A salary cap in football, is it possible ?

European football is well criticized because of its financial situation and his lack of competitiveness. Indeed, some are very competitive but very indebted or have some funds from Abu Dhabi or Qatar. So, this situation create a split between big clubs and small clubs.

In NBA, there are different financial rules. First of all, there is a salary cap, so the NBA franchises can't spend more than $ 58 million for all the players on the roster. This rule was made to balance the competitiveness of the league and also to prevent indebted teams. However, there is a flexibility about the salary cap, it is called Luxury tax. Indeed, a team can overtake the salary cap until $25 million more but has to pay 1$ more for 1$ spent above the salary cap. 

In European football, there is no salary cap, so, a club can buy a player if it has some funds or can purchase more loans. In that case, we can see big clubs like Real Madrid, FC Barcelona or clubs with rich investors like Manchester City or Paris Saint Germain buying the best players. 

Furthermore, the best players want to earn much more money. Actually, they want to earn more money than the others. In NBA, it's a little bit different. The NBA players want more money but there is a cap of $14 million for a maximum contract. This is huge, but this is a limit for not enlarge the gap between the clubs. 

A salary cap seems to be a good choice for European football. But it will be very difficult to implement this. First because there is a too huge financial differences between a Manchester United and a Evian Thonon Gaillard in Ligue 1. There is also too much clubs in Europe, so the competitiveness will be too much sprinkled to be good. 

However, we can fix a limit, even if it will be not so efficient because of the two factors mentioned before. Indeed, we can't let the wages of football players get bigger and bigger during a  financial crisis that make the clubs more indebted. 

If you are interested, you can watch the Forbes list of worlds highest paid athletes.

Should Manchester City be expelled by UEFA?

Cheif executive of Borussia Dortmund, Hans Joachim Watzke, believes that football clubs such as Manchester City should be expelled by UEFA.

As German teams have a control on their budgets and are owned 51% by club supporters, they see their rival clubs having an advantage by having financing from wealthy individuals.

The example is Manchester City, they have benefitted from their wealthy owner Sheikh Mansour bin Zayed Al Nahyan. They have been able to have a 350 million pound stadium and get a sponsor throught contacts of the owner.

UEFA want to have the financial fair play, Watzke see’s deals like this to go against it and believes that this is unfair advantage. He has informed authorities that huge spending as such must be stopped. UEFA must avoid this ‘back door funding’.

Financial fair play will not work if money is being pumped into a club with sponsorship from 5 companies the owner controls.

Watzke said that he would ‘not even welcome’ Sheikh Mansour bin Zayed Al Nahyan “What if the sheikh, as shown by Malaga, lost interest?”

Passing the wage bill onto the fans

Since the formation of the English premier league in 1992, there has been a huge increase in the amount of money in club football in the UK and all over europe. Transfer fees have become astronomical, Tv rights and sponsor deals are worth billions of pounds, and player wages are spiralling out of control, causing clubs to rack up massive amounts of debt. There are various reasons for the increasing amounts of money in our beautiful game, but it is mainly due to the increase in foreign investors, and the globalisation of the EPL through pay TV and multimedia technologies as an entertainment business. But let me show you some figures to highlight this growth in investment over the last 20 years: 

In 1992 total revenue of all clubs combined was £170 Million, now in 2012 it is £2.3 Billion. *
Despite all this money, the total debt of EPL clubs at the end of last season was £2.4 Billion. 

In the first Premier League season the average player wage was £75,000 per year*, rising to £1.16 million last season. *

Prior to the start of the first Premier League season in 1992, Alan Shearer became the first British player to command a transfer fee of more than £3 million.* But in 2009, a new record transfer fee was set at £80 million when Cristiano Ronaldo was sold from  manchester united to real madrid. *

Some of these figures are mind boggling, but what is even more worrying is that clubs seem to be passing the brunt of their increasing wage bills onto their loyal fans. The average cost of the cheapest adult ticket in the top four divisions of English football has risen by 11.7% - more than five times the rate of inflation*. Clubs are taking their fans for granted because they know they are not like normal customers, no matter whether their team wins or looses, they will still come back because they are loyal to their team. However, these ridiculously high prices are driving out the traditional football fan, the working class fan, who can no longer afford to regularly attend games. Buying a season ticket to watch your team has now become a very expensive investment, and fans have to think twice before purchase, especially in such bleak economic times. This has meant a decline in the traditional working class fan and an increase in a more wealthy fan, solely looking for the best entertainment. This does not only have consequences on the fans, but also on the teams. We have seen an increasing trend in football that players will not usually stay loyal to their teams if they could be earning a higher salary else where, and therefore many teams struggle to retain their best players once their talent is realised by bigger clubs. This means the richer clubs can buy the best players and pay the highest wages, making it very difficult for smaller clubs to compete. This widens the gap between a few elite teams and the rest of the league, and also between the top division and the lower tiers of league football. And without any proper regulation or system in place, this problem will only continue to get worse, and diminish the high level of competitiveness in the game, and drive the real fan from the game all together. And who wants to watch the big clubs become an elite league of their own anyway? Surely a more competitive league where anyone can win provides for better entertainment? 

