an increase in the Salary payable to the Committed Contract Salary Cap Player and that Clubs Committed Contract Salary Cap Players shall no longer be capped at the Divisional Average Salary.

For clarity any payment falling due under the squad bonus schedule will need to be included within the Club’s Salary Cap Schedule.

Option Agreements

Where an option agreement is activated either:

automatically as a consequence of sporting performance, for example the Player has
made a pre-agreed number of appearances; or

by the Player without the Club having the ability to prevent the option activation,
then the Player shall still be considered to be a Committed Contract Salary Cap Player until his playing contract expires at the end of the option term.

3.1.4 Where a Committed Contract Salary Cap Player’s contract will expire at the end of the Salary Cap Year, provided that the Committed Contract Salary Cap Player is an Under 24 Player, the Club and Committed Contract Salary Cap Player may enter into a new contract and, provided that the new contract does not increase the Salary payable to the Committed Contract Salary Cap Player, the Committed Contract Salary Cap Player’s Salary shall remain capped at the relevant Division Average Salary until the first Salary Cap Year which the Committed Contract Salary Cap Player is no longer an Under 24 Player.

Guidance

This Rule has been included to ensure that Clubs are able to retain compensation rights in Under 24 Players by offering the Player a new contract on not less favourable terms but not allowing Clubs to offer these Players increased Salaries.

3.2 Relegated Salary Cap Players

3.2.1 A relegated salary cap player is a Salary Cap Player who is registered with a Relegated Club and entered into his contract (or agreed to vary the terms of his existing contract) with the Relegated Club on or before the conclusion of the Winter Transfer Window in the Season the Relegated Club was relegated (a “Relegated Salary Cap Player”).

Guidance

For the avoidance of doubt Rule 3.1 (Committed Contract Salary Cap Players) also applies to Relegated Clubs.

3.2.2  A Relegated Salary Cap Player’s Salary Cap Player Value shall be capped at the relevant Divisional Average Salary.

3.2.3  Save for Rule 3.2.4, where a Club and Relegated Salary Cap Player agree to amend the terms of that Player’s contract to:

(a)  increase the Salary payable to the Player; and/or

(b)  to extend the term of the Player’s contract (including where the Club chooses to exercise an option to extend the contract),

on or after the date the Winter Transfer Window closed in the Season the Relegated Club was relegated, then that Relegated Salary Cap Player’s Salary shall no longer be capped at the relevant Divisional Average Salary and the Salary Cap Player Value in respect of that Player shall be calculated in accordance with paragraph 1.1 of Schedule 3.

Guidance

Options

Where an option agreement is activated either:

  • automatically as a consequence of sporting performance, for example the Player has
    made a pre-agreed number of appearances: or
  • by the Player without the Club having the ability to prevent the option activation,

then the Player shall still be considered to be a Relegated Salary Cap Player until his playing contract expires at the end of the option term.

Date of relegation

The reference to on or after the date of the Club’s relegation shall mean the date upon which it is mathematically impossible to escape relegation based on playing performance, not the date upon which the constitution of each Division is confirmed.

3.2.4 Where a Relegated Salary Cap Player’s contract will expire at the end of the Salary Cap Year, provided that the Relegated Salary Cap Player is an Under 24 Player, the Club and Relegated Salary Cap Player may enter into a new contract and, provided that the new contract does not increase the Salary payable to the Relegated Salary Cap Player, the Relegated Salary Cap Player’s Salary shall remain capped at the relevant Division Average Salary until the first Salary Cap Year in which the Relegated Salary Cap Player is no longer an Under 24 Player.

Guidance

This Rule has been included to ensure that Clubs are able to retain compensation rights in Under 24 Players by offering the Player a new contract on not less favourable terms but not allowing Clubs to offer these Players increased Salaries.

4 Excluded Salary Cap Players

4.1 The following Players shall not be considered to be a Salary Cap Player:

4.1.1  any Under 21 Player;

4.1.2  in respect of Relegated Clubs in its first Salary Cap Year following relegation only, any Player who is not included within the Squad List of that Club throughout that Salary Cap Year; and

4.1.3  in Season 2020/21 only, any Player who is not included within the Squad List of a Club.

Guidance

Under 21 Loan Players

For the avoidance of doubt, any Under 21 Player on loan at a Club will be excluded for the purpose of the Squad Salary Cap calculation.

Squad Lists

Where a Club has not included the maximum number of Players permitted to be on a Squad List, the Club shall be entitled to apply to The League to add a Player registered with the Club but not currently included on the Squad List (see guidance to Regulation 43.9.6.). Where The League approves such an application, the full Salary paid or payable by the Club to that Player for the entirety of that Salary Cap Year shall be included for the purpose of the Salary Cap Calculation. This will not apply on a pro-rated basis.

5 Club’s Obligations and Process

5.1  The responsibility to fulfil the obligations set out in this Rule 5 rests with the Club. The Chief Executive Officer (or equivalent e.g. Managing Director) and the Finance Director (or equivalent e.g. Head of Finance) of each Club shall each also have a responsibility to procure the Club’s compliance with this Rule 5. In the event that any Club does not, whether temporarily or permanently, have a Chief Executive Officer or Finance Director, the responsibility to fulfil the obligations set out below will fall to the Chairman of the Club's board of directors or such other designated representative of the Club as notified in writing and agreed between the Club and The League prior to 1 July of the Salary Cap Year in question.

5.2  In Season 2020/21 only, by no later than 5 days following the closing of the Summer Transfer Window, and in each subsequent Season by no later than the third Friday in June in the immediately preceding Salary Cap Year, each Club will provide to The League:

5.2.1 a copy of the Declaration signed on behalf of the Club by the Chief Executive Officer (or equivalent) and the Financial Director (or equivalent) of the Club. The Declaration certifies the sums which the Chief Executive Office and Financial Director, having made full and proper enquiries:

(a) expect the Club to pay during that Salary Cap Year including:

(i)  the total amounts paid or payable provided or to be provided as Salary in that Season by or on behalf of a Club or a Connected Party of the Club to the Salary Cap Players or any Connected Party of the Salary Cap Players; and

(ii)  the total amount to be included as Excluded Items,

5.2.2  its Squad Salary Cap Calculation; and

5.2.3  minutes in the form set out in Schedule 7, of the meeting of the board of directors of the Club at which the Declaration was formally approved on behalf of the Club, including details of the directors in attendance or absent at that meeting.

5.3 Where, following the conclusion of the Summer Transfer Window, The League determines that a Club is forecasting to be in breach of these Salary Cap Rules The League shall place the Club under an Embargo and the Club will use its best endeavours to work with The League to agree a business plan with the objective of ensuring that the Club is no longer forecasting to be in breach of the Salary Cap Rules by the conclusion of the Winter Transfer Window in that Salary Cap Year.

5.4 By no later than 7 July following the conclusion of a Salary Cap Year each Club will provide to The League:

5.4.1 a copy of the Declaration signed on behalf of the Club by the Chief Executive Officer (or equivalent) and the Financial Director (or equivalent) of the Club. The Declaration certifies the following sums, which the Chief Executive Office and Financial Director, having made full and proper enquiries:

(b) the sums that the Club has paid during the previous Salary Cap Year including:

(i)  the total amounts paid or payable provided as Salary in that Salary Cap Year by or on behalf of a Club or a Connected Party of the Club to Salary Cap Players or any Connected Party of the Salary Cap Players; and

(ii)  the total amount included as Excluded Items,

5.4.2  its Squad Salary Cap Calculation for the previous Salary Cap Year; and

5.4.3  minutes in the form set out in Schedule 7, of the meeting of the board of directors of the Club at which the Declaration was formally approved on behalf of the Club, including details of the directors in attendance or absent at that meeting.

5.5  The Board shall have the power acting, in its sole discretion, to amend the dates for submission referred to at Rules 5.2 and 5.4 provided that the Board gives Clubs not less than 30 days’ written notice of its intention to do so.

5.6  Clubs must not negotiate, procure or otherwise arrange any form of commercial agreement (including but not limited to individual endorsement agreements) between Players and commercial partners (including but not limited to official kit suppliers or equivalent) of the Club. In the event that Clubs are aware that a Salary Cap Player has entered into any form of commercial agreement with a commercial partner of the Club, the Club shall notify The League and provide (and procure that the Salary Cap Player provides) The League with all Relevant Records that The League requests. The League shall, acting in its sole discretion, determine if any of payments received in connection with the agreement between the Salary Cap Player and the commercial partner shall be deemed to be Salary. If The League determines that the payments should be deemed to be Salary the Club shall be required to submit an updated Salary Cap Calculation to The League within 5 days of receiving an instruction of The League to do the same.

5.7  To ensure the proper observance and enforcement of the Salary Cap Rules and without prejudice to the provisions of Regulation 3.4, each Club agrees during the operation of the Salary Cap Rules to notify in writing to The League details of:

5.7.1  any potential or actual loopholes, lacunae or errors in the Salary Cap Rules;

5.7.2  any breach of the Salary Cap Rules by any Club of which the Club or their staff or agents become aware; and

5.7.3  any suspicions or complaints that they, their staff or agents may have concerning the observance by any other Club of the Salary Cap Rules. The Club shall keep such suspicions or complaints confidential (save for notifying them to The League) and shall not announce or leak them (even on a "no-names" or anonymous basis) to the press or public or another Club.

5.8  Each party who is subject to the Salary Cap Rules must not assist, encourage, aid, abet, cover up, or have any other type of complicity in, any breach by any other Party of any Salary Cap Rule. A party who fails to comply with this Rule 5.8 shall be deemed to have committed a Misconduct.

5.9  Where a party who is subject to the Salary Cap Rules wishes to act in a manner which is not expressly permitted by these Salary Cap Rules, they must obtain the prior written approval from The League. A party who fails to comply with this Rule 5.9 shall be deemed to have committed a Misconduct.

Guidance

Clubs are reminded that the Regulations prohibit Clubs from making payments to Players who have not been registered with The League (see Regulation 50.1.4).

5.10  To assist The League in monitoring compliance with these Salary Cap Rules, individuals (whether players, coaches, administrators, agents or others) are encouraged to approach The League with any information relevant to any actual or potential instance of non-compliance with the Salary Cap Rules by another party. The identity of the individual providing the information will not be disclosed beyond The League without such individual’s prior approval unless The League is required to disclose such details by order of arbitral body, court order or required by order of a government authority but only to the extent that and for the purpose of which such disclosure is required.

5.11  The standard of proof in all matters under these Salary Cap Rules shall be the balance of probabilities. Where these Salary Cap Rules place the burden of proof upon a Club to rebut a presumption or establish facts or circumstances, the standard of proof shall also be the balance of probabilities.

