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A Wage Cap In The Premier League?

  A Wage Cap In The Premier League?

Chelsea's success has come at a huge cost

For many years now a wage cap has been hailed as something that could rejuvenate football. But could a regimented wage structure really be something that would work and how would it change the Premier League?

Obviously for a wage cap to work it would have to be something that was done on a worldwide basis, but the most difficult question of all would be the level at which the cap was set. While there are stars in the league earning upwards of £150,000 a week, the average professional footballer in England will earn nowhere near that. How could you set a wage cap that was fair to all sides?

One solution could be to have a progressive wage cap as you moved through the leagues, but even then it would still be difficult to gauge a fair level for each league. Take Manchester City for example; who obviously spend a lot more on wages then Wigan Athletic.

If you were to cap wages at Manchester City’s current expenditure level then in many ways the competitiveness of the Premier League wouldn’t change, if you were to cap it at a level closer to that of Wigan’s it would course drastic problems for the bigger teams as they looked to drastically cut their wage bill.

This sort of move would also call outrage from the players. If you were to tell the top earners in the Premier League that they needed to take a pay cut you could guarantee that the PFA would call a strike.

While the money they earn is quite frankly ludicrous could you imagine any other industry seeing wages capped? If there is a demand for their service they should be able to earn whatever they can.

But the main reason why I can’t see an enforced wage structure working is because it punishes clubs who have managed their finances in a way which allows them to splash the cash and bring in players with big demands.

Look at Manchester United, before the Glazer takeover, they were a debt free profit making organisation that paid out the big wages. Arsenal are another profit making Premier League side who in years to come will surely see a big growth in the cost of the wage bill.

Personally I have no problem with a player earning a six figure some every week. The problem comes when clubs can’t afford it. Look at Manchester City, they spent more on wages then their entire turnover last year. It is this sort of wild spending which creates problems.

The solution that I propose would be for there to be a fixed level of the clubs turnover that they could allocate to wages. On average Premier League clubs spend 67% of their turnover on wages, if all clubs were to work around this figure, then we would at least have a more financial basis in the League.

This sort of plan would allow for clubs to make sure they weren’t living above their means, but would still allow for the big name signings to filter in to the league, but only if they could be afforded.

At the end of the day we all want to see the big names, big names cost money, but in the long term clubs cannot continue with their current wild spending. Things will have to change sooner or later.

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31 Responses to A Wage Cap In The Premier League?

  1. I’ve always been a fan of this idea, I can imagine most people that support the teams who don’t win something every other year are as well.

    It would give other teams a real chance to compete rather than the league becoming a monopoly of sorts

  2. Jason says:

    My only issue with capping the wages is that it might lead to the best players defenitely heading elsewhere to play. For a wage cap to be effective it would have to come from the FA for all leagues I would think.

    I’m a Tottenham supporter and Levy has a self imposed cap that is far below some other top tier clubs and we still field a very competitive team. With that, we have a hard time bringing in players as we are unwilling to break that wage structure. While Tottenham can compete on the world stage I don’t have delusions that we will win the Champions league and I fear that the Premier League would be in a simialr situation with Tottenham in that they can compete on a global level but not win anything.

    Make sense?

  3. rob says:

    survival of the fittest is the way to go. salary caps and revenue sharing are ruining american sports. And its an affront to capitalism and democracy.

    • bob says:

      Oh yeah, the NFL has been doing terribly with their salary cap.

      • Jay says:

        Lets wait until after the lockout next year to decide shall we?

        In any event, the argument can be made that the NFL has been ruined by the salary cap. Teams can’t afford to be successful. It is a constant cycle of building up, being successful, and then tearing the team apart because you can’t fit wage demands under your salary cap structure. Granted some teams (notably the Patriots) are better at this than others, and some choose not to participate, but to me, parity in the NFL is a four letter word.

        I’m not a big fan of either club salary caps or individual wage caps. I am a much bigger fan of requiring clubs to operate with balanced books.

      • Robert says:

        The difference is NFL players have no were else to play their craft. The EPL would suffer because players would just go to other leagues without salary caps.

    • Lack of a proper salary cap and remotely realistic revenue sharing has destroyed baseball.

    • CrazyMike says:

      I disagree – the MLS model which utilizes salary caps AND an exemption system in the form of the Designated player is absolutely brilliant and ensures that every single team can win on any given day, but only properly managed teams will win consistently over a season.

      It is true that the better players in MLS who are not quite worthy of DP money will go elsewhere (see Sacha Kliejstan, Chris Rolfe, etc) usually Scandinavia. Scandinavian leagues are not ‘better’ quality of play than MLS, but the wages they offer are several times larger.

