EFL Chief Warns of ‘Systemic Insolvency Risk’ as Financial Dispute With PFA Escalates

EFL chief executive Trevor Birch has warned that increasing financial losses among clubs are creating a "systemic insolvency risk" across English football.

Birch issued the warning in an open letter following the Professional Footballers' Association's decision to begin legal proceedings against the EFL over planned changes to financial regulations in League One.

The dispute centres on new Squad Cost Rules (SCR), which are due to replace the existing Profitability and Sustainability (P&S) framework from the 2026-27 season. Among the proposed changes is a reduction in the proportion of club turnover that can be spent on player wages, with the League One limit set to fall from 60 per cent to 50 per cent.

The PFA has argued that the changes cannot be implemented without full agreement through the Professional Football Negotiating and Consultative Committee (PFNCC), while the EFL maintains the reforms are necessary to improve the long-term sustainability of clubs.

Birch acknowledged concerns raised by players, but argued that the current financial model is becoming increasingly difficult to maintain.

He wrote: "Financial sustainability and player protection are not opposing ideas. They are inseparable.

"A club that is financially secure is more likely to honour contracts, pay wages on time, invest in facilities and provide long-term career opportunities."

The EFL chief highlighted the scale of the challenge facing clubs, pointing to a sharp rise in spending and losses in recent years. Over the past five seasons, average player expenditure in League One has increased from £3.8 million to £8 million, while average losses have risen from £2.3 million to £7.3 million. In the Championship, average losses reached £21.6 million last season.

Birch said the issue extends beyond League One and represents a broader challenge for the football pyramid.

He added: "This is not solely a League One issue. In the Championship it is even starker."

The latest disagreement follows a similar dispute in 2021, when plans to introduce salary caps in League One and League Two were abandoned after objections from the PFA.

Addressing the union's concerns, Birch said: "The PFA insists the new rules could suppress wages and restrict spending on squads. That concern deserves to be heard.

"But there is also a legitimate concern that doing nothing only perpetuates the challenges our clubs face, with owners unwilling or unable to provide increased funding requirements."

He stressed that the purpose of the new regulations is not to limit ambition but to encourage clubs to operate within sustainable financial limits.

Birch said: "The purpose of these controls is not to limit ambition, but to put appropriate guardrails in place, so clubs can invest responsibly, remain competitive and avoid being pushed into spending that places their long-term future at risk."

The EFL has frequently pointed to examples of clubs experiencing financial difficulties as evidence of the need for reform, with Birch arguing that supporters want clubs to remain sustainable and continue serving their communities for generations to come.

He added: "Litigation isn't the answer. It will not solve the underlying challenge facing the game: a financial model in which too many clubs are asked to chase success through losses that owners are expected to absorb indefinitely. It is not sustainable."