5.12  Where a Club fails to provide the submissions as set out at Rules 5.2 and 5.4, the Club shall be deemed to have committed a Misconduct and shall be subject to an Embargo as per Rule 5.23.

5.13  Clubs must not include a payment or benefit in kind as an Excluded Item unless The League has given its prior written approval for its inclusion.

5.14  Each Club is responsible for keeping their Squad Salary Cap Calculation updated at all times and shall re-submit the Squad Salary Cap Calculation to The League, clearly highlighting the changes being made, for approval prior to making any change. Upon discovering any error or variance to the Squad Salary Cap Calculation, the Club is also responsible for reporting any error or variance to The League and shall submit a corrected Squad Salary Cap Calculation to The League for approval.

Guidance

Where a Club wishes to make any change to the Squad Salary Cap Calculation, for example to register a new Player, the Club shall be required to re-submit its Squad Salary Cap Calculation to The League for approval.

5.15  The League may raise queries with any of the Clubs in relation to issues relevant to the compliance and operation of the Salary Cap Rules. Each Club agrees to co-operate fully with The League in connection with any such query and in the management, operation and enforcement of the Salary Cap Rules and to use all reasonable endeavours to procure that their Players co-operate fully with any query raised by The League and addressed to or in respect of a Player.

5.16  The League may at any time require a Club to provide such further information as The League deems necessary (acting reasonably) for the purposes of enabling The League to assess whether a Club has fulfilled (or not) the Squad Salary Cap Calculation. By way of example, and without limitation, additional information may be requested where any Squad Salary Cap Calculation is incomplete or additional evidence is required to support certain assumptions.

5.17  Any such request shall be made in writing (including by email from the Finance Department) and shall be responded to in full within 5 Normal Working Days of any such request being made.

5.18  Where The League has reasonable suspicion to believe that the registration of a Player will result in a Club breaching these Salary Cap Rules, The League shall have the power to impose an Embargo on that Club until The League is provided with the necessary information in order to be satisfied that the Club will not breach these Salary Cap Rules. The League will exercise its discretion not to impose an Embargo in such circumstances where the Club makes payment of 50% of the Overrun Tax or, where relevant, the sanction recommended in the Sanction Guidelines to The League in advance of the Player being registered. In circumstances where The League is satisfied that the registration of the Player has not caused the Club to breach the Salary Cap Rules, The League shall reimburse the sums paid but shall be entitled to retain any interested accrued in respect of such sums during the time it is held by The League.

5.19  Clubs shall keep all records and documents relevant to the Declarations and Player Contracts, including all documents and records that the Club was required to provide under the Salary Cap Rules and Relevant Records, for a period of six years from the end of the Season to which those records or documents relate.

5.20  If The League reasonably suspects:

5.20.1  a Club has breached these Salary Cap Rules; or

5.20.2  in respect that any decision that The League has already made in correction with these Salary Cap Rules, that a Club mislead The League (either deliberately or in advertently) in connection with the same,

The League may carry out, or may instruct Investigators to carry out, an Investigatory Audit. Prior to the commencement of any Investigatory Audit The League shall notify the relevant Club providing brief details of the suspected breach(es) which is/are to be the subject of the Investigatory Audit.

5.21  Each Club which is the subject of an Investigatory Audit shall use all reasonable endeavours, during normal business hours to:

5.21.1  provide The League (or Investigators where relevant) with access to and take copies of Relevant Records held at the Club’s premises (or such other located at which they are held);

5.21.2  provide The League (or Investigators where relevant) with access to electronic devices held at the Club’s premises or controlled by the Club and paper copies thereof;

5.21.3  provide The League (or Investigators where relevant) with access to the Club’s pay roll system and associated data;

5.21.4  making available (both electronically via email, CD, DVD, USB memory stick or other form of secure electronic transfer and paper copy) the Relevant Records as requested by The League (or Investigators where relevant);

5.21.5  giving The League (or Investigators where relevant) full and unfettered access to its Players, directors, officials, employees, shareholders and any other persons contracted or engaged by the Club for playing purposes in order to meet with them and interview them in connection with the suspected breach of the Salary Cap Rules (at a time which will not unreasonably interfere with their duties to the Club);

5.21.6  answering fully and honestly all queries of The League (or Investigators where relevant) related to the Investigatory Audit; and

5.21.7  so far as reasonably possible making arrangements for The League (or Investigators where relevant) to meet persons and any third party or Connected Party that The League (or Investigators where relevant) wish to meet for the purpose of carrying out the Investigatory Audit.

5.22  Save where the matter has been settled by a Disciplinary Commission or League Arbitration Panel, the League may reopen any investigation where The League receives new evidence which was not available to it at the time of the original investigation or where a subsequent review of the information supplied highlights any potential failure by the Club to have complied with the obligations imposed on it pursuant to this Rule 5.

5.23  A Club which:

5.23.1  does not file a Squad Salary Cap Calculation by the required date; and/or

5.23.2  does not provide information where requested to do so by The League,

shall be subject to an Embargo until such time as The League is satisfied that the relevant information has been provided.

6 Duties of Promoted and Relegated Clubs

6.1  If a Club is promoted out of League One into the Championship that Club shall, notwithstanding promotion, remain bound by the provisions of Rule 5.4, Rules 5.10 - 5.22 (inclusive), Rule 7 and Rule 8 as if it were still a League One Club, until such time as it has complied with all of its obligations relating to its last Season(s) as a League One Club.

6.2  If a Club is relegated out of League One into League Two that Club shall, notwithstanding relegation, remain bound by the provisions of Rule 5.3, Rules 5.10 - 5.22 (inclusive), Rule 7 and Rule 8 as if it were still a League One Club, until such time as it has complied with all of its obligations relating to its last Season(s) as a League One Club.

7 Overrun

7.1 Any Overrun shall be dealt with in accordance with this Rule 7, whereas any breach of the Salary Cap Rules in relation to an Excess exceeding the Overrun, shall be dealt with in accordance with Rule 8.

7.2  Where The League is of the reasonable opinion that a Club has incurred an Overrun The League shall serve on the relevant Club a written summary notice (the “Summary Notice”) which shall:

7.2.1  identify the relevant provision(s) of the Salary Cap Rules which has resulted in the Club incurring the Overrun;

7.2.2  describe the nature and amount of the alleged Overrun;

7.2.3  provide a statement of facts to be relied upon;

7.2.4  provide copies of all documents or other evidence relied upon or referred to in the Summary Notice; and

7.2.5  offer the Club the option to accept the automatic Overrun Tax with no further sanction.

7.3  The Overrun Tax shall be set at the following values:

Level of Overrun Overrun Tax

Between 0% - 2%

£0.50 for every £1 in Excess between 0% and 2%

Between 2% - 4%

£1 for every £1 in Excess between 2% and 4%

Between 4% - 5%

£3 for every £1 in Excess between 4% and 5%

Guidance – Example

If a League One Club had an excess of 5% (£125,000) the Overrun Tax payable would be £149,996 calculated as follows:

0% - 2% - £0.50 for every £1 up to £50,000 (£0.5 x £50,000) = £25,000
2% - 4% - £1 for every £1 between £50,001 - £100,000 (£1 x £49,999) = £49,999 4% - 5% - £3 for every £1 between £100,001 - £125,000 (£3 x £24,999) = £74,997

7.4  Any Club that receives a Summary Notice will be subject to an Embargo from the date of the Summary Notice until:

7.4.1  the Overrun Tax is paid in full;

7.4.2  The League is satisfied that the Overrun Tax is not payable; or

7.4.3  a Club successfully challenges the Overrun Tax in accordance with Rule 8.

7.5  Within 10 Normal Working Days of receiving the Summary Notice, the Club shall respond in writing to either:
7.5.1 accept the automatic Overrun Tax pursuant to Rule 7.7; or

7.5.2 request that the matter be dealt with subject to the provisions of Rule 8.

7.6  If the Club accepts the automatic Overrun Tax, The League will report the Overrun and amount of the Overrun Tax to the Board at the next Board meeting (without identifying the name of any Player or details of any identifiable Player’s contract or their Salary).

7.7  If the Club accepts the automatic Overrun Tax, payment shall be made within 14 days of such acceptance. The provisions of Rule 8.6 shall apply to any late payments.

Guidance

Where a Club has already paid 50% in accordance with Rule 5.18, the Club will be required to pay the remaining 50% upon acceptance of the Overrun Tax, such payment shall be made within 14 days of acceptance.

7.8  Any amounts collected as Overrun Tax will not be paid into the Pool Account but shall instead be paid into a specific salary cap account (a “Salary Cap Account”).

8 Sanctions

8.1  Any breach of these Salary Cap Rules shall constitute a Misconduct and The League shall have the power to:

8.1.1  impose an Embargo; and/or

8.1.2  in accordance with Regulation 85.3 (Agreed Decisions), propose a sanction in line those set out in the Sanction Guidelines; and/or

8.1.3  refer the matter to a Disciplinary Commission in accordance with section 8 of the Regulations and a Disciplinary Commission shall have the power to make a decision in accordance with the provisions of Regulation 92 and with reference to the Approach to Sanctioning Guidelines and the Sanction Guidelines.

8.2  Where The League determines that a Club that has agreed a business plan with The League in accordance with Rule 5.3, is forecasting to be in breach of these Salary Cap Rules following the conclusion of the Winter Transfer Window in that Salary Cap Year, that Club shall be deemed to have breached these Salary Cap Rules.

8.3  Where the Club is deemed to have breached these Salary Cap Rules as provided for by Rule 8.2, The League will refer the complaint to a Disciplinary Commission in accordance with section 8 and, where considered appropriate, make an application to the chairperson of the Disciplinary Commission to abridge the time period set out in Regulation 89.3 and to set a hearing date prior to the end of the Normal Playing Season in the Salary Cap Year in question.

8.4  Where the Disciplinary Commission imposes a points deduction:

8.4.1  during the Normal Playing Season, the points deduction shall apply immediately;

8.4.2  outside of the Normal Playing Season, the points deduction shall apply in respect of the following Season such that the Club starts the Season 0, minus the points that they have been deducted.

8.5  The League and/or a Club may bring a Disciplinary Appeal in accordance with Regulation 94.

8.6  If the Club fails to make any payment due under these Salary Cap Rules by the due date for payment then, without prejudice to any other remedies The League may have, the Club shall pay interest on the overdue amount at the rate of 5% per annum above Barclay’s Bank PLC’s base rate from time to time. Such interest shall accrue on a daily basis from the due date until actual payment of the overdue amount, whether before or after judgment.

8.7  Any amounts collected as a result of a decision of the Disciplinary Commission for breach of these Salary Cap Rules will not be paid into the Pool Account but shall instead be paid into the Salary Cap Account.