      That being said, I think MLS will eventually be the best league, from top to bottom, in the world. It might not happen for a generation or two, but the exponential rise in quality since its founding will continue as the sport takes hold here.

      • Martin says:

        I can’t disagree with you more. I hate salary caps. Honestly I’m not sure how it works in the MLS but it has ruined many sports for me including hockey, basketball and football.

        First: parity sucks. Yes it means any year your team could win but what it really means is that it’s a crap shoot. The best team usually doesn’t win because each team is so similar to the next that statistical variance is the real decider. (for this reason I also hate playoffs – they are way to short to decide the best team – the league table is the only way to go)

        Second: you as a fan have no impact on whether the team does well or not. Your only influence is through the money you bring to the team. with a salary cap that money doesn’t matter they can’t hire better players because they are already at the cap. I’m a Red Sox, Celtics, Patriots and Bruins fans. Guess who’s merchandise I buy and games I actually attend? The Red Sox because I know it will help the team.

        Third: (and this is reformulation of “parity sucks”) huge upsets are awesome. It’s great to have the best team way way better than the worst because sooner or latter that terrible team will and does win. That game is remembered for ever and will be the rallying cry of the underdog for years.

        Fourth: it’s bad for business. Contrary to popular belief the EPL has grown tremendously in fan base since the rise of the big four. The MLB has also grown since the rise of Yankee/Red Sox dominance. I’m not sure exactly what the reason is but even though many fans vocally support parity the numbers show that fans love inequality. (I have the source for this argument somewhere it’s also in the book “Soccernomics”)

        Fifth: Strikes and lockouts suck and can devastate a league. the NHL may never recover from it’s lockout and baseball was floundering for years after it’s strike. A salary cap is guaranteed to create labor disputes on a regular basis which will eventually lead to a strike or lockout.

        The idea of a percentage gross cap however doesn’t sound that bad. But a flat cap would be a disaster.

        • Martin says:

          Edit for the above: I’m an American from Boston so I realize I need to explain some things: Celtics = Basketball team, Patriots = American Football team, Bruins = Hockey team, Red Sox = Baseball team. Baseball is the only 1st division league without a salary cap in america.

          As an American perhaps the greatest thing to me about football is the way it’s run in Europe and I would really really hate to see that change. I love the EPL for these reasons:

          No cap.

          League standing matters and there are no playoffs. The league cup and the FA cup are playoffs but they are justly considered less important than league standing.

          Every team plays every team exactly twice and there are no conferences or divisions which means there are no strength of schedule advantages.

          Relegation is a beautiful thing. In america if a team sucks they just pack it in for the rest of the season or sell of players to make a profit knowing that the bottom of the table doesn’t mean anything. Games with these teams are not worth watching. In the EPL however the worst teams have to fight for their lives. This means most games are Intersting because at least one of the participants are either fighting relegation, fighting for european entry, or fighting for the title. There are eight places (this year) out of 20 located on BOTH ends of the table that matter and matter a lot.

          In addition good football is a beautiful thing to watch. I didn’t realize how awesome it is until hi-def TV’s came around though.

  4. Kimo C. says:

    The cap is pretty much one of the key factors holding back the MLS. The teams don’t generate the funds because their hands are tied and they’re unable to attract the big names on the world scale.

    I’m totally against the cap. It’s a rich mans sport–let the million-billionaires spend and manage their toys however they see fit.

  5. David says:

    One option could be a “luxury tax”- you calculate the total revenue that the League makes (TV deals, sponsorships, etc.), determine a reasonable % to use on salaries (most of the US sports leagues with salary caps are in the 60% range), and once a team is a certain amount over that number, they have to pay a 100% tax on all salaries over that amount. All the tax collected would go to the teams who didn’t go over the cap (on a sliding scale- I’d give a bigger share to the newly promoted teams), with the proviso that all monies collected MUST be used on salaries.

    Example: Last year the approximate revenue of the League was £2,000,000,000. 60% of that is £1,200,000,000- £60,000,000 per team. Let’s say the Luxury tax threshold is 10% over that, which would be £66,000,000. Chelsea spent £137,000,000 last year on salaries, so that would mean they would have to pay £71,000,000 in luxury tax to the common pool.

    No salary cap system will be a perfect fit- there are accounting tricks that can be pulled. Here’s an article on one example…

    http://sports.espn.go.com/nhl/columns/story?columnist=burnside_scott&id=5450709

  6. Steven says:

    A wage cap would not work unless literally every other league in the world instituted the same policy. It would be insane for a player to stay in England when they could earn much more playing in Italy, Spain, etc. It would kill English football.

