Global Football Partners’ Charlie Methven appeared on the latest episode of the Where’s The Money Gone? podcast with Adrian Goldberg and discussed how a new Independent Football Regulator will operate.
Methven explained that Charlton, and all other League One clubs, are already obliged to meet the Salary Cost Management Protocol (SCMP), a measurement whereby a club’s player-related expenditure cannot exceed the sum of 60% of its relevant turnover.
Homegrown players aged 21 and under are excluded from this total, however.
Methven said: “Players who have come through your academy do not count towards your player wage consideration until they have reached, I think, 21. This, again, places a huge emphasis on your academy and what can be achieved through your academy.
“Let’s just say, for the sake of argument, that you are a club who has eight members of your first team squad being players under the age of 21 who have come through your academy, none of those players’ wages count. What that then means is that the remainder of your first team allowable squad budget can get spread much less thinly, because you are not having to spread that across 25 first squad members; you are spreading it across 17 or 18. The reason I mention those numbers is because that is the situation at Charlton.
“Charlton have eight members of their first team squad who are under the age of 21 who have come through their academy,” he continued. “One of the main reasons why my investors wanted to buy Charlton, above all other clubs in the Football League, was because they saw these changes coming and they saw that a competitive advantage would come to those clubs, like West Brom and like Charlton, who have got great academies. Ultimately, you would then have more budget to spend on fewer players in your first team than those clubs who needed to effectively recruit all of their players from the outside.
“League One operates within a situation where you can only spend 60% of your revenues on player wages,” Methven added. “Now, there is a little way round it, which is a bit flaky and which is susceptible to interpretation, where you can do what’s called an owner equity injection to cover some of the additional spend that you might make.
“At Charlton, we were expecting to get one or two extra players out of the club on loan; for one reason or another that didn’t happen, which meant we overspent our 60% limit. I had to write, as the owner, a letter to the EFL apologising for this, explaining why it had happened and effectively agreeing that we would cover the excess with an equity injection.
“All of this was going on whilst the Charlton fanbase were palpably shouting for us to spend a lot more money - not a bit more money which I could write a letter of explanation for, but a lot more money. In that event, we would have been subject, first of all, to an embargo and then a points deduction like Reading.
“Now, this is something which some fans are starting to understand now, that SCMP has teeth because they are seeing other clubs placed under embargo and they are seeing other clubs having points deducted. But under the new regime, this is going to be enforced with absolute total rigour. Some of these loopholes are going to get closed off very, very quickly by the government regulator. They won’t be born yesterday and they will understand that ownership equity injection is the same as ownership funding - it's the same thing.
“Why is it a problem? The reason it’s a problem is that you can cover with ownership equity funding the additional spending for the current season, but when you sign players on three and four-year contracts, that gap remains for many seasons afterwards. You are building up a cost model which your club cannot support and that is what the government wants to crack down on, that is what they want to stop. They know that somebody might be able to cover it for one season, but they are trying to stop that owner punt on one season success which then risks the future of the club over the two years following that punt.”