8.8  Any amounts standing to the credit of the division’s Salary Cap Account shall be distributed to those Clubs (and any Clubs promoted or relegated out of the Division at the end of the Salary Cap Year) that have demonstrated that in the Salary Cap Year they have not exceeded the Squad Salary Cap and have otherwise complied with these Salary Cap Rules (the “Sanction Distribution”). Sanction Distributions shall only be made once all challenges against the decision of the Disciplinary Commission have been determined.

8.9  If a Club is found to have breached these Salary Cap Rules at a later date the Club shall be required to repay any Sanction Distribution that it received in the Salary Cap Year that it is found to have breached these Salary Cap Rules. Any repaid Sanction Distributions shall be paid to the Clubs who were entitled to a Sanction Distribution at the time the original Sanction Distribution was made.

9 Miscellaneous

9.1  From the date of the introduction of these Salary Cap Rules, Part 3 of Appendix 5 of the Regulations shall be suspended and cease to have effect.

9.2  Where a Disciplinary Commission, League Arbitration Panel or any court orders that the application of these Salary Cap Rules be temporarily suspended, Part 3 of Appendix 5 of the Regulations shall apply from the date of such order.

9.3  If the whole of these Salary Cap Rules are found to be illegal, invalid or unenforceable, these Salary Cap Rules shall cease to apply and Part 3 of Appendix 5 of the Regulations shall apply from the date these Salary Cap Rules are found to be illegal, invalid or unenforceable.

9.4  If any provision or part-provision of these Salary Cap Rules is be found to be illegal, invalid or unenforceable, that shall not affect the legality, validity or enforceability of any other provision of these Salary Cap Rules.

9.5  If an arbitral body makes any ruling to the effect that the EFL acted in breach of the constitution of the Professional Football Negotiating and Consultative Committee when adopting the Salary Cap Rules, then these Salary Cap Rules will automatically and immediately be withdrawn from the Regulations and will be replaced by Part 4 of Appendix 5 of these Regulations (the ‘Existing SCMP Rules’).

9.6  Information provided by a Club to The League in accordance with these Salary Cap Rules shall only be made available to such members of the Executive as are required to know such information in order to fulfil their duties to The League (and who as are required to know such information in order to fulfil their duties to The League (and who are bound by obligations of confidentiality as part of their contract of employment) and shall not be disclosed to the Board generally.

Schedule 1 – Salary

1  Salary, for the purpose of these Salary Cap Rules, means the total of all amounts referred to in paragraph 2 of this Schedule 1, whether they are paid or payable (or in the case of a benefit in kind, provided or to be provided) directly or indirectly onshore or offshore by or on behalf of a Club or any Connected Party of the Club to or in respect of a Salary Cap Player or any Connected Party of the Salary Cap Player (save where that payment or benefit in kind is an Excluded Item).

2  Salary includes:

2.1  gross basic salaries;

2.2  signing on fees;

2.3  appearance fees;

2.4  save for as provided at paragraph 1.4 of Schedule 2, individual player bonuses including but not limited to any goal, assist, clean sheet, match, win, loyalty or other kind of bonus;

2.5  all expenses that are due to the Salary Cap Player under the terms of his contract including but not limited to accommodation, relocation, travel and motor costs;

2.6  any salary, fees or remuneration due under the terms of any image rights contract;

2.7  in respect of Salary Cap Player who is registered at the Club on a Temporary Loan Transfer all amounts referred to in this paragraph 2 and any Loan Fee;

2.8  any agents’ fees payable by the Club (this includes but is not limited to agents who represent, negotiate on the behalf of, is engaged by, advises or otherwise acts for a Club as well as any agents’ fees settled by the Club directly or indirectly on the Player’s behalf);

2.9  any loan made, or to be made, to the Salary Cap Player or a Connected Party of the Salary Cap Player which is not repaid within the same Salary Cap Year;

2.10  any compromise, redundancy or settlement payment made to the Salary Cap Player;

2.11  any cost to the Club of providing any benefit in kind, such as the cost of vehicles used privately, medical costs (the P11d benefit figure should be used in calculating the cost to the Club) and any hotel expenses (other than those directly relating to matches and training);

2.12  any National Insurance Contributions and taxes accrued in respect of the Salary Cap Player;

2.13  any pension contributions due in respect of any Salary Cap Player (including without limitation any payment for annuities) in relation to that Salary Cap Year;

2.14  any insurance premiums paid in respect of any Salary Cap Player including (but not limited to) personal accident, health and life insurance;

2.15  any personal expenses paid as well as other expenses ordinarily and necessarily incurred in connection with complying in full with the obligations under the terms of any employment contract;
Guidance
Costs of providing sustenance shall not be included within the scope of paragraph 2.15.

2.16  any payment into an Employment Benefit Trust shall prima facie be deemed to constitute Salary unless the Club proves to The League beyond all reasonable doubt that any payments made into an Employment Benefit Trust do not relate to any Player, which shall include providing The League with further information and supporting documentation including the following:

2.16.1 confirmation as to whether an Employment Benefit Trust has been set up and, if so, whether the Employment Benefit Trust has been set up for the benefit of Players or non-Players;

2.16.2 copies of any notification made to HM Revenue & Customs (or equivalent national body) that an Employment Benefit Trust has been established;

2.16.3 details, including the amounts, of any transfer of money that the Club has made to the Employment Benefit Trust;

2.16.4 where the beneficiaries of the Employment Benefit Trust includes Players and non- Players, the recommended allocation of funds amongst those beneficiaries;

2.16.5 any “letter of wishes”, recommendation or similar instruction that the Club has issued to the trustees of the Employment Benefit Trust regarding the use of the funds;

2.16.6 details, including the amounts, of any sums paid out of the Employment Benefit Trust by the trustees and the identity of the beneficiary, as notified to the Club by the trustees of the Employment Benefit Trust; and

2.16.7 any payments or loans to Players from or in connection with the Employment Benefit Trust that have been reported on a Player’s form P11D;

2.17 any child support or maintenance payment;

2.18  any accommodation or holiday cost;

2.19  any personal expenses or personal travelling expenses;

2.20  any payment in connection with promotional, media, or endorsement;

2.21  any payment for any off-field activities a Player carries out for or on behalf of the Club;

2.22  any payment or benefit in kind which the Player would not have received if it were not for his
involvement with a Club;

2.23  any payment or benefit in kind to an Ex-Player which is not a bona fide payment for the provision of off-field services by the Ex-Player to the Club, such services being provided by the Ex-Player to the Club subsequent to the termination or expiry of his playing contract with the Club;

2.24  any payments or benefits in kind in connection with an individual sponsorship endorsement, merchandising, employment or other individual arrangement between a Player and any Connected Party;

Guidance

This paragraph is not intended to capture sponsorship agreements that Players have with a boot manufacturers. Bona fide payments made to a Player under such agreements will not be considered as Salary for the purpose of these Rules.

2.25  any payment to a Player in relation to other on-field roles e.g. manager or coach; and

2.26  any other financial remuneration (of a form not described in this Schedule 1).

Schedule 2 Excluded Items

1 No payment will be permitted to be included as an “Excluded Item” unless The League has provided its prior written consent. Clubs can apply for the following items to be included as an Excluded Items:

Promotion Related Bonus

1.1  any payments paid under the terms of the Player’s contract or loan agreement as a result of the Club’s promotion from one Division to another (for the avoidance of doubt this does not include bonuses for success in earlier rounds of a Play-Off Competition);

1.2  the payments referred to in paragraph 1.1 of this Schedule 2 shall not include the following:

1.2.1  “win”, “position” or other types of bonuses ordinarily payable during the course of a Season to a Player as distinguished from payments only payable in the event of promotion; and

1.2.2  any reclassification of any other amounts paid (or already accrued due to be paid) as promotion related payments,

Severance Payments

1.3  any severance payment due to the Player in accordance with clause 19.2 of the Standard Contract; and
Cup Bonuses included in the Squad Bonus Schedule

1.4  any payments which are included in the Club’s standard squad bonus schedule and are paid or payable to the Salary Cap Player by or on behalf of the Club in connection with the Club’s participation in a match in a Play-Off Competition, EFL Cup, EFL Trophy and/or Football Association Challenge Cup.

Guidance

Where the bonuses have been individually negotiated and are therefore contained within the Player’s contract, these payments will be considered to be Salary.

The League will not accept applications where the Club’s standard squad bonus schedule significantly deviates from the payments made in the previous season.

Schedule 3 Calculations

1 Salary Cap Player Value

1.1 Each Salary Cap Player’s Value shall be calculated as follows:
1.1.1 Each Salary Cap Player’s Salary less Loan Income (as defined below).

Guidance

In the event that a Salary Cap Player’s registration is transferred during a Salary Cap Year, the amount to be included within the Salary Cap Calculation as the Salary Cap Player’s Salary shall be the amounts paid or payable to the Salary Cap Player up to the date his registration is transferred.

This principle applies where a Salary Cap Player is transferred into the Club, the amount to be included within the Salary Cap Calculation as the Salary Cap Player’s Salary shall be the amounts paid or payable to the Salary Cap Player from the date his registration is transferred to the Club in question until the end of that Salary Cap Year.

Where a Club registers a Salary Cap Player on a multiplicity/monthly contract, the amount to be included within the Salary Cap Calculation as the Salary Cap Player’s Salary shall be the amounts paid or payable to the Salary Cap Player during the period of his registration.

1.2 Loan income for any Salary Cap Player means any income that a Club receives or is to be received pursuant to the terms of the relevant loan agreement including Salary contributions and any Loan Fee payable (“Loan Income”) provided that the Loan Income shall always be capped at the Salary Cap Player’s Salary.

Guidance

Salary Cap Players Value cannot have a value of less than £0 for the purpose of the Salary Cap Calculation. Any submission which includes a Salary Cap Player Value of less than £0 shall be rejected.

2 Divisional Average Salary Calculation

2.1 The Divisional Average Salary shall be calculated as follows: 2.1.1 In Season 2020/21:

(a) Squad Salary Cap / 22 = Divisional Average Salary 2.1.2 In Season 2021/22 and in each subsequent Season:

(a) Squad Salary Cap / 20 = Divisional Average Salary

3 Squad Salary Cap Value

3.1 Each Club’s Squad Salary Cap Value shall be calculated by adding together each of its Salary Cap Players’ Salary Cap Player Values plus any payments (or benefits in kind) made directly or indirectly by or on behalf of the Club or a Connected Party of the Club to an Intermediary for any services provided by an Intermediary (including but not limited to scouting services, representing, negotiating on behalf of or advising the Club) which would not otherwise deemed to be Salary.

Guidance

Where Clubs contract the services of an Intermediary, any sums paid to the Intermediary which do not fall into the definition of Salary shall be included within the calculation of the Squad Salary Cap Value.

