Implications of relegation to league 1 (Mods can we condense all league 1 threads into one)

[Tommy G]

47 minutes ago, john ridley said:

Not going so well for Asda or Morrisons,PE never ends well.

No it never ends well at all....EVER 

[Andrew]

On 14/03/2026 at 23:03, jayfox26 said:

I dont see how we can get promoted from league 1, as we'll no doubt get another points deduction, potentially much bigger than the one this season, as it will be impossible for us to stay in line with the league 1 wage cap with the state of our wage bill. We will lose some players in the summer but nobody is taking the likes of Skipp and Ayew who are obscene wages. I honestly think we'll go bust 

Surely the likes of Skipp, Fatawu, Mav, and Choudray,  will have to be made available as a free with a clause in the sell on figure, or a loan with an option to buy. It has to be almost like an auction/ fire sale. We also have the dough from the EL K sale coming in. Seagrave well that's another issue. 

[jayfox26]

21 minutes ago, Andrew said:

Surely the likes of Skipp, Fatawu, Mav, and Choudray,  will have to be made available as a free with a clause in the sell on figure, or a loan with an option to buy. It has to be almost like an auction/ fire sale. We also have the dough from the EL K sale coming in. Seagrave well that's another issue. 

The money for Bilal will be minimal when you consider how much we still owe on him. 

[Claudio Fannieri]

3 hours ago, Andrew said:

Surely the likes of Skipp, Fatawu, Mav, and Choudray,  will have to be made available as a free with a clause in the sell on figure, or a loan with an option to buy. It has to be almost like an auction/ fire sale. We also have the dough from the EL K sale coming in. Seagrave well that's another issue. 

We can’t really afford to let anyone leave for less than their remaining book value because if we do then it’s a direct hit against the 60% limit for spend vs turnocer which interestingly does not include profits from transfers. 

[Chrysalis]

On 17/03/2026 at 20:01, Claudio Fannieri said:

We can’t really afford to let anyone leave for less than their remaining book value because if we do then it’s a direct hit against the 60% limit for spend vs turnocer which interestingly does not include profits from transfers. 

Which would you say is better?

Taking a bigger hit on one year, by making several years after better, or just limping along trying to keep book value?

Bear in mind also consider it hinders squad balance, and development, so lost revenue related to footballing results, and managerial sackings as well.

[Claudio Fannieri]

10 hours ago, Chrysalis said:

Which would you say is better?

Taking a bigger hit on one year, by making several years after better, or just limping along trying to keep book value?

Bear in mind also consider it hinders squad balance, and development, so lost revenue related to footballing results, and managerial sackings as well.

Actually whilst amortisation is included in the spend calculation. Profit and loss on transfer fees against book values are excluded. So technically if we were relegated we could use this as an opportunity to get real high earners off the books. 
 

We would still take an accounting hit for any losses but it wouldn’t impact the 60% spend against revenue. It would actually create additional opportunity as we would lose the cost of the wages from that high earner which could be reinvested to bring in 2/3 players. 

Edited 19 March by Claudio Fannieri

[Ric Flair]

On 17/03/2026 at 20:01, Claudio Fannieri said:

We can’t really afford to let anyone leave for less than their remaining book value because if we do then it’s a direct hit against the 60% limit for spend vs turnocer which interestingly does not include profits from transfers. 

Does losses on players book value count either? Surely you can't have one and not the other.

[Terraloon]

1 hour ago, Claudio Fannieri said:

Actually whilst amortisation is included in the spend calculation. Profit and loss on transfer fees against book values are excluded. So technically if we were relegated we could use this as an opportunity to get real high earners off the books. 
 

We would still take an accounting hit for any losses but it wouldn’t impact the 60% spend against revenue. It would actually create additional opportunity as we would lose the cost of the wages from that high earner which could be reinvested to bring in 2/3 players. 

A loss on player transfer value is factored into squad cost its called  impairment which is treated in exactly the same way as amortisation.

Edited 19 March by Terraloon

[Claudio Fannieri]

37 minutes ago, Terraloon said:

A loss on player transfer value is factored into squad cost its called  impairment which is treated in exactly the same way as amortisation.

