Topic: Salary Cap...?

[Steve C]

It appears that the G14, that is the elite clubs who are increasingly in control of the club game, above UEFA, are considering reversing Jmmy Hill's 1961 abolition of the maximum wage. The idea is Italian led, but Liverpool and Mancs are heavily involved as the English members of the G14.

Article from the Guardianhere

Vivek Chaudhary
Tuesday March 5, 2002
The Guardian

... European football will take its first step towards salary capping next week as a consensus grows among the top clubs that wages must be reduced in the face of an uncertain economic future, particularly an anticipated decline in television revenue.

The G14 group of leading clubs met in Barcelona two weeks ago and agreed in principle to a salary cap because most of their annual turnover disappears on players' wages that they can no longer afford. Manchester United, a G14 member, last week agreed a new contract with their captain Roy Keane that will pay him £100,000 a week for the next four years and are about to agree a similarly expensive deal with David Beckham.

Uefa's executive committee is next week expected to agree to a licensing system which would require all clubs taking part in its competitions to meet certain criteria regarding their stadiums, youth development policies and issues relating to good governance. Clubs that do not meet the criteria will not be granted a licence and will consequently be ineligible for the Champions League or Uefa Cup.

The system will come into force in 2004 but for Europe's leading clubs, headed by Milan, Lazio and Barcelona, it could eventually be extended to incorporate salary capping.

Lazio's president Sergio Cragnotti yesterday said he would propose a salary cap for the Serie A club this month. "I will bring before the Lazio board a proposal that they will discuss. The objective is to contain the costs of salaries," he said. "I believe that there will be some news because I believe that the world of football must be restructured. We are now in a situation where revenues are being dried up by costs."

The clubs have not worked out what form salary capping would take but there is a growing feeling that a unified system is required so that all European leagues are equally restricted. The only way this could be achieved is by administering it through the club licensing system.

Over 80% of most top clubs' turnover is spent on wages. At some that figure is higher and it is conceivable that many clubs will go bankrupt if this continues.

Uefa's spokesman Mike Lee said: "It is clear that a growing number of clubs in Europe are facing major financial challenges and are interested in some sort of system to contain the overall level of salaries. While we are sympathetic to the idea, there needs to be a great deal of commitment from the clubs themselves if there is to be any move in this direction.

"Many clubs that have been taking part in our working party on the club licensing system feel that it gives us a framework to help address some of the issues over salary capping. You could never have salary capping without establishing some basic rules of financing that are adhered to by all the clubs in Europe."

Italian clubs in particular, who started the trend of extremely high wages almost a decade ago after they had agreed lucrative television contracts, are leading the drive towards salary capping. They are supported by German and Spanish clubs.

Serie A's 18 clubs finished last season with a combined operating loss of about £700m. Lazio recently admitted they were two months behind in paying players' salaries and claimed the delay was because television companies had been late in paying them. Fiorentina, once one of the highest payers in Italy, are near bankruptcy with debts of about £100m.

Bundesliga clubs are finding themselves in difficulties after the financial problems of the marketing company Kirch, which owns the television rights to German league football. In Spain, the expected windfall from pay-per-view deals has not come about, leaving many clubs with less money than expected.

Simon Banks, a football finance analyst who has investigated the issue of salary capping, said: "The only way it can work is through Uefa's licensing system. Clubs will always try to outbid each other and pay higher salaries to get the best players. Salary capping has to be one of the conditions of the licence and has to be monitored by Uefa.

"The irony is that in the past it has always been the smaller clubs asking for salary capping. This time it is the bigger clubs, and if they want they will get it." ...  

[Ben S]

Its a good idea but had to be a world wide thing obviously.

A good rate? 50k a year sounds good to me

[Eli_B (aka Badland Red)]

Its a good idea but had to be a world wide thing obviously.

A good rate? 50k a year sounds good to me

After reading the post by Steve_C with the article from the Guardian. It does not suprise me that European and world football will eventually have a salary cap. And if that's true then the G14 will follow the route of North American sports which have had the salary cap system for years.

Also in the next few yrs it could be the beginning of the end for star players demanding wages of £90,000+ a week.......

P.S. quite an interesting figure of 50k a year for football players. Which league will that figure be aimed at?. Premiership or Nationwide league?

[cain]

I am on more than that !!!

[Ben S]

50k a year is enough to live on. The money grabbing c*nts that are the players should be happy enough to be doing a job that they love.

[Steve C]

Its the market that dictates it...if a club thinks its a sound investment to pay it, then why blame the players and call them 'greedy c*nts'?

The whole point of removing the maximum wage in the first place was because the players were the only ones not making money out of the game. That wasnt fair.

