FRIDAY FEATURE: Would salary caps help the Premier League?

Salary caps can be defined as an agreement or rule that places a limit on the amount of money that a sporting club can spend on player salaries. British football does not currently have a salary cap, but with money becoming an increasingly more vital part in the game, one could argue that it is time for the cap to be brought in. We already see salary caps in many sports, with the USA seemingly showing the world the rest of the way, but it is starting to be seen in more and more places, with Europe also introducing salary caps into some sports. Despite there being many years of talk of salary caps in British football, it has not yet been brought in, and some will feel, unless the rest of the world also does the same, it may never be seen in the Barclays Premier League or Football Leagues.

Salary caps have many advantages and disadvantages, especially in sport. Sometimes an advantage for one can also work out as a disadvantage for another, for example a low salary cap may help the likes of Norwich City to achieve whereas it would hinder a team such as Chelsea. This is because the budget of Norwich is already low so the salary cap would not affect them as much as it would a team with a high budget at the moment (Chelsea). However if the salary cap was set high, it would not affect either of these teams, obviously dependant on how high. There have been many talks about salary caps being introduced within England and Wigan chairman, Dave Whelan, agrees. He told the Telegraph in May 2011: “Throughout all four leagues we have got to impose a salary scheme where each league or each club pay so much in wages.”

Any rule change that is to take place in English football would have to be agreed by no fewer than 14 of the 20 Premier League teams, however it is not clear whether a sufficient amount of clubs would favour any salary caps. With the next influx of money from television companies due to come in next year, it is felt that any move towards capping a players wages would have to be done sooner rather than later. Television does play a major role in a clubs finances and with only eight teams making a profit in the 2010-11 season it seems even television money isn’t always enough. In this season clubs were given £2.3 billion between them yet still managed to lose £361 million. The money they got was partly the result of the first year of the Premier League’s 2010-13 TV deals, in which a record £1.5bn was earned from overseas broadcasters.

This shows that even when clubs get a large helping financial hand from other outlets, it is not always enough to stop them making losses. A salary cap would. In the season previously mentioned, £1.5bn was spent on wages by the 20 clubs. This is a large amount and it would be assumed that the rest of the money was spent on wages, training facilities, player travel and other such material. If there was a wage cap at say £50,000 a player, per year (more than enough for anybody to survive on), at 20 players per squad, this would work out at £1 million spent by each club on wages each year. Obviously for all 20 clubs, it works out as a net total of £20 million, a massive saving on the £1.5 billion.

If there was a salary cap, it is ridiculous to think it would be this low, after all would Wayne Rooney take a loss from being on £250k a week to £50k a year? Of course not. But a simple calculation like that just shows how easy it would be for a salary cap to help finances in football. Perhaps though, it is players rather than clubs that will never accept a salary cap.

As mentioned previously, any salary cap that would come in would have to be high. It would be likely then, that some clubs would not be able to budget towards the top end of the cap (I doubt a team such as Hull would ever pay a player £120k a week, an example of a potential high salary cap). This would mean that players would still wish to be transferred to a club that can pay them much higher wages and that can afford the higher budget. As far back as 2009, Arsenal chief executive Ivan Gazidis has been in favour of a salary cap, telling the Guardian:

“Clubs have a duty to provide more stability in our business models and some form of wage restraint is one element worth looking at. There are many different ways in which it could work.”

This could also bring us on to another debate, which is why stop at salary caps? It would be quite simple to also introduce transfer caps. When the highest transfer fee Wigan Athletic, who only last season were relegated, have paid is £7 million, for Charles N’Zogbia, and the highest Chelsea have paid is £50 million for Fernando Torres, it shows that something isn’t right with the game. The reason Wigan’s is so much lower than Chelsea’s is because they can’t afford it, but if there was a cap, all teams would have a more equal chance of buying a player. As it is, only clubs with high budgets can buy the ‘top’ players, meaning English football as a whole tends to suffer.

