Premier League Should Emulate Major League Baseball’s Wage Structure

Premier League chief executive Richard Scudamore rejected the notion of a salary cap, suggested by UEFA.

“If you say 60% or 50% can be capped on wages, what it really does is absolutely lock in the natural order,” he told BBC Radio Five’s Sportsweek programme yesterday. “It would help the big clubs far more than the small clubs. If you have a small club who have got a benefactor, or who have got other ways of raising money or ways of funding, at least it gives them a chance to compete.”

Incredibly, the Premier League has a valid criticism.  Such a cap, tied to club revenue, would keep clubs within their means, rather than deficit spending themselves into massive debt.  But, it’s also implicitly unfair, as 60 percent of Man United’s turnover is far greater than 60 percent of Hull City.  It would calcify the existing order.

One alternative is a firm, legitimate salary cap for all clubs.  It would create parity, as it did in the NFL.  But, for such a system to be implemented, it would have to come at the expense of relegation.  Man United is not going to agree to a system that would see them at risk of relegation and financial ruin.

The NFL regulation may be too radical, but the Premier League should consider tow facets of the current system in place in Major League Baseball.

The first is the luxury tax.  There is no salary cap in American baseball, but there is a luxury tax – a set amount for payroll.  If a team spends above the luxury tax amount, they pay into a common fund, distributed to less fortunate clubs.

So, for instance, the Premier League could set the luxury tax threshold for payroll at £100m per year.  Chelsea’s payroll is £148.5m.  The difference is £48.5m.  Chelsea could pay a tax on the difference of 50 percent, so £24.25m.  That money would then be redistributed to the bottom clubs.  The tax could also increase for repeat offenders who repeatedly overspend.

The luxury tax would curb spending, but in a way palatable for clubs.  It would not stunt a big club’s ambition or enforce socialistic parity.  It would merely increase the cost of anticompetitive extravagance, to the benefit of other clubs.  Manchester United can still flex its financial muscle, but other clubs have a better chance to compete.

Another baseball innovation that the Premier League should consider is the apprenticeship period.

Baseball players are not natural free agents at the beginning of their careers.  Major League clubs hold their restricted rights for their first six seasons of Major League service.  The club dictates the player’s salary within league standards, for the first three years of the contract.

During the second three years, the player and club go to an arbitrator to agree on a salary.  A player may also sign an extended contract, often at below market value, forgoing another year of free agency in exchange for more money.

This could be key to breaking the Premier League oligarchy.

With young talent so cheap, teams would feel less pressure to sell young players.  Everton could keep Wayne Rooney for a few years, rather than selling him to Manchester United.

A low budget club with a smartly developed brood of youngsters and well-bought veterans could compete for the Premier League title.

It’s not a radical adjustment of power.  Generally, teams that spend well will still do well.  The Boston Red Sox and New York Yankees are still favorites to win the American League every season.

However, occasionally, there is a season such as 2008.  The Tampa Bay Rays went to the World Series with the second lowest payroll in MLB.  The three highest paying teams – the New York Yankees, the New York Mets and the Detroit Tigers – all missed the playoffs.

Similarly, Manchester United and Liverpool would challenge for the title every year.  But, every so often, a club such as Middlesbrough would rise to knock them from the pedestal.

The Premier League doesn’t need a massive NFL-style overhaul.  A softer touch in the manner of MLB may be just right.

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