    A much better idea for league equality would be for teams to improve the way they develop players, and not be so quick to sell them. Villa have sold off Milner and Barry in the past two years, all in the name of making a quick profit. If teams truly want to succeed, they’ll quit selling players when their values reach their zenith.

    None of this, by the way, is ever going to happen.

    • Nick says:

      Well, not “literally every other league”. I’m against a salary cap, but I don’t think there’s much chance of Houston Dynamo outbidding Manchester United for Chicarrito. If the biggest, richest leagues all agreed to a salary cap, that would do the trick.

      That being said, I’m against salary caps, unless the owners agree to cap their revenues.

  7. brian says:

    It would work if they created a super league consisting of the best teams of Europe. The price caps could be based off a percentage of the projected revenue of all the clubs that season, like the NFL.

    The best players will remain in the league and still get a fair wage, while ensuring competition beatween the teams.

    The teams would make lots more money since they don’t have to outspend each other to win the chmpionship and a real European league would be a cash generating machine.

    • Michael Fahey says:

      biran,
      There already is a European super league: The Champions League. Why eliminate the various national leagues, which have years of tradition and many ardent supporters?

  8. Chris McQuade says:

    The title shouldn’t be ‘in the premier league’ rather ‘UEFA’ as any unilateral wage cap would be struck down by the EU when any of the top paid players bring the case.

  9. tony says:

    A cap just wouldn’t work legally or competitively. I think all you can do is to ensure that wages don’t exceed a certain % of income and if you do that the in balances still exist and it, in fact, becomes harder for a small team to get success because a new backer cannot come in and pump money in.

    • Albert says:

      A cap can work legally. The premier league is a private competition. You can employ any footballer you want, but you have to play by the rules. Rugby has a wage cap in place, and it doesn’t look like clubs are trying to overturn that in the courts.

      I do think that a wage cap can only work with revenue sharing and salary floor. Each team should be sort of guaranteed enough money to pay the salary floor. Teams would also be forced to have break clauses in player’s contracts to cater for the eventuality that they might be relegated. The cap could be set at such a level that teams that bring in more money are able to spend a bit more than others, but smaller teams could also attract good players and realistically challenge for the title. For example, if you set the wage cap at £90m, only about 6-7 or so teams would hit that cap, whilst other smaller teams could be closer to the cap, though not reaching it.

      I think transfer fees also need to be capped somewhat.

  10. Decker says:

    Good luck instituting a cap where there’s relegation and promotion of clubs within league tiers. The NFL cap works because teams don’t drop out of the league when they finish at the bottom. Small market teams spend just as much as the large markets. The system works for football only. It won’t work in soccer where the structure is different with multiple leagues, subdivisions, Champions League, and worldwide transfer market.

    A club generating revenue from their 60,000+ seat stadium should not be forced to spend a limited amount on player wages because a small club in a 10,000 stadium can’t compete in salary. The big club owners earned the right pay marque players their supporters come out to see and buy their merchandise. These clubs keep the league afloat.

    Ultimately it’s a business. Owners have their financial plans they stick by, which determine what they’re willing to spend.

    • Albert says:

      Football is a community. Manchester United does not play alone. Football as a product does not exist without competition, and good competition makes the product better. If smaller teams rebelled and set up their own league, the so called big teams would find themselves without a product and without the so called big revenues that they claim to deserve.

  11. It is one of those ideas like socialism that are a great idea but are nearby impossible to put into practice. I love the idea of a wage cap so that clubs can compete on a more even footing (F1 has taken huge strides in trying to take car costs out of the equation) but then again if I were a footballer (I’m 33 so there’s still hope…) I would be a little annoyed if people were telling me how much I should earn. I definitely prefer the percentage of income the club generates as being the total wage cap and David’s idea was rather good, but in my opinion that should just be common sense. It’s difficult when part of the league try and run the clubs as a business, others are run as playthings for the rich and most end up in a horrible hybrid of the two.

    Perhaps it isn’t so much the wage cap that needs to be looked at but rather a more fan based club ownership system like that of Germany. The fans would then be able to have a greater say and for example decide the trade off between ticket prices and amount of money available for transfers or wages.

  12. Vious says:

    I personally love the idea as the NFL model has caught on with me

    It inspires parity across the board yet the best teams USUALLY can find a way to succeed.

  13. Fernando says:

    The whole salary cap issue is a non-starter for many reasons.

    The simplest way to at least give the perception that a financial balance is trying to be achieved is to slice the SKY TV dollars equally amongst all 20 Premier League teams.

    It would be ideal for the teams to share all their revenue, we all know the red tape involved is too much. Asking an organization to give up money is never easy but the Premier League could really make a forward thinking decision with this move.

