Financial Rules - SMCP this season....An Explanation

This season we will no longer have to comply with the Profit & Sustainability rules. Instead we have to comply with the Salary Cost Management Protocol ("SCMP")

During the day I have been looking into SMCP a bit more and I understand that its a lot easier to comply with than the sustainability rules in the Championship.

1) The first rule is that we are allowed to spend a maximum of 60% of our turnover (see below) on 1st team salaries
2) The salaries of anyone aged under 21, on the first day of the season, can be excluded
3) The salary of an older player, playing outside of the first team, can be excluded
4) Owners can inject as much as they want into clubs - provided it is on a Cash to Equity basis

So if an owner loans £10m then £nothing counts towards turnover but;
If an owner converts £10m into equity then £10m counts towards turnover

Apparently our turnover is allowed to consist of the following:

(a) Gate Receipts - (Based on 15,000 supporters I would expect £6.5m in receipts)
(b) Sponsorship & Advertising - (Estimate drop down to £4m)
(c) Merchandise & Retail - (Estimate at £2m)
(d) League Distribution - (Estimate at £1.8m)
(e) Merit Payments - (Does not apply to L1)
(f) Cup Prize Money - (Estimate at £100,000)
(g) Parachute payments - (Does not apply to L1)
(h) Net Player Sales - (Estimate at £1m)
(i) Owner Injections - (Estimate at £10m based on previous seasons of £15m) This has a huge impact on SMCP

If the above figures were correct we would have £25.5m towards turnover for purposes of SMCP and this would allow us to spend in the region of £15m on salaries.

If the club operate an average 40% relegation reduction clause I would estimate we are paying £10m on salaries - so we appear to have plenty of room for manouever

Hope this assists.

Thanks Paul makes it easier yo understand!

I think this is how Brum managed it last season spent a vast amount on transfers (20+ million) which ultimately must have been covered by extra owner equity

Over to you Mr Tan a chance to splash the cash if you want to do it??

Thanks Paul, didn't know a lot about how it worked.

Definitely room for us to add to the squad as you say.

"We have been relegated, income will be reduced, so we have a limited budget"

The club are experts in "Political Spin" and I am sure many of us are expecting a statement like the above.

So the purpose of putting this together was to demonstrate, if the club do say this, then we have every reason to question it.

It is also the case that, if VT wanted to buy promotion, the SCMP rules allow him to do so.

The losses, previously quoted by Pererborough owner Darragh MacAnthony, was more like 80%. He bangs on about it when covering for Simon Jordan on TalkSport.

It is 60% - the following was copy and pasted from the EFL website

Salary Cost Management Protocol (SCMP) is the Financial Fair Play rules for all League One and League Two Clubs.

The SCMP requirement is whereby a Club’s Player-Related Expenditure shall not exceed the sum of 60% or 50% of the Club’s Relevant Turnover for League One and League Two Clubs respectively.

The Reporting Period in respect of which a Club is assessed for the purpose of the SCMP Requirement is the 12 month period recorded in the Club’s Annual Accounts.

Sorry, I was on about the difference in turnover from Championship to L1. I think you quoted 40%, Peterboroughs Owner says 80%.

Nothing to do with SCMP rules. Just the difference in cashflow in the respective divisions.

I assume we'd be accountable to SCMP in our 2026 financial reporting? Is that correct?

It is 60% - the following was copy and pasted from the EFL website

Salary Cost Management Protocol (SCMP) is the Financial Fair Play rules for all League One and League Two Clubs.

The SCMP requirement is whereby a Club’s Player-Related Expenditure shall not exceed the sum of 60% or 50% of the Club’s Relevant Turnover for League One and League Two Clubs respectively.

The Reporting Period in respect of which a Club is assessed for the purpose of the SCMP Requirement is the 12 month period recorded in the Club’s Annual Accounts.

It’s 75% for newly relegated clubs.

I thought it was as well - but when I rechecked it all pointed to 60%

But great if we do get the extra.

Looking at what we presently have on the payroll, and assuming an average 15000 crowd, I think our SMCP is presently sitting at 31% and that's before ""Transfers out".

When it comes to selling the likes of Salech (or others) the club will not be able to use SMCP as an excuse - because we are well within the limits. We could even afford to quadruple Salech salary and still only be around 41%