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Would A Salary Cap Combat Debt?

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FA chairman David Treisman mentioned introducing a salary cap, to combat the “very tangible dangers” of the current financial climate.  Premier League clubs have a combined £3 billion of debt.  But, is wage expenditure really the most prominent issue?

Yes, players make an absurd amount of money for wearing short pants and playing a kid’s game.  However, wages are not driving debt.

In the 2007-8 season, Kaka was the highest paid player in the world, earning just over £7m in salary per year.  John Terry, the highest paid player in England that season, earned roughly £6.5m.  It’s not a small sum, but, in an environment where a middling player, such as David Bentley, commands a £17m transfer fee, it’s not a particularly significant one.

Moreover, if compared to American sports, football salaries are, if anything, undervalued compared to the revenue earned by Premier League clubs.
There are far more significant debt factors.

American purchases of Manchester United and Liverpool, funded by credit, saddled those clubs with hundreds of millions of debt.  Arsenal assumed hundreds of millions of debt with the construction of the Emirates stadium.  Chelsea spend profligately, funded by an oil-rich sugar daddy.

A salary cap might earn the FA brownie points with embittered fans (and owners), but it’s not a sensible mechanism to combat debt.

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3 Comments

3 Comments

  1. AtlantaPompey

    October 9, 2008 at 10:18 am

    The Bundesliga requires a business plan and a budget and punishes clubs that do not stick to that budget. They require revenue to match expenditures and that clubs remain viable businesses. They do not put limits on expenses so long as revenue matches the projected expenses. This is a sensible way to run a business. Why can't all sports teams run themselves like that?

  2. Weston

    October 9, 2008 at 9:53 am

    A better way to keep debt under control would be to require a certain amount of available capital before the FA approves the sale of a club. It seems the trend is moving towards the big clubs being bought only with teh helps of monstrous bank loans, and we all know how well that is going at the moment…

  3. 50

    October 9, 2008 at 4:14 am

    a transfer fee cap is needed much more so than a salary cap.

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