NEWPORT County AFC and their League Two rivals have agreed to introduce squad salary caps with immediate effect.

The English Football League has announced that clubs in League One and Two have voted in favour of a proposal, with the cap set at £2.5million in the third tier and £1.5million in the fourth.

Lower league clubs have been hit hard by the coronavirus pandemic and will be stretched by the season getting under way on September 12 behind closed doors, depriving them much-needed gate receipts.

The Exiles, who have been helped in the crisis by money banked through FA Cup heroics, backed the introduction of a salary cap in June and the majority of their rivals also gave the green light.

A statement from the EFL read: "The decision follows extensive and comprehensive consultation with all clubs in respect of addressing sustainability and wage inflation issues across the EFL which were initiated prior to the suspension of football in March following the Covid-19 outbreak and have continued during the course of the summer."

Players' union the Professional Footballers' Association has expressed concerns about the proposals as they are drafted, and has called for further consultation and clarity around the objectives for introducing a cap.

It is understood 22 League Two clubs were in favour of a cap, with two against.

The EFL said the cap would cover basic wages, taxes, bonuses, image rights, agents' fees and other fees and expenses paid directly or indirectly to all registered players.

Promotion bonuses or incentives payable for success in cup competitions will not be included, the EFL said, and any income generated from players going out on loan is deducted from the club's salary cap calculation.

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County chairman Gavin Foxall told the Argus in June that a limit on spending was essential for clubs in the lower leagues.

"There has been dialogue going on for some time about a salary cap for squads. We think it is absolutely needed at our level," he said.

"A reset is needed generally in football, because the pandemic has highlighted that it's not sustainable at certain levels.

"A salary cap is potentially going to come in next season and we believe that will ensure clubs can be enjoyed by thousands of people for years to come.

"One chairman at another League Two club described it as almost protecting chairmen and owners from themselves, because everybody wants to gain promotion and gain that little bit of an advantage.

"If your manager comes and asks you for something then nine times out of ten then you want to support them as much as you can for obvious reasons.

"We've been no different but that potentially can make clubs in League Two, and likely in League One, unsustainable.

"It would also create more of a level playing field, because in our league there are probably clubs that range in budgets from £1million right up to £3million I suspect.

"A salary cap would be really welcome to have a measure in place as part of the EFL regulations so that we don't have another Bury."

The regulations include transition arrangements for relegated clubs and take account of deals already agreed.

There will be an 'overrun tax' imposed on clubs who exceed the cap by up to five per cent. It is understood the level of penalty is on a sliding scale depending how much of an overspend the club has committed.

Beyond five per cent, clubs will be referred to an independent disciplinary commission.

Sanctioning guidelines are "in place" for the commission to consider, the EFL said.

EFL chief executive David Baldwin said: "The term 'salary cap' is an emotive one, creating the impression of a restrictive measure, but we are clear in our view that this is neither the objective nor the likely effect of these changes to EFL regulations.

"The financial impact of Covid-19 will be profound for EFL clubs and the vote will help ensure clubs cannot extend themselves to the point that could cause financial instability."