The balance may have swung the other way now, but the clubs are still making profit. Real Madrid claim to have already made a profit on Figo and Zidane through merchandising, so on 50k a year, it would be the players who suffered again,a nd the clubs who would be laughing all the way to the bank.

Of course, there's one constant that wont change, salary cap or no salary cap, and that is at the end of the day, ITS THE FANS WHO SUFFER.

[laddo]

some good points raised, im in favour of a salary cap, if it was brought in i think players would have more clauses such as bonuses and from merchandising etc..

not sure abt the 50k a year! Id be more than happy with that as my wage but im not sure about some players - theyd be taking less home in a year than what they take home in a week at the mo! It makes you  :  

[Ben S]

players squabling over 20k a week are greedy c*nts. Just because the market dictates they can get it doesnt mean they have to take it and moan like spoilt bastards(beckham anyone?)

[Paul]

I am more than supportive of a salary cap. At the end of the day, the players dont actually need more than 50k a week to live on. Lower wage bills could mean lower ticket prices for the fans, and hence bigger attendances.

Football is said to be on a popularity decline in some countries (Italy for example). If reducing ticket prices helps to keep the popularity up and can be acheieved at the expense of players wages, then it is a great idea.

[Steve C]

players squabling over 20k a week are greedy c*nts. Just because the market dictates they can get it doesnt mean they have to take it and moan like spoilt bastards(beckham anyone?)

Would you turn down money if offered it?

And why should Manc PLC benefit from Beckham's mass popularity, when Beckham doesnt? That doesnt seem fair to me..why shouldnt a player negotiate the best deal that he can get for himself?

I would, and I would guess that you would, especially if it were at the expense of Manc PLC's bank balance.

[laddo]

I agree steve, thats not to say I agree with players demanding all that money but like you say If i were in there position id take as much as i could get - especially if it was the Mancs money  

Football is said to be on a popularity decline in some countries (Italy for example).

probably why italian clubs are in favour of a cap? Hopefully it will have the effect of reduced ticket prices and will see the rise in genuine football fans being able to get to matches.

One question, will it be effective in all divisions or just the prem? Like will there be say a 50k one for prem, 20k for div 1, 15k for div 2 etc etc.... ??

[Steve C]

I havnt stated whether i am in favour of a salary cap or not yet. Just seeing it from the players perspective, rather than the PLC clubs, who would be the ones to benefit from a cap.

I'll say it again, ITS THE FANS WHO WILL CONTINUE TO LOSE OUT.

[Ben S]

Would you turn down money if offered it?

No, but he isnt offered it on a plate he moans for it.

And why should Manc PLC benefit from Beckham's mass popularity, when Beckham doesnt? That doesnt seem fair to me..why shouldnt a player negotiate the best deal that he can get for himself?

They shouldnt, the fans should with lower gate prices, lower merchendise costs, lower price of pies in the ground etc.

[Steve C]

At the risk of repeating myself...i have said twice that the fans are the ones who will suffer, and that that wont change. Of course I would love ticket prices etc to come down, but in the age of the PLC cant see it happening.

And, not having been present during Beckham's salary negotiations, I wouldnt know about his moaning..

[John Barnes, Anchorman]

No doubt I'm not the only one on these forums who thinks the economic system which allows the market to entirely dictate wages is a major fuck-up, but why should footballers not cash in?  Everyone else goes for the job with the highest wages possible within reason.  Why should they be different?

It's a sad situation, but it's not their fault.  It runs a lot deeper than that.

[John Barnes, Anchorman]

and it's a lovely idea to reduce the prices, but who's in a position to do it?  The clubs?  They would understandably rather give it to the players because they would leave otherwise, where as we stupid fuckers (the supporters) KEEP PAYING the admission fees.  When it stops being profitable they'll stop charging them.  Simple as that.  Market forces are a bastard, but they are deeply ingrained in England now.  It's a bit late to complain.

[MichaelA]

I can't see a salary cap actually working. Even with reduced revenues from the next sale of TV rights, there will still be millions of pounds in the game; millions of pounds at stake for PLC's, and in an open market there will always be someone prepared to pay over the odds. I do not see any agreement on salaries being honoured.

The question  of what constitutes a "salary" is equivalent to asking the length of a piece of string. Personally, when I see the figures quoted for the Beckhams of this world I take them with a shovel of salt. If salaries were capped at £50k a week, clubs would add other incentives such as bonuses, licensing rights, club shares etc to ensure the loyalty of key players, and to attract new talent.

The net effect of a salary cap would be negligible; the power in the game would be retained by the players able to command the big "salary",and by those clubs able to offer that "salary".

