The major transfer and contract challenges facing Sunderland if League One’s controversial salary cap proposals are passed

Clubs will convene on July 29 to discuss the salary cap mechanism, which looks set to replace the Salary Cost Management Protocol regulations which are currently in place in the third tier.

But what is being proposed and, crucially, how will it affect Sunderland? We take a look:

What is being proposed and why?

The current EFL proposals would see a £2.5million salary cap placed upon League One clubs.

These plans were initially proposed last summer following the issues which emerged at both Bolton Wanderers and Bury, and the events of recent months have only fast-tracked the implementation of the salary caps.

What does that £2.5million limit include?

In addition to player wages, that total must include player bonuses, signing-on fees, agent fees, National Insurance contributions and relocation costs.

Exempt from the cap are promotion bonuses, management and coaching salaries and transfer fees.

Will Sunderland be restricted in how many players they can recruit?

Yes. Under the current proposals, Sunderland will be limited to registering 22 players for the 2020/21 season - reducing to 21 and then 20 players in the subsequent seasons.

It’s worth noting, though, that this squad cap does not include players aged 21 and under. Youngsters, therefore, could be handed a chance to impress.

How will it affect Sunderland in the transfer market?

This salary cap will naturally have a big effect on Sunderland in the transfer market.

Phil Parkinson’s desire to bring in ‘seven or eight’ players tallies up with the squad size limit set to be imposed upon clubs, but it is the salary cap that will pose concerns for Sunderland.

Imposing this limit upon the Black Cats - and other clubs who generate far more revenue than their rivals, such as Portsmouth and Ipswich - will severely affect their ability to recruit players that they may have been able to target in previous windows, given that they will now be working beneath a financial threshold.

While in the past the bigger clubs in the division were able to go out and recruit players earning far more than the League One average - because their incomes allowed them to without putting the club into jeopardy - this will now prove much harder.

It’s for that reason that the vast majority of clubs are yet to foray into the transfer market this season. Only once these plans are passed will they be able to fully plan and take stock of what they can and cannot afford to offer to potential recruits.

How about when it comes to players with existing contracts?

One crucial factor is how the salary cap will affect those currently under contract.

The current proposals would see an average League One wage calculated and applied to every player currently contracted by Sunderland for the purposes of the salary cap monitoring, making initial calculations easier and giving clubs a chance to rebuild in the market this summer.

As an example, a player like Aiden McGeady - who we can safely assume earns far higher than the League One average - will not see his full salary count in the cap calculations. Instead, for the remainder of his current deal, his salary will be counted as the League One average. His actual salary will remain the same, but Sunderland can count a far lower amount towards the salary cap.

Now in theory, this should benefit the Black Cats. Given they will have very few, if any, contracted players earning less than the League One average, it will see Sunderland given some extra flexibility to manoeuvre in the transfer market in the short-term given they not see their full wage bill count towards the cap.

However, the problem will come in the long-term. If Sunderland wanted to negotiate a new contract with McGeady, for example, his new agreement and therefore wage would then apply towards the cap. Simply put, it means Sunderland would go from having an average League One wage applied for McGeady to his full salary - which is presumably far higher and would place greater strain on the club as they look to abide by the salary cap. This could leave clubs struggling to retain some of their better players given they may struggle to offer comparable terms due to the pressures of the salary caps.

Will there be a ‘grace period’ for clubs?

While initially there were plans for a grace period, it’s now understood that these are somewhat off the table.

They have been replaced by the plan mentioned above, where every existing contract will be counted at the League One average rather than its true value for the first season.

What have clubs said about these plans and how likely are they to be passed?

A number of clubs have been vocal in their opposition of the plans, with Sunderland chief executive Jim Rodwell saying that while the Black Cats support the notion of increased financial controls, they are against a uniform salary cap.

“Sunderland absolutely agree that clubs should become more sustainable, but that doesn't mean a hard and fast wage cap,” he said.

“Sustainability is not about creating a level-playing field, it's about living within your means.

“If that means one club is larger than another, so be it.

“That's what sustainability means.”

Rodwell’s counterpart at Portsmouth, Mark Catlin, branded the proposals as an ‘absolue disgrace’.

“Should salary caps come in, those clubs with a 40,000 average attendance and generating huge commercial revenues will be only allowed to spend the same as clubs with a 2,000 attendance and no commercial income,” he explained.

“How can that be right?

“It is an absolute disgrace. I have been fighting this behind the scenes and will be fighting it even more strongly over the coming weeks and months.”

But Sunderland and Portsmouth are thought to be in the minority, with League One clubs set to vote to pass the plans.

A two-thirds majority is required, and it is extremely likely that this threshold will be met.