Peterborough United must honour a salary cap with immediate effect, but a legal challenge could follow

Clubs in League One and League Two today (August 7) voted for the introduction of new financial controls in the form of ‘Squad Salary Caps.’ The fixed caps are £2.5 million in League One and £1.5 million in League Two.

When calculating total salary spending, the ‘cap’ includes: basic wages. taxes, bonuses, image rights, agents’ fees and other fees and expenses paid directly or indirectly to all registered players.

Payments directly linked to a club’s progression in cup competitions or promotion are excluded from the cap, while any income generated from players going out on loan is deducted from the cub’s salary cap calculation.

Contracts entered into before today’s announcement will be capped at an agreed divisional average (£1300 per week in League One).

Posh have yet to comment on the salary cap although they did publicly state they intended to vote for its introduction, even though co-owner Darragh MacAnthony had sympathy for third tier clubs with large fanbases like Sunderland, Ipswich and Portsmouth who will not now benefit from the financial advantages a large home gate brings.

Sunderland’s wage bill last season was reported to be £10 million.

It’s understood Portsmouth are considering legal action after the vote was passed by a reportedly narrow margin.

Posh are not expected to have any trouble staying within the cap, Under 21 players do not count towards the cap and Posh have 10 such players in their first-team squad.

The salary cap idea was first floated in the light of financial problems laid bare by the coronavirus crisis.