In any case, the PFA would not stand for it, claiming restraint of trade, etc and would take a case to the EU, and would probably win.

Michael

[Steve C]

Is right BenC. Need to address the problems with the Western liberal-democratic, free-market system if we want things to change.

[4pool]

First let me explain that here in America where "salary caps" are part of football and basketball..the two leagues are apples and oranges. American Football limits the "team" to a certain amount for salaries..how each club spends it is their business. Basketball includes percentages of profits and tv revenue before divying up amoungst the players as negotiated by the players union.

The end result is ever escalating player salaries, within the cap. And at NO TIME have ticket prices gone down since the cap has been installed. Revenue is revenue lads. Ticket prices won't go down.

Depending on the league and the teams lawyers, there are still ways of paying a player more or delaying payment of salaries after the player leaves or retires. So a club could ( if 50 thousand a week is the max) offer that to a player long past his prime. Such multiyear contracts are drawn up. In the end the club is paying all or part of the 50 grand after the player leaves because the new club doesn't rate the player the same way. So club finances are still stretched.

For instance, Gary McAllister. Say he's on 30 grand a week. He's getting older but when he originally signs, LFC offer him a 4 year contract. Two years in he's to slow and LFC want to sell him or he just retires. He still is paid his 30 grand a week. If sold maybe his new club picks up 10 grand worth and LFC end up paying the 20 grand balance. The net result is that LFC have money on the books for someone not playing. Take this into account with the big squads of today. Even with a cap, teams will sell and move players and their overall salary allocation continue to rise.

That's what has happend here in the USA and that is why still a lot of clubs are not solvent.

If TV revenue goes down instead of up when the tv contracts are renegotiated, how do the clubs pay the salaries they are committed to? :-) Every club is in the same boat and can't buy the players a club may want to offload because their wage bill it also to high. Ticket price increase...
Ticket pricing will not go down unless you go watch Sunday league..

Hope this helps the understanding of what's about to come. The more things change, the more they stay the same...

[Steve C]

You could also get round it by paying X £50 k a week, and offering him a £5 million signing fee, and other such incentives...

[4pool]

Yeah, they do the signing bonus bit in the States. Still there's only so much money in the pot. Once you pay, say Owen, a 5 mil bonus. Then what do you do when Anelka comes asking? Suppose they tell Nic he's worth 1 mil? His agent says Fiorentina will give him 2 mil to sign...it's still the same game.

The trick is to not morgage the future for the present.
Ask Leeds..

[Tom_Smith]

I totally agree with 50k a year that is enough and then the lowere ticket prices will make football an even bigger sport but it is not just the players the agents need a good slap too and next would be transfers because paying £40m for a human to play football is fucking unbelievable

[Ben S]

And tax the clubs to fuck to pay for the NHS....

[saph]

ben s - i like it!

i think a cap would be good as players can then not ask for even more silly amounts of money. however the financial differnce between premiership players and clubs and those in lower leagues will still be present whilst money rules the game.

how about a salary cap, a signing fee cap AND reduced ticket prices?

saph (rose tinted glasses 'r' us!)

[John Barnes, Anchorman]

It's just market forces.

Why should footballers be the exception?  I'm all for taxing the rich more bla bla socialist bla, but not ONLY footballers.  WE pay their wages, we make the extortionate amounts paid possible.

[Steve_M]

I can't see how a salary cap would be introduced officially. It would take only one player to go to the European Court of Human Rights (similar to what Bosman did) claiming restraint of trade.

Players with smart agents could screw the whole system. Try this one. Remember how Hollywood tied actors to 7 year contracts years ago, so that the actors had no choice in the movies they worked on and couldn't work for other companies unless they had permission. Now they are free agents. They freelance and choose which films they want to work on or audition for. So why shouldn't they hire themselves out to the highest bidders on one year contracts. Do you think Real Madrid, AC Milan, etc will really ignore the top players and sign cheaper, less talented players? Of course not.

What about clubs like Juventus? They may agree in principle to a salary cap but what if, as an example, they agree to only pay Trezeguet £50,000 a week, but FIAT which bankrolls the club also pay him £50,000 a week? Legally you can't do anything about it, if FIAT says he is also employed by them to do PR work.

Like anything else, certain clubs will bend the rules.

They would need to be part of an organisation that had some way of regulating this, so that if you were found guilty of violating the agreement, you could be suspended from the competition for, say three years.

Possibly the best thing would be if the clubs had an informal agreement not to spend huge amounts on wages which would be in their own best interests, so that they couldn't be held to ransom by players.

With regard to ticket prices.....they will never come down, unless the actual attendances drop so far that clubs are desperate to attract crowds.