Steve Lansdown believes the Championship needs a salary cap to secure the long-term security of the league as Bristol City, and a number of other clubs face difficult financial challenges and decisions over the coming years.
City posted record losses of £38.4million for the financial year ending 2021 with the pandemic and the collapse of the transfer market outside of the Premier League the chief reasons for the alarming size of the red number.
As a result, the Robins will struggle to make the EFL's Profit & Sustainability rules for next season, which will likely lead to a points deduction. Although Bristol Live understands talks between clubs and the governing body over potential reform continues.
The EFL did announce fresh amendments to the rules on Thursday which include the opportunity for "add-backs" of lost revenue due to the pandemic amounting to £7.5m over three seasons. However, City's bone of contention is around absent transfer revenue, which they estimate to be £30m for the season 2019/20 and 2020/21, which is yet to be addressed.
On Wednesday, City chairman Jon Lansdown claimed that up to seven clubs in the Championship - with many yet to publish their accounts for 2021 - could be a similar situation to City with losses that are likely to incur points-related sanctions.
If more than a quarter of the division were to be hit with such penalties, it would raise serious questions of the credibility of the competition but also the viability of financial fair play which was introduced to try and curb unsustainable club spending.
Lansdown believes that moving forward, the EFL has to mimic wage control, as has been standard for rugby union's Premiership, in which he has acute knowledge of given his ownership of Bristol Bears.
“We have to have some form of salary cap," Lansdown told The Times. "I’ve always been a free marketeer but having been in rugby a lot, I’ve seen how the cap works there. It’s not perfect but it gives you control over those salaries and it makes your managers and other people work within a budget.
"It makes coaches better. I remember having a conversation with Lee Johnson a few years ago saying in this scenario it doesn’t mean going out and looking for this better player, it means you coach what you’ve got better.
"Fans always like to see a name coming in but we can’t really afford that. If you’ve been in the Championship for a long time like we have, without ever having featured in the promised land, the problem is you don’t have those parachute payments.
"The Championship has effectively got to become Premier League 2 and a better distribution of the monies down through the pyramid would improve things.
"The parachute payments don’t really help. Stoke is a good example, a very well-run club. They’ve had the parachute payments, they spent it and haven’t made it [back up], so they’re having to readjust quite a lot.
"You’ve had the Boltons in the past that have got it wrong and gone all the way down. It’s more controlling expenditure when you come down. Parachute payments create an unfair playing field."
During former CEO Mark Ashton's time on the EFL board, the salary cap was constantly on the agenda and was briefly introduced into League One and League Two to try and restrict spending in the immediate aftermath of the onset of the pandemic and the prospect of playing the 2020/21 season behind closed doors.
Despite having supporters such as Middlesbrough's Steve Gibson, proposals for an £18m cap were rejected last year with a two-third majority required from the Championship's 24 clubs to pass the motion.
Brentford, Norwich City - now both of the Premier League - and Bournemouth - who possess one of the biggest wage budgets in the division - were among the dissenting voices.
However, with the situation for next season fast approaching, which would have huge implications for the integrity of the 2022/23 campaign, Lansdown wants the concept back on the table and the EFL continue to monitor the situation.
"We have issues following on from Covid," Lansdown added. "Having had no income for a while and the transfer market being completely scuppered, so balancing our books is difficult. I am having to fork out more and more money to keep the club afloat.
"If you don’t balance the books you don’t have a club. We’ve seen instances of that already. One thing that is close to my heart and I’m very proud of is Bristol City Football Club has always paid its bills, always paid its staff, and it has always looked after its community as best it can. Football generally is still spending money on contracts and agents which it shouldn’t do. A cap scenario needs to come in because we need some control in that area."
City's now broken former financial model of "player trading" - namely buying low to sell high - to offset wages, did record notable successes with the considerable sales of Adam Webster, Bobby Reid, Josh Brownhill and Lloyd Kelly, but their inability to move any players for significant fees over the last two transfer windows - albeit with a separate debate around exactly who could have been sold outside of Niclas Eliasson and Famara Diedhiou - has left them in this situation.
Changes have been made, with 10 first-team players released last summer upon expiry of their contracts, and the promotion of academy talent and low cost, low wage acquisitions from League One and League, which is estimated to have reduced the wage bill by around £6m. However, further reductions will need to be made over the next transfer window, although not as severe.
Although chairman Jon Lansdown claims this scenario can be viewed as an "honest mistake", and CEO Richard Gould declaring it a result of "an act of God" outside of their control, with relation to the pandemic, that opinion isn't universally shared.
On Thursday, talkSPORT pundit and former Crystal Palace owner Simon Jordan said: "You cannot underpin your business with things that may not happen, you cannot build a cup run into your cash flows to suggest you're going to get to the quarter-finals of the cup or get knocked out in the third round because that's all you can ever budget for - common sense prevails. You've got to maintain a certain degree of control."
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