Financial Fair Play does not operate in League One and Two, but clubs must instead abide by the snappily named Salary Cost Management Protocol (SCMP).
This regulation limits the percentage of a clubs turnover allowed to be spent on wages.
In League One this limit is 60 per cent, while in League Two it is 55 per cent.
Every summer, a club will be asked to provide a forecast of turnover for the upcoming season, this includes information about where the club expects to be at the halfway stage of the campaign.
The figures must be submitted with firm evidence from the previous season. Any major changes in income or expenditure would have to be explained.
If the forecast are drastically off from the current season and clubs fail to inform the EFL of any changes, a transfer embargo can be imposed.
What income is included as turnover?
Every penny you spend with your club is important to SCMP as all these are included: match-day income (season tickets, gate receipts, programmes, catering), commercial income (sponsorship), TV and radio rights plus 'merit' payments based on league position.
Also any cup run income which the EFL could sanction additional wage spend.
Can an owner invest into the club without being subject to SCMP?
They can. The Football League turnover figure includes donations from the owners of the club as long as there is no expected repayment to the donor. This means clubs can't rely on large cash loans for their income.
Injections of equity also count as turnover. Therefore a wealthy owner can fund the club in ways that are not permitted in other divisions.
Is profit made on player sales included?
Yes, it will be part of the turnover on a cash basis when the installments are received.
So what wages are part of the SCMP calculation?
Only player wages are included. These relate to all contract players (full contract, non-contract etc) and loan players.
Wages of players loaned out to other clubs are deducted for the period of the loan.
Are any players wages excluded?
Wage costs for youth players on professional contracts don't count on SCMP.
They must be 20 years of age or under at the start of the season and have been in the club's Youth Development scheme.
What is the aim of these rules?
The EFL hopes to reduce the levels of losses incurred at some clubs, and in the longer term, ensure that the two divisions are made up of self-sustaining professional clubs, not ones relying on large cash loans to operate.
And the consequences for failing to comply with the rules?
Any club that are deemed to have breached the permitted spending threshold will be hit with a transfer embargo.
The EFL will monitor accounts and a club that is forecasting a wage spent within 5 per cent of the figure will be asked for assurances that they won't break through the agreed percentage.