The suffering comes when there is always the same teams that rise to the top of the league. Yes, admittedly, the same thing tends to happen all over Europe, but in Germany, we are seeing more competitive leagues. The Bundesliga is now the most profitable league in the world, despite the television income being a modest €594m compared with the Premier League’s lucrative return of €1.94bn. This is because of a self imposed cap meaning Bundesliga have restrained themselves to a mere £683m on salaries. The wages to revenue ratio in the league is 51%, compared to the Premier League’s of 67%.

However, English sports economist Stefan Szymanski, based in Germany told ESPN: “The reason it (Bundesliga) isn’t the largest league, in spite of having the largest and wealthiest population that is fanatical about football, is that they are restrained by the rules they impose on themselves. There’s definitely a penalty in limiting your financial opportunities in the way that they do.” One would arguably disagree with this, as although Germany have not had a Champions League winner since Bayern Munich in 2001, the past two seasons has seen the resurgence of German football with Munich, and Borussia Dortmund proving their worth.

The German national team have also progressed in the last few major competitions. Some may argue that this is to do with the fact that no team can increase their player wages so a player will stay at the club they are with, thus meaning the players are more used to playing as a team. A recent Germany national squad saw the players come from seven different teams, while a recent England squad had players from 13 different clubs. Anybody will be able to tell you that the fewer clubs involved, the better the squad will be, as a team.

Some would argue though that what England are suffering on a national scale, they are improving at club level. 13 different clubs being used in the national squad surely shows strength in depth while many critics claim that the Premier League is the best, in terms of entertainment at least, in the world. The Premier League is the most-watched football league in the world, broadcast in 212 territories to 643 million homes, proving it to be the most popular. Many big football names also have ambitions to play in England one day, adding more fuel to the fire that is the Barclays Premier League.

Despite English football appearing to be the most entertaining, when in Europe, English teams seem to be faltering. Chelsea won the Champions League in 2012, but many seem to think that to be down to luck rather than skill. When Manchester City were Premier League holders, they were knocked out at the group stage. This is why salary caps would need to be introduced throughout the whole of the continent, if not the whole of the world.

Having a salary cap just in England would mean that the teams still lack the ability that the Spanish, German and Italian teams have and also lack the money. No matter what anybody says, money talks and most players would rather be paid an extra £50,000 a week and play their football in another country. This would be likely to happen if a salary cap is only introduced in England. A problem one immediately thinks of here, brings us back to the first point. Teams across Europe, all have differing wage budgets so a salary cap would have to be agreed on, something which would arguably take a long period of time.

Not only would all countries/leagues have to agree on a set salary cap, one feels they would also have to agree on a transfer cap, for reasons stated above. There should not be able to be a ‘battle’ between Southampton, Atletico Madrid and Bayern Munich over one player. With a salary cap, they would all be able to pay the same maximum wages, but Southampton would not be able to fight against the transfer fee. If the maximum fee was set at say £8 million, all clubs would be involved and it would then be down to contract negotiations and where the said player wants to play football.

Yes, a salary and transfer cap may lead to less exciting football between the ‘bigger’ teams, but it should make for more entertaining football in other matches. All teams would be able to budget the same so the quality of players should be very similar. You would not have the likes of Manchester City going out to buy all the best players, leaving the likes of Aston Villa to struggle with the lesser quality players. This would be because both teams would have the same money to battle it out for players. Yes, one might say, City are the more successful club so a player would always pick them to be transferred to, but with caps on money, it would leave the question: How long will the likes of Chelsea and Manchester City, who have arguably bought their way to success, stay at the top?

A salary and transfer cap would also help those teams that have strong youth systems. The youth systems would help build a team, without having to pay for players. Wages would also not be originally as high as the player would have been at the club from a young age, and tend not to ask for huge pay demands. Again, this makes the whole competition a lot fairer, and could result in the national team progressing further as well.

Will we see a salary cap in British football in the near future? One would say the answer is no, however if it is introduced relatively soon, it would only bring positives in my eyes. Of course, it’s never going to happen unless it is introduced across the continent but the sooner it does, the sooner we will have clubs not reaching huge levels of debt. You would also see a more level playing field, which ultimately, is what every fan wants.