Schedule 4 Connected Party

1 For the purpose of these Salary Cap Rules a Connected Party means:

1.1  in respect of a Player, any of the following shall be deemed to be a ‘Connected Party’ where
they are:

1.1.1  a close relative of that person being a person who is related to that Player whether by family ties or in law and the final determination shall be made by The League; or

1.1.2  anyone else of a close relationship with that Player who, in the opinion of The League is or is likely to be acting with or who is financially dependent upon, that Player; or

1.1.3  the Player’s Intermediary; or

1.1.4  any company:

(a)  of which that Player (or any individual who is an associate of that person) is a director; or

(b)  in which that Player (or any individual who is an associate of that person) either directly or indirectly holds shares; or

(c)  over which that Player (or any individual who is an associate of that person) is able to exercise any influence or Control; or

(d)  of which the Player’s Intermediary (or an individual who is an associate of that person) is a director; or

(e)  in which that Player’s Intermediary (or any individual who is an associate of that person) either directly or indirectly holds shares; or

(f)  over which that Player’s Intermediary (or any individual who is an associate of that person) is able to exercise any influence of Control;

1.1.5  any person who is a shareholder, director or employee of any company referred to in paragraph 105.3.3 or any close relative of any such person; or

1.1.6  any company which is a Group Undertaking, Parent Undertaking or Subsidiary Undertaking of any company referred to in paragraph 105.3.3; or

1.1.7  any person who is a shareholder, director or employee of any company referred to in paragraph 105.3.3 or any close relative of any such shareholder, director or employee; or

1.1.8  any person who is an employee or partner of that Player or any close relative of any such employee or partner,

1.2  in respect of a Club, any of the following shall be deemed to be a “Connected Party”:

1.2.1  any person who is a director, shareholder or employee of that Club or any close relative of any such director, shareholder or employee; or

1.2.2  any person who is able to influence the financial, commercial or business affairs or the management or administration of that Club or any close relative of any such person; or

1.2.3  any company which is a Group Undertaking, Parent Undertaking or Subsidiary Undertaking of that Club; or

1.2.4  any shareholder, director or employee of any company referred to in paragraph 105.4.3 or any close relative of any such director, shareholder or employee; or

1.2.5  any person who is able to influence the financial, commercial or business affairs or the management or administration of any company referred to in paragraph 105.4.3 or any close relative of any such person; or

1.2.6  any sponsor of that Club (which includes but is not limited to stadium naming rights partners and the official shirt manufacturer of the Club); or

1.2.7  any shareholder, director or employee of any sponsor of that Club; or

1.2.8  any person who is able to influence the financial, commercial or business affairs or the management or administration of any sponsor referred to at paragraph 1.2.6 or any close relative of any such person.

1 Introduction

Schedule 5 Approach to Sanctioning Guidelines

1.1  Where a Disciplinary Commission finds that a Club has breached any of these Salary Cap Rules, the Disciplinary Commission has the power to make any decision as provided for at Regulation 92.2.

1.2  Where a Disciplinary Commission finds that a Club has breached any of these Salary Cap Rules, the Disciplinary Commission will:

1.2.1  identify all relevant factors that it deems to aggravate the nature of the breach which may include the following:

(a)  the relative degree of fault, including in particular whether there had been any deliberate misrepresentation and/or intention to cheat;

(b)  whether the breach substantially damaged or had the potential to substantially damage the competitive balance of any League Competition;

(c)  whether the welfare and interests of a Player have been endangered;

(d)  any attempt to conceal the breach;

(e)  failure to co-operate with The League;

(f)  previous disciplinary record of the Club;

(g)  the Club failing to seek clarity from The League on the application of the Salary Cap Rules prior to committing the misconduct; and

(h)  any other aggravating factor(s) that the Disciplinary Commission considers relevant and appropriate.

1.2.2  identify all relevant factors that it deems to mitigate the nature of the breach which may include the following:

(a)  the presence and timing of an admission of guilt;

(b)  no prior breaches of the Salary Cap Rules;

(c)  full co-operation with The League;

(d)  minimal impact of the breach upon the competitive balance of the League Competition;

(e)  the relevant degree of fault (e.g. where the breach was accidental or inadvertent); and/or

(f) any other mitigating factor(s) that the Disciplinary Commission considers relevant and appropriate.

1.3  Where a Disciplinary Commission finds that a Club is guilty of a specified offence (as detailed in the Sanction Guidelines), the Disciplinary Commission will, having considered the aggravating and mitigating factors set out at paragraph 1.2, consider the sanction to impose by reference to the Sanction Guidelines.

1.4  If a Disciplinary Commission considers that, due the extent of the aggravating factors, applying a sanction within the range provided in the Sanction Guidelines would be not constitute a sufficient sanction, the Disciplinary Commission will have the power to apply any sanction that it already has the power to do so in accordance with Regulation 92.2.

Schedule 6 Declaration

[TO BE DRAFTED ON CLUB HEADED PAPER]

1 We hereby confirm on behalf of [INSERT NAME OF THE CLUB] that in accordance with the Salary Cap Rules (and the definitions set out therein) that having made full and proper enquiries the following amounts are:

1.1  the total sums expected to be paid as Salary to all Salary Cap Players and/or any Connected Party of the Salary Cap Players; and

1.2  the total amount to be included as Excluded Items,
in the Salary Cap Year commencing on 1 July 202[-] and ending on 30 June 202[-]. [INSERT SUMS FOR SALARY]
[INSERT SUMS FOR EXCLUDED ITEMS]

2 We attach for these purposes the Squad Salary Cap Calculation.

Signed by [ ]                                                                  CEO of [INSERT NAME OF THE CLUB]
[Name of Signatory]
For and on behalf of [Name of Club]                                         

Signed by [ ]                                                                  Finance Director of [INSERT NAME OF THE CLUB]
[Name of Signatory]
For and on behalf of [Name of Club]

[Signed by [ ]                                                                Chairman of [INSERT NAME OF THE CLUB]
[Name of Signatory]
For and on behalf of [Name of Club]]


Schedule 7

Board Minutes

[INSERT NAME OF CLUB] (the “Company”)

Minutes of a meeting of the board of directors of the Company held at                    on                   at 

am/pm.

Present:                           (Chairman)

Absent:

1  The Chairman reported that due notice of the meeting had been given and that quorum was present. Accordingly, the Chairman declared the meeting open.

2  The Chairman explained that the purpose of the meeting was to review and approve various documents that the Company was required to submit pursuant to its obligation under the Salary Cap Rules.

3  Having considered the final form for the Declaration and the obligations of the Company, Chief Executive Officer and Finance Director (or equivalent) [or where the Club does not have a CEO or Finance Director (or equivalent) the Chairman] as set out in the Salary Cap Rules, IT WAS RESOLVED THAT:

3.1  none of those present knew of any reason or circumstances that would cause the statements set out in the Declaration (in the form set out in Schedule 6 of the Salary Cap Rules) to be false;

3.2  the Declaration hereby be approved; and

3.3  the Chief Executive Office and the Finance Director (or equivalent) [or where the Club does not have a CEO or Finance Director (or equivalent) the Chairman] of the Company hereby be authorised sign the Declaration on behalf of the Company.

4  The Chairman instructed the secretary of the Company to deliver the signed Declaration to The League by no later than 5 days following the closing of the Summer Transfer Window.

5  There was no further business and the Chairman declared the meeting closed.
................................
Chairman 

...............................

Date

 

PART 2 - SALARY CAP RULES LEAGUE TWO

1 Definitions

1.1 Capitalised terms have the meanings ascribed to them in the Articles of Association and the Regulations of The League unless otherwise indicated below:

Approach to Sanctioning Guidelines          

means the Approach to Sanctioning guidelines set out at Schedule 5;

Broadcast Agreement

means each new domestic “live” broadcast agreement; 

Committed Contract Salary Cap Player

has the meaning given to it Rule 3.1.1;

Connected Party

has the meaning given to it at Schedule 4;

Declaration

means the Declaration contained at Schedule 6;

Divisional Average Salary

has the meaning as set out in paragraph 2 of Schedule 3;

Embargo
means a registration embargo such that a Club shall not be permitted to register any Player or any new contract of an existing Player with that Club without the prior written consent of The League;

Employment Benefit Trust

means any trust established by a Club or any third party, in relation to which any Club or Connected Party of that Club makes any payment;

Excess

means any amount in excess of the Squad Salary Cap;

Excluded Items 

has the meaning given to it at Schedule 2;

Ex-Player

means any person who was previously a Player of a Club in any Salary Cap Year;

Investigators

means any third party appointed and/or instructed by The League from time to time for the purposes of carrying out such investigations or inquiries as set out in these Salary Cap Rules;

Investigatory Audit

means an audit carried out by The League (or where relevant by Investigators) in connection with a suspected breach of these Salary Cap Rules;

Loan Income

has the meaning given to it at paragraph 1.2 of Schedule 3;

Overrun

means any Excess up to 5% of the Squad Salary Cap;

Overrun Tax

has the meaning given to it at Rule 7.3;

Relegated Club

means a League One Club that was relegated from the Championship in the immediately preceding Salary Cap Year;

Relegated Salary Cap Player

has the meaning given to it at Rule 3.2.1;

Relevant Records

means the any record, document and any other information held by or in the control of a Club and which are reasonably considered by The League to be relevant the Salary Cap Rules;

Salary

has the meaning given to it at Schedule 1;

Squad Salary Cap Calculation

means the excel spreadsheet in a form as determined by The League from time to time;
Salary Cap Rules

means this Part 5 of Appendix 5;

Salary Cap Player

means any Registered Player at the Club that is not excluded in accordance with Rule 4.1;

Salary Cap Player Value

has the meaning given to it at paragraph 1.1 of Schedule 3;

Salary Cap Year

means the 12-month period from 1 July in one calendar year to 30 June in the following calendar year (inclusive);

Sanction Guidelines

means the Sanction Guidelines agreed by the Board;

Squad Salary Cap

has the meaning given to it at Rule 2.1; and

Squad Salary Cap Value

has the meaning given to it at paragraph 3.1 of Schedule 3.

2 Squad Salary Cap

2.1  Each Club must ensure that, at any time during the Salary Cap Year, its Squad Salary Cap Value does not exceed £1,500,000 (the “Squad Salary Cap”).

2.2  Any payment or benefit in kind which falls within the definition of Salary shall be deemed to be made in the Salary Cap Year in which the payment is contracted to be paid or in which the service is provided.

Guidance

Regulation 63.4 requires signing on fees to be paid in equal annual instalments over the period of the contract, therefore the equal annual instalment should be the amount included within the Squad Salary Cap Calculation for the relevant Salary Cap Year.