Impairment is the club choosing to take a hit by reducing the book value in year but reducing future amortisation, this is excluded in the 60% squad cap as is transfer profit and loss so it’s another lever we could use to give us more wriggle room next season, albeit it would still be an accounting hit. 

[Claudio Fannieri]

1 hour ago, Ric Flair said:

Does losses on players book value count either? Surely you can't have one and not the other.

I have researched a bit more and transfer profit and loss is excluded from the 60% squad cost cap so it does mean the event of relegation we could use it as an opportunity to move on big earners or players with very high book values such Skipp to free up budget in the squad cost cap. 
 

it would still show a loss in our accounting period and financial results but the league one model allows this as long as the squad cost control stays within the permitted 60% of revenue. 

[Ric Flair]

2 hours ago, Claudio Fannieri said:

I have researched a bit more and transfer profit and loss is excluded from the 60% squad cost cap so it does mean the event of relegation we could use it as an opportunity to move on big earners or players with very high book values such Skipp to free up budget in the squad cost cap. 
 

it would still show a loss in our accounting period and financial results but the league one model allows this as long as the squad cost control stays within the permitted 60% of revenue. 

DRAIN THE SWAMP

[davieG]

16 minutes ago, Ric Flair said:

DRAIN THE SWAMP

Should that now be Drain the Cesspit

[justfoxes]

It’s just been 1 Fuch up after the next from Top, Rudkin & King Power since the Death of the great One Vichai,  Year on year  they’ve Fuched up everything from signing complete W⚓️’s who don’t give a fuch about the club on stupidly high wages which they’d never have got elsewhere and would rather sit on the bench reaping in their fortunes than go out on loan to no investment into players we actually need to fuching up the books pushing us into PSR and points deductions.

 

I can’t honestly imagine anything other than us going into Administration and possible bankruptcy if we are relegated to Division 1, with an owner who hasn’t got a scooby doo of how to run a football club he’s squandered millions on trash rather play Polo with his mates than actually sort this club out try and make a decent business of it, no wonder he was replaced at king power  as they found out he was shocking at business. Then the bloke has an interview with Owyn states Marti must be backed then sacks him an hour later, he then jokes that if we can’t go up this year we can go up next year the boy hasn’t got a clue it’s like he’s playing a game of football monopoly but royally failing at everything he needs to realise there’s no reset button to go back and start again !

 

Others who sit by me at the KP are just as concerned about the state of our club and are thinking our worst case scenario will come true if we’re relegated, Top and Co need to Fuch off out of our club sell up he hasn’t got a clue he still thinks everything will be ok he’s deluded it’s easy to see that Rudkin is Running the Asylum in Tops lengthy absence the club is slowly swirling down the drain after the plug has been pulled out, and they can’t stop the decline.

 

we have 8 cup finals to get more points than the 2-3 clubs above us and I can’t see this happening with our weak minded team who can’t cope when the other team score, so unless Rowett can give these CNUTS a kick up the arse get them in a different mind frame with a fighting attitude we are screwed !
 

 

 

 

[Les-TA-Jon]

3 hours ago, Claudio Fannieri said:

I have researched a bit more and transfer profit and loss is excluded from the 60% squad cost cap so it does mean the event of relegation we could use it as an opportunity to move on big earners or players with very high book values such Skipp to free up budget in the squad cost cap. 
 

it would still show a loss in our accounting period and financial results but the league one model allows this as long as the squad cost control stays within the permitted 60% of revenue. 

 

1 hour ago, Ric Flair said:

DRAIN THE SWAMP

Not sure we'll be able to do this completely freely though - as in the event of promotion (if falling within relevant 3 year rolling period) you're beholden to the profit/loss rules of PSR. 

 

Top and Rudkin haven't been able to adhere to one set of rules - I have little faith in their ability to comply with L1 rules whilst simultaneously having one eye on compliance with PSR when/if promoted... 

[Jock's Hill]

1 hour ago, Ric Flair said:

DRAIN THE SWAMP

We have been draining the swamp for 2 or 3 years now. Trouble is it keeps filling up again!!!!!!

[Terraloon]

6 hours ago, Claudio Fannieri said:

Impairment is the club choosing to take a hit by reducing the book value in year but reducing future amortisation, this is excluded in the 60% squad cap as is transfer profit and loss so it’s another lever we could use to give us more wriggle room next season, albeit it would still be an accounting hit. 

