The interesting Championship financial update and what it means for Sunderland, Leeds, Middlesbrough & Co

The EFL have confirmed that the Championship's current financial rules will be replaced by the end of next season, though clubs are not as of yet in agreement over what new rules will be brought into force.

Championship clubs currently operate under the Profitability and Sustainability Rules, which limit clubs to losses of around £39 million over a three-season period. As in the Premier League, the rules have become increasingly controversial in recent years as a number of points deductions and punishments have come into force.

In a statement released on Friday evening, the EFL confirmed that it hoped to have decided on a route forward by the end of the year: "Separately, in the Championship, Clubs have also committed to change and agreed in principle to target the end of the calendar year to determine how future cost controls in the division will work. Clubs will now consider multiple options to enhance or replace the current Profitability and Sustainability Rules (P&S) via a new working party that will represent the views of all 24 Clubs before deciding on the most appropriate direction of travel."

Here's what you need to know from a Sunderland perspective...

Why the delay and what might the new rules look like?

EFL Chairman Rick Parry has previously confirmed that he expects the preference of Championship clubs to be to fall into line with the Premier League, who currently operate under a very similar system of financial regulation (albeit with a significantly higher upper limit).

Premier League clubs voted earlier this summer to introduce a new set of rules, which will shadow the current regulations next season before fully coming into force ahead of the 2025/26 campaign. Those rules will more closely mirror UEFA's regulations for the European competitions, in which a club's spending is linked to their overall turnover. Reports suggest in the Premier League those in European competition will be able to spend 70% of their turnover, and those outside of the European places will be able to spend 85%.

The Premier League will also trial an additional system next season, whereby clubs will have to follow what is known as an 'anchoring system'. This will limited any top-tier club's spending to around five times what the club finishing bottom of the league earns. These measures are significantly more divisive and have already drawn some concerns from the PFA, whose legal challenge famously brought an end to the salary cap introduced to League One while Sunderland were in that division. While the 'anchoring' system may or may not come to fruition in future, the rules limiting spending to a percentage of turnover are agreed and it is expected that the Championship's new rules will be broadly similar to those when finally introduced.

The financial rules governing the Championship are just one part of the puzzle when it comes to the EFL's hope of bringing about a more stable financial picture, though. And that in part further explains the delay to this current overhaul. The EFL and the Premier League have been at an impasse over a new funding deal, which in theory would redistribute more of the riches earned in the top tier down the pyramid. For a multitude of reasons, no deal has been close to agreed and one of the key sticking points is the future of parachute payments. The Premier League believes they are essential to ensuring promoted teams can compete with the competition, while the EFL believes they distort the competitiveness of the Championship and encourage unsustainable spending from those trying to keep pace. The EFL would prefer to distribute the Premier League money on a merit-based basis, but that remains unpalatable to the Premier League.

The EFL's hope was that the introduction of a bill to create an independent regulator, which would have backstop powers to force an agreement, might have forced the Premier League back to the table. However, that bill is now on hold ahead of the imminent general election.

So what does all this mean for Sunderland - and what's the best outcome from their perspective?

In theory, a rule that links what a club can spend to their turnover should benefit Sunderland in the long run. They regularly post the biggest attendance in the division, with a huge and loyal fanbase that will drive revenues other clubs can't compete with. The reality, in the short term at least, is a little more complex. By their own admission they have a lot of work to do off the pitch to fully maximise those revenues, both in retail and elsewhere. That's a key project for new Chief Business Officer David Bruce, who has already agreed new deals with hummel and Fanatics.

It's also true that in the short term, the current rules work relatively well for them. They are well below the limit on what they can lose over a three-year period at a time when many of the clubs around them who would expect to be similarly challenging for a play-off spot are constrained by how close they are to breaching the rules. So while they're unlikely to be opposed by a long-term change to a turnover-based model, it's no great hardship that the current rules stay in place for now. Fundamentally, the biggest change to their promotion aspirations would be if parachute payments were overhauled or replaced, and at the moment that still feels a long way off.