2.3  The Squad Salary Cap shall be adjusted in the Salary Cap Year that each new Broadcast Agreement comes into effect, in accordance with the following calculation:

2.3.1  where the income payable in accordance with the terms of the Broadcast Agreement exceeds the income payable in accordance with the terms of previous Broadcast Agreement, by a percentage equal to the increase that the Division receives in accordance with Article 39.3; or

2.3.2  where the income payable in accordance with the terms of the Broadcast Agreement does not exceed the income payable in accordance with the terms of previous Broadcast Agreement, by a percentage equal to the decrease that the Division receives in accordance with Article 39.3.

Guidance

If, as was the case in Season 2019/20, rebate is required to be paid in accordance with the terms of the Broadcast Agreement, this Rule will not apply to reduce the Squad Salary Cap for that Season.

3 Capped Salary Cap Players

3.1 Committed Contract Salary Cap Players

3.1.1 A committed contract salary cap player is a Salary Cap Player who has entered into a contract with the Club and which has been registered with The League (and has been provided to The League in accordance with Regulation 46.1) on or before the later of 6 August 2020 or the date that these Salary Cap Rules come into effect (a “Committed Contract Salary Cap Player”).

Guidance

This Rule has been introduced to ensure that Club’s calculations are adjusted to reflect pre- existing commitments.

3.1.2  A Committed Contract Salary Cap Player‘s Salary Cap Player Value shall be capped at the relevant Divisional Average Salary.

3.1.3  Save for where when Rule 3.1.4 applies, where a Club and Committed Contract Salary Cap Player agree to amend the terms of the Committed Contract Salary Cap Player’s contract to either:

(c) increase the Salary payable to the Committed Contract Salary Cap Player; and/or

(d) to extend the term of the Committed Contract Salary Cap Player’s contract (including where the Club chooses to exercise an option to extend the contract),

3.1.4 on or after the 6 August 2020 or the date that these Salary Cap Rules come into effect, then that Committed Contract Salary Cap Player’s Salary shall no longer be capped at the Divisional Average Salary and the Salary Cap Player Value in respect of that Salary Cap Player shall be calculated in accordance with paragraph 1.1 of Schedule 3.

Guidance


Squad Bonus Schedules

Where Clubs enter into squad bonus schedules and the bonus schedule is applicable to all professional Registered Players, then subject to The League’s further review this will not be considered to be an increase to the Salary of Committed Contract Salary Cap Players. Therefore those Players will remain capped at the Divisional Average Salary.

The League retains the right to review such bonus schedules and should The League determine that the updated squad bonus schedule is a substantial increase in salary in comparison to the squad bonus schedule for the previous Season, The League shall have the right to make a determination that this is an increase in the Salary payable to the Committed Contract Salary Cap Player and that Clubs Committed Contract Salary Cap Players shall no longer be capped at the Divisional Average Salary.

For clarity any payment falling due under the squad bonus schedule will need to be included within the Club’s Salary Cap Schedule.

Option Agreements

Where an option agreement is activated either:

  • automatically as a consequence of sporting performance, for example the Player has
    made a pre-agreed number of appearances; or
  • by the Player without the Club having the ability to prevent the option activation,

then the Player shall still be considered to be a Committed Contract Salary Cap Player until his playing contract expires at the end of the option term.

3.1.5 Where a Committed Contract Salary Cap Player’s contract will expire at the end of the Salary Cap Year, provided that the Committed Contract Salary Cap Player is an Under 24 Player, the Club and Committed Contract Salary Cap Player may enter into a new contract and, provided that the new contract does not increase the Salary payable to the Committed Contract Salary Cap Player, the Committed Contract Salary Cap Player’s Salary shall remain capped at the relevant Division Average Salary until the first Salary Cap Year which the Committed Contract Salary Cap Player is no longer an Under 24 Player.

Guidance

This Rule has been included to ensure that Clubs are able to retain compensation rights in Under 24 Players by offering the Player a new contract on not less favourable terms but not allowing Clubs to offer these Players increased Salaries.

3.2 Relegated Salary Cap Players

3.2.1 A relegated salary cap player is a Salary Cap Player who is registered with a Relegated Club and entered into his contract (or agreed to vary the terms of his existing contract) with the Relegated Club on or before the conclusion of the Winter Transfer Window in the Season the Relegated Club was relegated (a “Relegated Salary Cap Player”).

Guidance

For the avoidance of doubt Rule 3.1 (Committed Contract Salary Cap Players) also applies to Relegated Clubs.

3.2.2 A Relegated Salary Cap Player’s Salary Cap Player Value shall be capped at th relevant Divisional Average Salary.

3.2.3 Save for Rule 3.2.4, where a Club and Relegated Salary Cap Player agree to amend the terms of that Player’s contract to:

(c) increase the Salary payable to the Player; and/or

(d) to extend the term of the Player’s contract (including where the Club chooses to exercise an option to extend the contract),

on or after the date the Winter Transfer Window closed in the Season the Relegated Club was relegated, then that Relegated Salary Cap Player’s Salary shall no longer be capped at the relevant Divisional Average Salary and the Salary Cap Player Value in respect of that Player shall be calculated in accordance with paragraph 1.1 of Schedule 3.

Guidance

Options

Where an option agreement is activated either:

  • automatically as a consequence of sporting performance, for example the Player has
    made a pre-agreed number of appearances: or
  • by the Player without the Club having the ability to prevent the option activation,

then the Player shall still be considered to be a Relegated Salary Cap Player until his playing contract expires at the end of the option term.

Date of relegation

The reference to on or after the date of the Club’s relegation shall mean the date upon which it is mathematically impossible to escape relegation based on playing performance, not the date upon which the constitution of each Division is confirmed.

3.2.4 Where a Relegated Salary Cap Player’s contract will expire at the end of the Salary Cap Year, provided that the Relegated Salary Cap Player is an Under 24 Player, the Club and Relegated Salary Cap Player may enter into a new contract and, provided that the new contract does not increase the Salary payable to the Relegated Salary Cap Player, the Relegated Salary Cap Player’s Salary shall remain capped at the relevant Division Average Salary until the first Salary Cap Year in which the Relegated Salary Cap Player is no longer an Under 24 Player.

Guidance

This Rule has been included to ensure that Clubs are able to retain compensation rights in Under 24 Players by offering the Player a new contract on not less favourable terms but not allowing Clubs to offer these Players increased Salaries.

4 Excluded Salary Cap Players

4.1 The following Players shall not be considered to be a Salary Cap Player:

4.1.1  any Under 21 Player;

4.1.2  in respect of Relegated Clubs in its first Salary Cap Year following relegation only, any Player who is not included within the Squad List of that Club throughout that Salary Cap Year; and

4.1.3 in Season 2020/21 only, any Player who is not included within the Squad List of a Club.

Guidance

Under 21 Loan Players

For the avoidance of doubt, any Under 21 Player on loan at a Club will be excluded for the purpose of the Squad Salary Cap calculation.

Squad Lists

Where a Club has not included the maximum number of Players permitted to be on a Squad List, the Club shall be entitled to apply to The League to add a Player registered with the Club but not currently included on the Squad List (see guidance to Regulation 43.9.7). Where The League approves such an application, the full Salary paid or payable by the Club to that Player for the entirety of that Salary Cap Year shall be included for the purpose of the Salary Cap Calculation. This will not apply on a pro-rated basis.

5 Club’s Obligations and Process

5.1  The responsibility to fulfil the obligations set out in this Rule 5 rests with the Club. The Chief Executive Officer (or equivalent e.g. Managing Director) and the Finance Director (or equivalent e.g. Head of Finance) of each Club shall each also have a responsibility to procure the Club’s compliance with this Rule 5. In the event that any Club does not, whether temporarily or permanently, have a Chief Executive Officer or Finance Director, the responsibility to fulfil the obligations set out below will fall to the Chairman of the Club's board of directors or such other designated representative of the Club as notified in writing and agreed between the Club and The League prior to 1 July of the Salary Cap Year in question.

5.2  In Season 2020/21 only, by no later than 5 days following the closing of the Summer Transfer Window, and in each subsequent Season by no later than the third Friday in June in the immediately preceding Salary Cap Year, each Club will provide to The League:

5.2.1 a copy of the Declaration signed on behalf of the Club by the Chief Executive Officer (or equivalent) and the Financial Director (or equivalent) of the Club. The Declaration certifies the sums which the Chief Executive Office and Financial Director, having made full and proper enquiries:

(c) expect the Club to pay during that Salary Cap Year including:

(iii)  the total amounts paid or payable provided or to be provided as Salary in that Season by or on behalf of a Club or a Connected Party of the Club to the Salary Cap Players or any Connected Party of the Salary Cap Players; and

(iv)  the total amount to be included as Excluded Items,

5.2.2  its Squad Salary Cap Calculation; and

5.2.3  minutes in the form set out in Schedule 7, of the meeting of the board of directors of the Club at which the Declaration was formally approved on behalf of the Club, including details of the directors in attendance or absent at that meeting.

5.3 Where, following the conclusion of the Summer Transfer Window, The League determines that a Club is forecasting to be in breach of these Salary Cap Rules The League shall place the Club under an Embargo and the Club will use its best endeavours to work with The League to agree a business plan with the objective of ensuring that the Club is no longer forecasting to be in breach of the Salary Cap Rules by the conclusion of the Winter Transfer Window in that Salary Cap Year.

5.4 By no later than 7 July following the conclusion of a Salary Cap Year each Club will provide to The League:

5.4.1 a copy of the Declaration signed on behalf of the Club by the Chief Executive Officer (or equivalent) and the Financial Director (or equivalent) of the Club. The Declaration certifies the following sums, which the Chief Executive Office and Financial Director, having made full and proper enquiries:

(d) the sums that the Club has paid during the previous Salary Cap Year including:

(i)  the total amounts paid or payable provided as Salary in that Salary Cap Year by or on behalf of a Club or a Connected Party of the Club to Salary Cap Players or any Connected Party of the Salary Cap Players; and

(ii)  the total amount included as Excluded Items,

5.4.2  its Squad Salary Cap Calculation for the previous Salary Cap Year; and

5.4.3  minutes in the form set out in Schedule 7, of the meeting of the board of directors of the Club at which the Declaration was formally approved on behalf of the Club, including details of the directors in attendance or absent at that meeting.

5.5  The Board shall have the power acting, in its sole discretion, to amend the dates for submission referred to at Rules 5.2 and 5.4 provided that the Board gives Clubs not less than 30 days’ written notice of its intention to do so.

