Newcastle United were dealt a blow on Wednesday as it was revealed their academy would not receive Category One status under the Elite Player Performance Plan (EPPP).
Instead Newcastle find themselves in Category Two along with the likes of Brighton & Holve Albion, Coventry City, and Crystal Palace.
The EPPP is aimed at boosting the chance of domestic talent breaking through into first-team football and ranks club academies to determine their funding levels. Launched last October, it was described as a "major step forward" at the time by Football League chairman Greg Clarke.
To achieve Category One status, a club must have a minimum of 18 full time staff, and an operating budget of £2.5m, among other criteria.
There has been opposition to the EPPP from some football league clubs, with Hereford United, Wycombe Wanderes, and Yeovil Town all confirming the closure of their academies, citing the cost of the EPPP's implementation as the reason despite a vote of Football League clubs returning 46 votes in favour to 22 opposed.
The Magpies had hoped to match neighbours Sunderland and Middlesbrough in achieving the top grade, but will now have to wait two years before they can apply to be reconsidered.
Under the new rulings, a Category One club will receive a minimum £775,000 a year in funding from the Premier League, while Category Two clubs will receive only £480,000.