So if the club let a player with sums still to be amortised go for free aren’t you  reducing the book value ? 

 

You simply can’t under accounting process just write off the value of an asset without it impacting in the numbers and in every squad ratio calculation I have seen player trading and that includes both amortisation and impairment are factored into squad costs .

 

Heres the explanation of the PLs rules

 

 

Four primary expenditure types constitute the regulated squad costs.   

1. Wages and salaries: This encompasses the total gross compensation, including base salary, performance bonuses, and image rights payments, for all contracted first-team players and the head coach. Notably, the salaries of assistant coaches, medical staff, and administrative personnel are excluded.   
2. Amortisation of transfer fees: In line with standard football accounting, the cost of acquiring a player is not recognised as a lump sum in the year of purchase. Instead, the transfer fee is amortised, spread equally, over the length of the player’s contract, up to a maximum period of five years.
3. Agent and intermediary fees: All commissions and fees paid to player representatives during contract negotiations or transfer transactions are included in the annual squad cost calculation.   
4. Impairment losses: If the book value of a player’s registration decreases significantly due to factors such as long-term injury, permanent performance decline, or the club’s relegation, the resulting impairment loss must be factored into the squad costs for that period.

 

 

I admit I am not close to 100% of the EFL rules but unless impairment were factored into squad costs all clubs would do is write players values down to nil and they simply won’t do that 

 

Irrespective if transfer profit and loads is excluded in the 60% squad cap ( I think in year one for a relegated Championship Club it’s actually 75%) then no point selling anyone that’s any good.!

 

 

 

 

 

 

 

[Claudio Fannieri]

4 hours ago, Terraloon said:

So if the club let a player with sums still to be amortised go for free aren’t you  reducing the book value ? 

 

You simply can’t under accounting process just write off the value of an asset without it impacting in the numbers and in every squad ratio calculation I have seen player trading and that includes both amortisation and impairment are factored into squad costs .

 

Heres the explanation of the PLs rules

 

 

 

Four primary expenditure types constitute the regulated squad costs.   

1. Wages and salaries: This encompasses the total gross compensation, including base salary, performance bonuses, and image rights payments, for all contracted first-team players and the head coach. Notably, the salaries of assistant coaches, medical staff, and administrative personnel are excluded.   
2. Amortisation of transfer fees: In line with standard football accounting, the cost of acquiring a player is not recognised as a lump sum in the year of purchase. Instead, the transfer fee is amortised, spread equally, over the length of the player’s contract, up to a maximum period of five years.
3. Agent and intermediary fees: All commissions and fees paid to player representatives during contract negotiations or transfer transactions are included in the annual squad cost calculation.   
4. Impairment losses: If the book value of a player’s registration decreases significantly due to factors such as long-term injury, permanent performance decline, or the club’s relegation, the resulting impairment loss must be factored into the squad costs for that period.

 

 

I admit I am not close to 100% of the EFL rules but unless impairment were factored into squad costs all clubs would do is write players values down to nil and they simply won’t do that 

 

Irrespective if transfer profit and loads is excluded in the 60% squad cap ( I think in year one for a relegated Championship Club it’s actually 75%) then no point selling anyone that’s any good.!

 

 

 

 

 

 

 

I agree hence my initial comment in a previous post when I assumed we couldn’t just have a fire sale due to the risk of not receiving book value and it having a negative impact on our plans for next season. 
 

we will still have to account for it in our accounts but from what I have read and understood it will not be included in the squad cost cap calculation. 
 

I am going to have another look 👀 to try and box it off one way or the other. 

[Claudio Fannieri]

Right I have uploaded the EFL 2025-26 rules into AI and asked for a simple summary - 

 

 

For League One clubs, the turnover percentage is 60%. For a club newly relegated from the Championship, it is 75% for its first season in League One only.   

 

 

The key formula

 

 

The SCMP requirement says a club’s:

 

Agents’ fees + player related expenditure – non-established under-21 player expenditure

 

must not be more than its:

 

player trading income + allowable equity injection income + relevant turnover x relevant turnover percentage.   