5.6  Clubs must not negotiate, procure or otherwise arrange any form of commercial agreement (including but not limited to individual endorsement agreements) between Players and commercial partners (including but not limited to official kit suppliers or equivalent) of the Club. In the event that Clubs are aware that a Salary Cap Player has entered into any form of commercial agreement with a commercial partner of the Club, the Club shall notify The League and provide (and procure that the Salary Cap Player provides) The League with all Relevant Records that The League requests. The League shall, acting in its sole discretion, determine if any of payments received in connection with the agreement between the Salary Cap Player and the commercial partner shall be deemed to be Salary. If The League determines that the payments should be deemed to be Salary the Club shall be required to submit an updated Salary Cap Calculation to The League within 5 days of receiving an instruction of The League to do the same.

5.7  To ensure the proper observance and enforcement of the Salary Cap Rules and without prejudice to the provisions of Regulation 3.4, each Club agrees during the operation of the Salary Cap Rules to notify in writing to The League details of:

5.7.1  any potential or actual loopholes, lacunae or errors in the Salary Cap Rules;

5.7.2  any breach of the Salary Cap Rules by any Club of which the Club or their staff or agents become aware; and

5.7.3  any suspicions or complaints that they, their staff or agents may have concerning the observance by any other Club of the Salary Cap Rules. The Club shall keep such suspicions or complaints confidential (save for notifying them to The League) and shall not announce or leak them (even on a "no-names" or anonymous basis) to the press or public or another Club.

5.8  Each party who is subject to the Salary Cap Rules must not assist, encourage, aid, abet, cover up, or have any other type of complicity in, any breach by any other Party of any Salary Cap Rule. A party who fails to comply with this Rule 5.8 shall be deemed to have committed a Misconduct.

5.9  Where a party who is subject to the Salary Cap Rules wishes to act in a manner which is not expressly permitted by these Salary Cap Rules, they must obtain the prior written approval from The League. A party who fails to comply with this Rule 5.9 shall be deemed to have committed a Misconduct.

Guidance

Clubs are reminded that the Regulations prohibit Clubs from making payments to Players who have not been registered with The League (see Regulation 50.1.4).

5.10  To assist The League in monitoring compliance with these Salary Cap Rules, individuals (whether players, coaches, administrators, agents or others) are encouraged to approach The League with any information relevant to any actual or potential instance of non-compliance with the Salary Cap Rules by another party. The identity of the individual providing the information will not be disclosed beyond The League without such individual’s prior approval unless The League is required to disclose such details by order of arbitral body, court order or required by order of a government authority but only to the extent that and for the purpose of which such disclosure is required.

5.11  The standard of proof in all matters under these Salary Cap Rules shall be the balance of probabilities. Where these Salary Cap Rules place the burden of proof upon a Club to rebut a presumption or establish facts or circumstances, the standard of proof shall also be the balance of probabilities.

5.12  Where a Club fails to provide the submissions as set out at Rules 5.2 and 5.4, the Club shall be deemed to have committed a Misconduct and shall be subject to an Embargo as per Rule 5.23.

5.13  Clubs must not include a payment or benefit in kind as an Excluded Item unless The League has given its prior written approval for its inclusion.

5.14  Each Club is responsible for keeping their Squad Salary Cap Calculation updated at all times and shall re-submit the Squad Salary Cap Calculation to The League, clearly highlighting the changes being made, for approval prior to making any change. Upon discovering any error or variance to the Squad Salary Cap Calculation, the Club is also responsible for reporting any error or variance to The League and shall submit a corrected Squad Salary Cap Calculation to The League for approval.

Guidance

Where a Club wishes to make any change to the Squad Salary Cap Calculation, for example to register a new Player, the Club shall be required to re-submit its Squad Salary Cap Calculation to The League for approval.

5.15  The League may raise queries with any of the Clubs in relation to issues relevant to the compliance and operation of the Salary Cap Rules. Each Club agrees to co-operate fully with The League in connection with any such query and in the management, operation and enforcement of the Salary Cap Rules and to use all reasonable endeavours to procure that their Players co-operate fully with any query raised by The League and addressed to or in respect of a Player.

5.16  The League may at any time require a Club to provide such further information as The League deems necessary (acting reasonably) for the purposes of enabling The League to assess whether a Club has fulfilled (or not) the Squad Salary Cap Calculation. By way of example, and without limitation, additional information may be requested where any Squad Salary Cap Calculation is incomplete or additional evidence is required to support certain assumptions.

5.17  Any such request shall be made in writing (including by email from the Finance Department) and shall be responded to in full within 5 Normal Working Days of any such request being made.

5.18  Where The League has reasonable suspicion to believe that the registration of a Player will result in a Club breaching these Salary Cap Rules, The League shall have the power to impose an Embargo on that Club until The League is provided with the necessary information in order to be satisfied that the Club will not breach these Salary Cap Rules. The League will exercise its discretion not to impose an Embargo in such circumstances where the Club makes payment of 50% of the Overrun Tax or, where relevant, the sanction recommended in the Sanction Guidelines to The League in advance of the Player being registered. In circumstances where The League is satisfied that the registration of the Player has not caused the Club to breach the Salary Cap Rules, The League shall reimburse the sums paid but shall be entitled to retain any interested accrued in respect of such sums during the time it is held by The League.

5.19  Clubs shall keep all records and documents relevant to the Declarations and Player Contracts, including all documents and records that the Club was required to provide under the Salary Cap Rules and Relevant Records, for a period of six years from the end of the Season to which those records or documents relate.

5.20  If The League reasonably suspects:

5.20.1  a Club has breached these Salary Cap Rules; or

5.20.2  in respect that any decision that The League has already made in correction with these Salary Cap Rules, that a Club mislead The League (either deliberately or in advertently) in connection with the same,

The League may carry out, or may instruct Investigators to carry out, an Investigatory Audit. Prior to the commencement of any Investigatory Audit The League shall notify the relevant Club providing brief details of the suspected breach(es) which is/are to be the subject of the Investigatory Audit.

5.21  Each Club which is the subject of an Investigatory Audit shall use all reasonable endeavours, during normal business hours to:

5.21.1  provide The League (or Investigators where relevant) with access to and take copies of Relevant Records held at the Club’s premises (or such other located at which they are held);

5.21.2  provide The League (or Investigators where relevant) with access to electronic

devices held at the Club’s premises or controlled by the Club and paper copies thereof;

5.21.3  provide The League (or Investigators where relevant) with access to the Club’s pay roll system and associated data;

5.21.4  making available (both electronically via email, CD, DVD, USB memory stick or other form of secure electronic transfer and paper copy) the Relevant Records as requested by The League (or Investigators where relevant);

5.21.5  giving The League (or Investigators where relevant) full and unfettered access to its Players, directors, officials, employees, shareholders and any other persons contracted or engaged by the Club for playing purposes in order to meet with them and interview them in connection with the suspected breach of the Salary Cap Rules (at a time which will not unreasonably interfere with their duties to the Club);

5.21.6  answering fully and honestly all queries of The League (or Investigators where relevant) related to the Investigatory Audit; and

5.21.7  so far as reasonably possible making arrangements for The League (or Investigators where relevant) to meet persons and any third party or Connected Party that The League (or Investigators where relevant) wish to meet for the purpose of carrying out the Investigatory Audit.

5.22  Save where the matter has been settled by a Disciplinary Commission or League Arbitration Panel, the League may reopen any investigation where The League receives new evidence which was not available to it at the time of the original investigation or where a subsequent review of the information supplied highlights any potential failure by the Club to have complied with the obligations imposed on it pursuant to this Rule 5.

5.23  A Club which:

5.23.1  does not file a Squad Salary Cap Calculation by the required date; and/or

5.23.2  does not provide information where requested to do so by The League,

shall be subject to an Embargo until such time as The League is satisfied that the relevant information has been provided.

6 Duties of Promoted and Relegated Clubs

6.1  If a Club is promoted out of League Two into League One that Club shall, notwithstanding promotion, remain bound by the provisions of Rule 5.4, Rules 5.10 - 5.22 (inclusive), Rule 7 and Rule 8 as if it were still a League Two Club, until such time as it has complied with all of its obligations relating to its last Season(s) as a League Two Club.

6.2  If a Club is relegated out of League Two into the National League that Club shall, notwithstanding relegation, remain bound by the provisions of Rule 5.3, Rules 5.10 - 5.22 (inclusive), Rule 7 and Rule 8 as if it were still a League Two Club, until such time as it has complied with all of its obligations relating to its last Season(s) as a League Two Club.

7 Overrun

7.1 Any Overrun shall be dealt with in accordance with this Rule 7, whereas any breach of the Salary Cap Rules in relation to an Excess exceeding the Overrun, shall be dealt with in accordance with Rule 8.

7.2  Where The League is of the reasonable opinion that a Club has incurred an Overrun The League shall serve on the relevant Club a written summary notice (the “Summary Notice”) which shall:

7.2.1  identify the relevant provision(s) of the Salary Cap Rules which has resulted in the Club incurring the Overrun;

7.2.2  describe the nature and amount of the alleged Overrun;

7.2.3  provide a statement of facts to be relied upon;

7.2.4  provide copies of all documents or other evidence relied upon or referred to in the Summary Notice; and

7.2.5  offer the Club the option to accept the automatic Overrun Tax with no further sanction.

7.3  The Overrun Tax shall be set at the following values:

Level of Overrun Overrun Tax

Between 0% - 2%

£0.50 for every £1 in Excess between 0% and 2%

Between 2% - 4%

£1 for every £1 in Excess between 2% and 4%

Between 4% - 5%

£3 for every £1 in Excess between 4% and 5%

Guidance – Example

If a League Two Club had an excess of 5% (£75,000) the Overrun Tax payable would be £89,996 calculated as follows:

0% - 2% - £0.50 for every £1 up to £30,000 (£0.5 x £30,000) = £15,000
2% - 4% - £1 for every £1 between £30,001 - £60,000 (£1 x £29,999) = £29,999 4% - 5% - £3 for every £1 between £60,001 - £75,000 (£3 x £14,999) = £44,997

7.4  Any Club that receives a Summary Notice will be subject to an Embargo from the date of the Summary Notice until:

7.4.1  the Overrun Tax is paid in full;

7.4.2  The League is satisfied that the Overrun Tax is not payable; or

7.4.3  a Club successfully challenges the Overrun Tax in accordance with Rule 8.

7.5  Within 10 Normal Working Days of receiving the Summary Notice, the Club shall respond in writing to either:

7.5.1  accept the automatic Overrun Tax pursuant to Rule 7.7; or

7.5.2  request that the matter be dealt with subject to the provisions of Rule 8.

7.6  If the Club accepts the automatic Overrun Tax, The League will report the Overrun and amount of the Overrun Tax to the Board at the next Board meeting (without identifying the name of any Player or details of any identifiable Player’s contract or their Salary).

7.7  If the Club accepts the automatic Overrun Tax, payment shall be made within 14 days of such acceptance. The provisions of Rule 8.6 shall apply to any late payments.

