The Professional Footballers’ Association (PFA) has begun legal proceedings against the English Football League (EFL) over new financial rules that will significantly restrict how much League One clubs can spend on player wages.
The dispute comes just days before the start of the 2026-27 League One season and centers on the introduction of Squad Cost Rules (SCR), which are replacing the previous Profitability and Sustainability framework from this season. At the heart of the disagreement is the League One salary cap, with the PFA arguing that the changes were introduced without following the required consultation and agreement process.
League One salary cap changes spark legal challenge
The EFL announced the new financial regulations in May after Championship and League One clubs approved changes to the existing system. Under the new Squad Cost Rules, League One clubs will face tighter limits on the amount they can devote to player wages.
The most significant change is a reduction in the permitted wage-to-turnover ratio from 60% to 50%. In practical terms, clubs will now be restricted to spending half of their turnover on wages under the new framework.
The rules also affect clubs arriving in League One after relegation from the Championship. Those teams will be allowed to spend up to 65% of their turnover on wages during their first season in the third tier, compared with the previous allowance of 75%.
Managerial salaries have also been incorporated into the new calculations, while clubs face an additional restriction concerning owner investment. No more than 50% of cash injected by owners can be used for wages.
For the PFA, these changes go beyond ordinary financial regulation because they directly influence the employment conditions and earning potential of professional footballers.
PFA questions the introduction of Squad Cost Rules
The players’ union argues that the EFL could not introduce the changes without securing full agreement through the Professional Football Negotiating and Consultative Committee (PFNCC), which brings together the EFL, PFA, Football Association and Premier League.
The PFA says the process followed by the league did not comply with the consultation and agreement requirements attached to the committee.
The union said the new measures would “artificially restrict and tighten” the amount clubs can spend on player wages, and argues that the procedure used to approve them was not consistent with the obligations of the organisations involved.
That argument is now at the centre of the legal proceedings, creating a significant test for the EFL’s ability to introduce financial controls in the lower divisions.
The EFL, however, strongly disputes the PFA’s position.
EFL defends new League One salary cap rules
The EFL said it was “concerned and disappointed” by the legal challenge and rejected the suggestion that the new rules represented a major alteration to the regulation of the league that affected players’ terms and conditions of employment.
The league maintains that the Squad Cost Rules are designed primarily to encourage responsible financial management and improve the long-term sustainability of League One clubs.
The EFL also insists the regulations are not intended to undermine the interests of players. Instead, it argues that tighter financial controls can create a more stable environment in which clubs are better able to meet their financial obligations and continue investing in football.
The league added that it would continue engaging with the PFA and other stakeholders during the dispute.
The disagreement therefore extends beyond the size of the League One salary cap itself. It also raises questions about the authority of the EFL to implement financial regulations that have an indirect impact on players’ wages.
League One has faced salary-cap controversy before
The current dispute is not the first time the PFA has challenged attempts to impose tighter wage restrictions in the lower divisions.
In 2021, plans to introduce salary caps in League One and League Two were withdrawn after an independent arbitration panel ruled in favour of a PFA challenge.
Under those proposals, League One clubs would have faced a £2.5m salary ceiling, while League Two clubs would have been limited to £1.25m.
The PFA had argued that those proposed caps were unlawful and unenforceable, and the independent panel upheld its claim.
The latest system is structured differently, with spending limits linked to club turnover and other financial factors rather than imposing one fixed salary ceiling on every club. Nevertheless, the previous dispute provides important context for the latest confrontation between the players’ union and the EFL.
Oxford United already caught by new rules
The impact of the new financial framework is already being felt by League One clubs.
Oxford United were placed under a temporary registration embargo last month after failing to comply with the new requirements. The restriction means the club cannot currently register new players, including loan signings and free transfers.
The club has indicated that it could take months to satisfy the relevant obligations.
The timing of the PFA’s legal challenge therefore creates further uncertainty for clubs attempting to operate under the new system. Any significant development in the case could have consequences beyond the immediate dispute between the EFL and players’ union.
With the 2026-27 League One campaign beginning on Saturday, the legal battle has arrived at a particularly sensitive moment.
What happens next?
The PFA’s legal proceedings now put the League One salary cap and the wider Squad Cost Rules under scrutiny just as clubs prepare for the new season.
The EFL remains confident that its regulations are legitimate and necessary for financial sustainability, while the PFA maintains that the process used to introduce them did not satisfy the required collective consultation arrangements.
The outcome could have implications for the relationship between the EFL, clubs and players, particularly if the new financial restrictions are found to have been introduced without the necessary agreement.
For now, the League One salary cap remains in place, but the legal challenge means the rules governing spending in England’s third tier are facing a significant test before the season has even begun.