 

So the EFL is effectively asking:

 

“Are your first-team squad costs covered by recognised football income, transfer income, and a limited amount of owner funding?”

 

What counts as squad cost

 

The rules are broader than just basic wages.

 

They include, among other things:

• basic player salary
• appearance fees
• win, loyalty and promotion bonuses
• signing-on fees
• image rights payments
• accommodation, relocation and holiday costs paid for the player
• cars and other benefits in kind
• taxes and National Insurance
• pension contributions
• insurance premiums
• agents’ fees paid by the club, including those paid on a player’s behalf
• lump-sum compromise or redundancy payments to players
• wages of loan players while they are with the club.    

 

So this is not just “wages” in the narrow sense. It is effectively the full employment cost of the first-team playing group.

 

What does not count in full

 

There is one important relief for younger players.

 

All under-21 players must still be disclosed, but non-established under-21 players are deducted back out of the calculation.

 

An under-21 becomes an established under-21 player if:

• he reaches 40 first-team appearances, or
• his basic weekly wage reaches the Established Player Basic Wage, which for 2025/26 is £3,400 per week.   

Also, any under-21 on loan into the club is included in cost.

 

What income counts

 

The rules allow a club to use three main income buckets.

 

1) Relevant turnover

 

This is the ordinary business income the EFL lets clubs count.

 

It includes things such as:

 

• EFL distributions and facility fees
• solidarity and parachute payments received in cash
• league and cup gate receipts
• hospitality
• sponsorship
• advertising and commercial income
• merchandise
• club lottery
• matchday catering
• some stadium income
• club-generated streaming and other broadcast income.  

 

For most League One clubs, 60% of that relevant turnover can be used in the squad cost limit.

 

2) Player trading income

 

This is transfer and loan income that the club is contractually due to receive in the relevant transfer period. The rules say the money must actually be received to qualify as transfer income.

 

3) Allowable equity injection income

 

This is owner/investor money, but only part of it counts.

 

The rules do not let owners simply cover everything without restriction.

 

For League One, allowable equity injection income is staged:

 

• first £500,000 counts at 100%
• next £250,000 counts at 75%
• next £250,000 counts at 60%
• amounts above £1,000,000 count at 60%.

 

Important point:

• this funding must be genuine equity/cash injection/donation
• it must be evidenced properly
• loan funding does not count
• if money is later repaid when it was meant to be non-returnable, that can amount to misconduct.    

 

[Claudio Fannieri]

So interestingly if we are relegated we operate at 75% not 60% for our first season in league one. 
 

Player trading is included but only on contractual amounts to be received in that relevant transfer period (1st July to 30th June) 

 

Owner can inject equity first £500k at 100% with next £250k at 75% then next £250k at 60% and anything over £1m at 60%. 
 

U21 players are not included unless they have played 40 first team games or earns £3,400 or more 

[Ric Flair]

8 hours ago, Les-TA-Jon said:

 

Not sure we'll be able to do this completely freely though - as in the event of promotion (if falling within relevant 3 year rolling period) you're beholden to the profit/loss rules of PSR. 

 

Top and Rudkin haven't been able to adhere to one set of rules - I have little faith in their ability to comply with L1 rules whilst simultaneously having one eye on compliance with PSR when/if promoted... 

I honestly don't see how they can have massively different financial parameters for these different leagues and expect teams to adhere to them as they move up and down. Not sure what the answer is whilst they aren't uniformed but it's stupidity.

[Claudio Fannieri]

8 hours ago, Les-TA-Jon said:

 

Not sure we'll be able to do this completely freely though - as in the event of promotion (if falling within relevant 3 year rolling period) you're beholden to the profit/loss rules of PSR. 

 

Top and Rudkin haven't been able to adhere to one set of rules - I have little faith in their ability to comply with L1 rules whilst simultaneously having one eye on compliance with PSR when/if promoted... 

Yes agreed if we were to be relegated and then promoted back to the championship we would still have to demonstrate we had not breached the £39m of allowable losses over 3 year rolling period including the season(s) in league one. 

[Les-TA-Jon]

14 hours ago, Claudio Fannieri said:

Right I have uploaded the EFL 2025-26 rules into AI and asked for a simple summary -