Guidance

Where a Club has already paid 50% in accordance with Rule 5.18, the Club will be required to pay the remaining 50% upon acceptance of the Overrun Tax, such payment shall be made within 14 days of acceptance.

7.8  Any amounts collected as Overrun Tax will not be paid into the Pool Account but shall instead be paid into a specific salary cap account (a “Salary Cap Account”).

8 Sanctions

8.1  Any breach of these Salary Cap Rules shall constitute a Misconduct and The League shall have the power to:

8.1.1  impose an Embargo; and/or

8.1.2  in accordance with Regulation 85.3 (Agreed Decisions), propose a sanction in line those set out in the Sanction Guidelines; and/or

8.1.3  refer the matter to a Disciplinary Commission in accordance with section 8 of the Regulations and a Disciplinary Commission shall have the power to make a decision in accordance with the provisions of Regulation 92 and with reference to the Approach to Sanctioning Guidelines and the Sanction Guidelines.

8.2  Where The League determines that a Club that has agreed a business plan with The League in accordance with Rule 5.3, is forecasting to be in breach of these Salary Cap Rules following the conclusion of the Winter Transfer Window in that Salary Cap Year, that Club shall be deemed to have breached these Salary Cap Rules.

8.3  Where the Club is deemed to have breached these Salary Cap Rules as provided for by Rule 8.2, The League will refer the complaint to a Disciplinary Commission in accordance with section 8 and, where considered appropriate, make an application to the chairperson of the Disciplinary Commission to abridge the time period set out in Regulation 89.3 and to set a hearing date prior to the end of the Normal Playing Season in the Salary Cap Year in question.

8.4  Where the Disciplinary Commission imposes a points deduction:

8.4.1  during the Normal Playing Season, the points deduction shall apply immediately;

8.4.2  outside of the Normal Playing Season, the points deduction shall apply in respect of the following Season such that the Club starts the Season 0, minus the points that they have been deducted.

8.5  The League and/or a Club may bring a Disciplinary Appeal in accordance with Regulation 94.

8.6  If the Club fails to make any payment due under these Salary Cap Rules by the due date for payment then, without prejudice to any other remedies The League may have, the Club shall pay interest on the overdue amount at the rate of 5% per annum above Barclay’s Bank PLC’s base rate from time to time. Such interest shall accrue on a daily basis from the due date until actual payment of the overdue amount, whether before or after judgment.

8.7  Any amounts collected as a result of a decision of the Disciplinary Commission for breach of these Salary Cap Rules will not be paid into the Pool Account but shall instead be paid into the Salary Cap Account.

8.8  Any amounts standing to the credit of the division’s Salary Cap Account shall be distributed to those Clubs (and any Clubs promoted or relegated out of the Division at the end of the Salary Cap Year) that have demonstrated that in the Salary Cap Year they have not exceeded the Squad Salary Cap and have otherwise complied with these Salary Cap Rules (the “Sanction Distribution”). Sanction Distributions shall only be made once all challenges against the decision of the Disciplinary Commission have been determined.

8.9  If a Club is found to have breached these Salary Cap Rules at a later date the Club shall be required to repay any Sanction Distribution that it received in the Salary Cap Year that it is found to have breached these Salary Cap Rules. Any repaid Sanction Distributions shall be paid to the Clubs who were entitled to a Sanction Distribution at the time the original Sanction Distribution was made.

9 Miscellaneous

9.1  From the date of the introduction of these Salary Cap Rules, Part 4 of Appendix 5 of the Regulations shall be suspended and cease to have effect.

9.2  Where a Disciplinary Commission, League Arbitration Panel or any court orders that the application of these Salary Cap Rules be temporarily suspended, Part 4 of Appendix 5 of the Regulations shall apply from the date of such order.

9.3  If the whole of these Salary Cap Rules are found to be illegal, invalid or unenforceable, these Salary Cap Rules shall cease to apply and Part 4 of Appendix 5 of the Regulations shall apply from the date these Salary Cap Rules are found to be illegal, invalid or unenforceable.

9.4  If any provision or part-provision of these Salary Cap Rules is be found to be illegal, invalid or unenforceable, that shall not affect the legality, validity or enforceability of any other provision of these Salary Cap Rules.

9.5  If an arbitral body makes any ruling to the effect that the EFL acted in breach of the constitution of the Professional Football Negotiating and Consultative Committee when adopting the Salary Cap Rules, then these Salary Cap Rules will automatically and immediately be withdrawn from the Regulations and will be replaced by Part 4 of Appendix 5 of these Regulations (the ‘Existing SCMP Rules’).

9.6  Information provided by a Club to The League in accordance with these Salary Cap Rules shall only be made available to such members of the Executive as are required to know such information in order to fulfil their duties to The League (and who as are required to know such information in order to fulfil their duties to The League (and who are bound by obligations of confidentiality as part of their contract of employment) and shall not be disclosed to the Board generally.

Schedule 1 – Salary

1  Salary, for the purpose of these Salary Cap Rules, means the total of all amounts referred to in paragraph 2 of this Schedule 1, whether they are paid or payable (or in the case of a benefit in kind, provided or to be provided) directly or indirectly onshore or offshore by or on behalf of a Club or any Connected Party of the Club to or in respect of a Salary Cap Player or any Connected Party of the Salary Cap Player (save where that payment or benefit in kind is an Excluded Item).

2  Salary includes:

2.1  gross basic salaries;

2.2  signing on fees;

2.3  appearance fees;

2.4  save for as provided at paragraph 1.4 of Schedule 2, individual player bonuses including but not limited to any goal, assist, clean sheet, match, win, loyalty or other kind of bonus;

2.5  all expenses that are due to the Salary Cap Player under the terms of his contract including but not limited to accommodation, relocation, travel and motor costs;

2.6  any salary, fees or remuneration due under the terms of any image rights contract;

2.7  in respect of Salary Cap Player who is registered at the Club on a Temporary Loan Transfer all amounts referred to in this paragraph 2 and any Loan Fee;

2.8  any agents’ fees payable by the Club (this includes but is not limited to agents who represent, negotiate on the behalf of, is engaged by, advises or otherwise acts for a Club as well as any agents’ fees settled by the Club directly or indirectly on the Player’s behalf);

2.9  any loan made, or to be made, to the Salary Cap Player or a Connected Party of the Salary Cap Player which is not repaid within the same Salary Cap Year;

2.10  any compromise, redundancy or settlement payment made to the Salary Cap Player;

2.11  any cost to the Club of providing any benefit in kind, such as the cost of vehicles used privately, medical costs (the P11d benefit figure should be used in calculating the cost to the Club) and any hotel expenses (other than those directly relating to matches and training);

2.12  any National Insurance Contributions and taxes accrued in respect of the Salary Cap Player;

2.13  any pension contributions due in respect of any Salary Cap Player (including without limitation any payment for annuities) in relation to that Salary Cap Year;

2.14  any insurance premiums paid in respect of any Salary Cap Player including (but not limited to) personal accident, health and life insurance;

2.15  any personal expenses paid as well as other expenses ordinarily and necessarily incurred in connection with complying in full with the obligations under the terms of any employment contract;
Guidance
Costs of providing sustenance shall not be included within the scope of paragraph 2.15.

2.16  any payment into an Employment Benefit Trust shall prima facie be deemed to constitute Salary unless the Club proves to The League beyond all reasonable doubt that any payments made into an Employment Benefit Trust do not relate to any Player, which shall include providing The League with further information and supporting documentation including the following:

2.16.1 confirmation as to whether an Employment Benefit Trust has been set up and, if so, whether the Employment Benefit Trust has been set up for the benefit of Players or non-Players;

2.16.2 copies of any notification made to HM Revenue & Customs (or equivalent national body) that an Employment Benefit Trust has been established;

2.16.3 details, including the amounts, of any transfer of money that the Club has made to the Employment Benefit Trust;

2.16.4 where the beneficiaries of the Employment Benefit Trust includes Players and non- Players, the recommended allocation of funds amongst those beneficiaries;

2.16.5 any “letter of wishes”, recommendation or similar instruction that the Club has issued to the trustees of the Employment Benefit Trust regarding the use of the funds;

2.16.6 details, including the amounts, of any sums paid out of the Employment Benefit Trust by the trustees and the identity of the beneficiary, as notified to the Club by the trustees of the Employment Benefit Trust; and

2.16.7 any payments or loans to Players from or in connection with the Employment Benefit Trust that have been reported on a Player’s form P11D;

2.17 any child support or maintenance payment;

2.18  any accommodation or holiday cost;

2.19  any personal expenses or personal travelling expenses;

2.20  any payment in connection with promotional, media, or endorsement;

2.21  any payment for any off-field activities a Player carries out for or on behalf of the Club;

2.22  any payment or benefit in kind which the Player would not have received if it were not for his
involvement with a Club;

2.23  any payment or benefit in kind to an Ex-Player which is not a bona fide payment for the provision of off-field services by the Ex-Player to the Club, such services being provided by the Ex-Player to the Club subsequent to the termination or expiry of his playing contract with the Club;

2.24  any payments or benefits in kind in connection with an individual sponsorship endorsement, merchandising, employment or other individual arrangement between a Player and any Connected Party;

Guidance

This paragraph is not intended to capture sponsorship agreements that Players have with a boot manufacturers. Bona fide payments made to a Player under such agreements will not be considered as Salary for the purpose of these Rules.

2.25  any payment to a Player in relation to other on-field roles e.g. manager or coach; and

2.26  any other financial remuneration (of a form not described in this Schedule 1).

Schedule 2 Excluded Items

1 No payment will be permitted to be included as an “Excluded Item” unless The League has provided its prior written consent. Clubs can apply for the following items to be included as an Excluded Items:

Promotion Related Bonus

1.1  any payments paid under the terms of the Player’s contract or loan agreement as a result of the Club’s promotion from one Division to another (for the avoidance of doubt this does not include bonuses for success in earlier rounds of a Play-Off Competition);

1.2  the payments referred to in paragraph 1.1 of this Schedule 2 shall not include the following:

1.2.1  “win”, “position” or other types of bonuses ordinarily payable during the course of a Season to a Player as distinguished from payments only payable in the event of promotion; and

1.2.2  any reclassification of any other amounts paid (or already accrued due to be paid) as promotion related payments,

Severance Payments

1.3  any severance payment due to the Player in accordance with clause 19.2 of the Standard Contract; and
Cup Bonuses included in the Squad Bonus Schedule

1.4  any payments which are included in the Club’s standard squad bonus schedule and are paid or payable to the Salary Cap Player by or on behalf of the Club in connection with the Club’s participation in a match in a Play-Off Competition, EFL Cup, EFL Trophy and/or Football Association Challenge Cup.