  14. Cameron says:

    Let the clubs go broke, once their are less clubs available the remaining clubs will be able to generate a higher revenue share. I think England has an over-saturation of clubs.

  15. Hemelboy says:

    Unless a salary cap is set high as to be meaningless it will drive good players to other leagues, which is a self defeating outcome.

    Salary caps work in the US because the leagues are unquestioningly the best (and highest paying) of any league in their sport in the world (although a better KHL may eventually challenge the NHL on those grounds). The EPL does not have that status.

    US leagues are also run as monopolies screwing players (especially younger players) out of their rightful share of the league’s earnings in favour of the (already billionaire in many cases) owners. I also am not aware of any league that operates promotion and relegation, except between two well-matched divisions, while maintaining a salary cap. It would just increase the temptation for the Premier League to permanently cut itself off from the remainder of the league, with the attendant franchising and demanding payouts from city councils for stadia or other bribes that would follow.

    There is punishment for teams that overspend, it’s called bankruptcy and relegation and happened to Leeds United in the not too distant past and Liverpool now. The system works – why break it?

  16. Hemelboy says:

    @David
    You missed the end of the Kovalchuk saga, the passing of a revised contract with a revision to the rules so any future contract if the same type would be against them. Any rules can be gamed.
    http://www.cbc.ca/sports/hockey/story/2010/09/03/sp-nhl-nhlpa-kovalchuk-approved.html
    Still, Mike Green beat the crap out of Kovalchuk in a 7-2 Washington Capitals victory last week, so let’s hope the Devils get a taste of karma this season.

  17. Aly says:

    I don’t see this happening.

    Keep this in mind, if you want to play american football, then guess what….there is but one place to play, which is of course America. There’s nothing remotely resembling a rival league for players who want more lucrative contracts. That highlights the difference between the NFL and football….the NFL, while massively popular and the top sport in America, is an afterthought for much of the rest of the world. Meanwhile, football is truly the global game not just in terms of the following it has but also for the many truly professional and top leagues where it is played.

    If England puts a cap on player wages, then why would top class english players, and foreigners who play in England currently for that matter…….stay in the premier league and accept lower wages when they can get far more lucrative deals at great clubs elsewhere such as in La Liga, Serie A, the Bundesliga, French Ligue 1?

    For a wage cap to work in football, it would have to be implemented not just in England but elsewhere which is something I find highly unlikely.

  18. mosdef says:

    Don’t think it would work, I’m pretty sure the euro zone laws will look at it as a restraint of some sort, ie to trade, workers right.
    2) Real Madrid,any time you add more laws you give the advantage to teams like Madrid,Inter and probably even Barca, remember when Madrid used to nick Inter players or when Inter realised quick that Madrid would not only pay their players salary but also their taxes, what did Inter do, they started signing players to larger contracts where essentially they also paid their taxes,also see Yaya Toure’s contract for example, its supposed to go up substantially to make up for the increase in taxes
    3)The rules would be easy to skirt around, ie create loopholes where for example a player can be a club share holder or just have a long list of companies pay the players wages for endorsements that you may never notice, hope you are aware of how Valencia are avoiding fines on the construction site of their new stadium by having 4 workers show up every day,so when site inspectors show up, they are technically working and its not an abandoned construction site.
    4)Cultural differences,Rivarlies, Politics means that all is not equal, these clubs are spheres of regional influence,proxies of power,they can never play by the same rules

  19. Gareth says:

    Makes me sick the wages they’re on and how football has suffered because of it. I just don’t enjoy it as much as I used too. All I see is a bunch of over priced prima donnas who offer nothing more than celebrity gossip. They have no desire for the game anymore, all they care about is money. I bet if you where to ask them to drop to 10 grand a week (which is still alot of money) they would tell you to go jump because it’s not the game they’re interested in ultimately. We do need the wage cap because I wanna watch footballers who want to play for the love of the game and not the big wage package and celebrity lifestyle. I want to see players fighting to win matches like they used too becaused they cared about the result and the fans. We the fans are the ones who pay them so it’s time they started paying back. But not just wage caps, we also need transfer caps too to stop the big guns from monopolizing the transfer window, like city, real madrid and chelsea. Remember how great the premier league was in the 90′s ? when teams actually competed for it though sheer guts and determination. Well if you have enough money now you can buy it ! Ask chelsea and city. City may actually win something now because they can buy it, chelsea already have. Honour it seems, is a thing of the past.

    • roy says:

      Perhaps true players are mercenaries now. However, the standard of the Premier League in the 90s was not better. PL teams never really challenged for the Champions League then.

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