Guidance

Where the bonuses have been individually negotiated and are therefore contained within the Player’s contract, these payments will be considered to be Salary.

The League will not accept applications where the Club’s standard squad bonus schedule significantly deviates from the payments made in the previous season.

Schedule 3 Calculations

1 Salary Cap Player Value

1.1 Each Salary Cap Player’s Value shall be calculated as follows:
1.1.1 Each Salary Cap Player’s Salary less Loan Income (as defined below).

Guidance

In the event that a Salary Cap Player’s registration is transferred during a Salary Cap Year, the amount to be included within the Salary Cap Calculation as the Salary Cap Player’s Salary shall be the amounts paid or payable to the Salary Cap Player up to the date his registration is transferred.

This principle applies where a Salary Cap Player is transferred into the Club, the amount to be included within the Salary Cap Calculation as the Salary Cap Player’s Salary shall be the amounts paid or payable to the Salary Cap Player from the date his registration is transferred to the Club in question until the end of that Salary Cap Year.

Where a Club registers a Salary Cap Player on a multiplicity/monthly contract, the amount to be included within the Salary Cap Calculation as the Salary Cap Player’s Salary shall be the amounts paid or payable to the Salary Cap Player during the period of his registration.

1.2 Loan income for any Salary Cap Player means any income that a Club receives or is to be received pursuant to the terms of the relevant loan agreement including Salary contributions and any Loan Fee payable (“Loan Income”) provided that the Loan Income shall always be capped at the Salary Cap Player’s Salary.

Guidance

Salary Cap Players Value cannot have a value of less than £0 for the purpose of the Salary Cap Calculation. Any submission which includes a Salary Cap Player Value of less than £0 shall be rejected.

2 Divisional Average Salary Calculation

2.1 The Divisional Average Salary shall be calculated as follows: 2.1.1 In Season 2020/21:

(a) Squad Salary Cap / 22 = Divisional Average Salary 2.1.2 In Season 2021/22 and in each subsequent Season:

(a) Squad Salary Cap / 20 = Divisional Average Salary

3 Squad Salary Cap Value

3.1 Each Club’s Squad Salary Cap Value shall be calculated by adding together each of its Salary Cap Players’ Salary Cap Player Values plus any payments (or benefits in kind) made directly or indirectly by or on behalf of the Club or a Connected Party of the Club to an Intermediary for any services provided by an Intermediary (including but not limited to scouting services, representing, negotiating on behalf of or advising the Club) which would not otherwise deemed to be Salary.

Guidance

Where Clubs contract the services of an Intermediary, any sums paid to the Intermediary which do not fall into the definition of Salary shall be included within the calculation of the Squad Salary Cap Value.

Schedule 4 Connected Party

1 For the purpose of these Salary Cap Rules a Connected Party means:

1.1  in respect of a Player, any of the following shall be deemed to be a ‘Connected Party’ where they are:

1.1.1  a close relative of that person being a person who is related to that Player whether by family ties or in law and the final determination shall be made by The League; or

1.1.2  anyone else of a close relationship with that Player who, in the opinion of The League is or is likely to be acting with or who is financially dependent upon, that Player; or

1.1.3  the Player’s Intermediary; or

1.1.4  any company:

(a)  of which that Player (or any individual who is an associate of that person) is a director; or

(b)  in which that Player (or any individual who is an associate of that person) either directly or indirectly holds shares; or

(c)  over which that Player (or any individual who is an associate of that person) is able to exercise any influence or Control; or

(d)  of which the Player’s Intermediary (or an individual who is an associate of that person) is a director; or

(e)  in which that Player’s Intermediary (or any individual who is an associate of that person) either directly or indirectly holds shares; or

(f)  over which that Player’s Intermediary (or any individual who is an associate of that person) is able to exercise any influence of Control;

1.1.5  any person who is a shareholder, director or employee of any company referred to in paragraph 105.3.3 or any close relative of any such person; or

1.1.6  any company which is a Group Undertaking, Parent Undertaking or Subsidiary Undertaking of any company referred to in paragraph 105.3.3; or

1.1.7  any person who is a shareholder, director or employee of any company referred to in paragraph 105.3.3 or any close relative of any such shareholder, director or employee; or

1.1.8  any person who is an employee or partner of that Player or any close relative of any such employee or partner,

1.2  in respect of a Club, any of the following shall be deemed to be a “Connected Party”:

1.2.1  any person who is a director, shareholder or employee of that Club or any close relative of any such director, shareholder or employee; or

1.2.2  any person who is able to influence the financial, commercial or business affairs or the management or administration of that Club or any close relative of any such person; or

1.2.3  any company which is a Group Undertaking, Parent Undertaking or Subsidiary Undertaking of that Club; or

1.2.4  any shareholder, director or employee of any company referred to in paragraph 105.4.3 or any close relative of any such director, shareholder or employee; or

1.2.5  any person who is able to influence the financial, commercial or business affairs or the management or administration of any company referred to in paragraph 105.4.3 or any close relative of any such person; or

1.2.6  any sponsor of that Club (which includes but is not limited to stadium naming rights partners and the official shirt manufacturer of the Club); or

1.2.7  any shareholder, director or employee of any sponsor of that Club; or

1.2.8  any person who is able to influence the financial, commercial or business affairs or the management or administration of any sponsor referred to at paragraph 1.2.6 or any close relative of any such person.

Schedule 5
Approach to Sanctioning Guidelines

1.1  Where a Disciplinary Commission finds that a Club has breached any of these Salary Cap Rules, the Disciplinary Commission has the power to make any decision as provided for at Regulation 92.2.

1.2  Where a Disciplinary Commission finds that a Club has breached any of these Salary Cap Rules, the Disciplinary Commission will:

1.2.1  identify all relevant factors that it deems to aggravate the nature of the breach which may include the following:

(a)  the relative degree of fault, including in particular whether there had been any deliberate misrepresentation and/or intention to cheat;

(b)  whether the breach substantially damaged or had the potential to substantially damage the competitive balance of any League Competition;

(c)  whether the welfare and interests of a Player have been endangered;

(d)  any attempt to conceal the breach;

(e)  failure to co-operate with The League;

(f)  previous disciplinary record of the Club;

(g)  the Club failing to seek clarity from The League on the application of the Salary Cap Rules prior to committing the misconduct; and

(h)  any other aggravating factor(s) that the Disciplinary Commission considers relevant and appropriate.

1.2.2  identify all relevant factors that it deems to mitigate the nature of the breach which may include the following:

(g)  the presence and timing of an admission of guilt;

(h)  no prior breaches of the Salary Cap Rules;

(i)  full co-operation with The League;

(j)  minimal impact of the breach upon the competitive balance of the League Competition;

(k)  the relevant degree of fault (e.g. where the breach was accidental or inadvertent); and/or

(l)  any other mitigating factor(s) that the Disciplinary Commission considers relevant and appropriate.

1.3  Where a Disciplinary Commission finds that a Club is guilty of a specified offence (as detailed in the Sanction Guidelines), the Disciplinary Commission will, having considered the aggravating and mitigating factors set out at paragraph 1.2, consider the sanction to impose by reference to the Sanction Guidelines.

1.4  If a Disciplinary Commission considers that, due the extent of the aggravating factors, applying a sanction within the range provided in the Sanction Guidelines would be not constitute a sufficient sanction, the Disciplinary Commission will have the power to apply any sanction that it already has the power to do so in accordance with Regulation 92.2.

Schedule 6 Declaration

[TO BE DRAFTED ON CLUB HEADED PAPER]

1 We hereby confirm on behalf of [INSERT NAME OF THE CLUB] that in accordance with the Salary Cap Rules (and the definitions set out therein) that having made full and proper enquiries the following amounts are:

1.1  the total sums expected to be paid as Salary to all Salary Cap Players and/or any Connected Party of the Salary Cap Players; and

1.2  the total amount to be included as Excluded Items,
in the Salary Cap Year commencing on 1 July 202[-] and ending on 30 June 202[-]. [INSERT SUMS FOR SALARY]
[INSERT SUMS FOR EXCLUDED ITEMS]

2 We attach for these purposes the Squad Salary Cap Calculation.

Signed by [ ]                                                                  CEO of [INSERT NAME OF THE CLUB]
[Name of Signatory]
For and on behalf of [Name of Club]                                         

Signed by [ ]                                                                  Finance Director of [INSERT NAME OF THE CLUB]
[Name of Signatory]
For and on behalf of [Name of Club]

[Signed by [ ]                                                                Chairman of [INSERT NAME OF THE CLUB]
[Name of Signatory]
For and on behalf of [Name of Club]]

Schedule 7

Board Minutes

[INSERT NAME OF CLUB] (the “Company”)

Minutes of a meeting of the board of directors of the Company held at                    on                   at 

am/pm.

Present:                           (Chairman)

Absent:

1  The Chairman reported that due notice of the meeting had been given and that quorum was present. Accordingly, the Chairman declared the meeting open.

2  The Chairman explained that the purpose of the meeting was to review and approve various documents that the Company was required to submit pursuant to its obligation under the Salary Cap Rules.

3  Having considered the final form for the Declaration and the obligations of the Company, Chief Executive Officer and Finance Director (or equivalent) [or where the Club does not have a CEO or Finance Director (or equivalent) the Chairman] as set out in the Salary Cap Rules, IT WAS RESOLVED THAT:

3.1  none of those present knew of any reason or circumstances that would cause the statements set out in the Declaration (in the form set out in Schedule 6 of the Salary Cap Rules) to be false;

3.2  the Declaration hereby be approved; and

3.3  the Chief Executive Office and the Finance Director (or equivalent) [or where the Club does not have a CEO or Finance Director (or equivalent) the Chairman] of the Company hereby be authorised sign the Declaration on behalf of the Company.

4  The Chairman instructed the secretary of the Company to deliver the signed Declaration to The League by no later than 5 days following the closing of the Summer Transfer Window.

5  There was no further business and the Chairman declared the meeting closed.
................................
Chairman 

...............................

Date

APPENDIX 6 STANDARD CLAUSES FOR MANAGER CONTRACTS

The Manager shall observe and comply with the rules and regulations for the time being in force of any organisation or body the rules and regulations of which the Club is bound to observe including those of The Football Association and the League.

The Manager shall comply with all reasonable instructions and requests

(a)  given to Club Managers by the League; or

(b)  given to the Manager by the Club,

which arise in the first case out of any commercial contract entered into by the League for the benefit of its members or in the second case out of any such contract entered into by the Club for its own benefit and the Manager shall not himself enter into any such contract which conflicts or competes or is reasonably likely to conflict or compete with those entered into by the League or by the Club as aforesaid.

APPENDIX 7 RETURN TO PLAY PROTOCOLS

Available on the EFL SharePoint site accessed via the Club Portal system.