So, what can be done to prevent this? Well the introduction of UFEA's financial fair play system (FFP) is intended to force clubs to balance their football related expenditure over a three year period, starting in 2011/12 to 2014/15 season.* In theory this is meant to prevent rich clubs spending more than they earn in the search for success. Punishments for breaking the FFP rules include being banned from european competitions, fines, and transfer embargoes, amongst others. However, only a club’s outgoings in transfers will be counted over income, so this does not address the issue of high wages. One of the major criticisms of FFP is the possibility of solidifying the so-called big clubs which generate the largest revenue and profits, as well as attract the best sponsorship and TV deals, and can consequently spend more money on transfers.* This could potentially make it even harder for slightly lesser teams to break into the top four and gain champions league football. Therefore this does not solve the problem, but in fact could make it worse, meaning more has to be done by footballs governing bodies to create a balanced and level playing field. I strongly believe that a salary cap should be introduced, which will help prevent clubs from racking up huge mountains of debt due to ever increasing wages, that ultimately are passed onto the fans. A salary cap is a league sanctioned payroll limit that restricts the amount of money teams can spend on player salaries. Salary caps bring a wide variety of benefits to leagues that implement them. Firstly, it can increase the competition in a league by preventing the wealthiest teams from obtaining all the most talented players that require the highest salaries, therefore placing teams with a smaller payroll at more of an advantage. A greater level of competition across the league could increase television audiences and attendance rates, meaning a greater income across the league, and also meaning that clubs can lower ticket prices to make them more affordable due to other increased revenue streams. The salary cap system will also create wiser spending habits by clubs, and increase youth development and scouting, which is desperately needed in the premier league also. Therefore I believe that a sound salary cap system along with a newly modified Financial Fair Play system, as well as the incorporation of the ownership model in the Bundesliga,  could help football solve many of its current issues, and create a much more competitive, balanced, and fair playing field, as well as bring back some of the support that has been lost over the past few years. It may also rid our game of wealthy tycoons that come to win status and silverware by simply throwing large sums of money into a team, and then leaving them financially crippled once they are finished playing their own game, leaving no thought to the social impact they leave on the communities that support these clubs. However these regulations need to be implemented now before it is too late, and we loose what was once a beautiful game forever!

References: 

1. Game changer: 20 years of the premier league. BBC Radio (British Broadcasting Corporation). 4th September 2012.
2. Game changer: 20 years of the premier league. BBC Radio (British Broadcasting Corporation). 4th September 2012.
3. "Forty factors fuelling football inflation". The Guardian. 31 July 2003. Retrieved 8 August 2006.
4. Official figures show top-flight wages are now FIVE times more than in Championship, Daily Mail online, By ALEX MILLER , 29 October 2011
5. "From £250,000 to £29.1m". The Observer. 5 March 2006. Retrieved 2 December 2007.
6. "Man Utd accept £80m Ronaldo bid". BBC Sport (British Broadcasting Corporation). 12 June 2009. Retrieved 12 June 2009.
7. Price of Football: Survey of 166 British clubs revealed. BBC Sport (British Broadcasting Corporation) 18th October 2012.
8. BBC News Website 7 September 2011
9. Conn, David (25 May 2011). "Just how fair is Michel Platini's financial fair-play ruling?". The Guardian. Retrieved 2012-05-28.

Bundesliga

The german football league, the Bundesliga, has one of the best and most successful financial structures in all of Europe's major football leagues. It has the lowest debt to revenue ratio out of the 5 major leagues, with 39.8%. Compare that too Spanish clubs - 249%, English clubs - 129%, Italian clubs - 156%*. It also has the lowest total wage to revenue ratio, at 53%, compared to 70% in the premier league and 71% in Frances La Ligue 1*.The German Bundesliga also receives significantly less in television income than the premier league, 594 million euros compared to 1.94 billion euros*.

Their financial stability is due to several key reasons, but first and foremost, the 50+1 rule. This states that members of a club (the fans) must retain at least 51% ownership, so preventing any single entity taking control. There are exceptions to the 50+1 rule, yet even these appear couched in common sense. Bayer Leverkusen and Wolfsburg are two. If a company is supporting a football club for more than 20 years then it can acquire the majority*. The idea is that a company has by then proved to fans and the league that they take their engagement in the Bundesliga seriously, that it's not just a fancy toy or part-time cash injection that could change from one day to another. The other key reason is that to play in the Bundesliga, you must be granted a licence, and only clubs that have a sustainable financial structure with manageable amounts of debt will be issued a licence. This is the reason why Bundesliga clubs keep their wage bills so low compared to clubs in other leagues. The Bundesliga's careful financial management has clearly had a great impact on the competitiveness of its football, with three different league champions in the three seasons between 2008 and 2011. So why do Europe's other major leagues not introduce similar systems to that of the Bundesliga if they are achieving such high levels of competitiveness and financial stability?

As well as all this success, German football is extremely fan oriented and will always hold the core value of its fans first. They value their fan culture extremely highly, and because of this they have the cheapest ticket prices and the highest average attendances (41,904) in Europe's 5 major leagues, as well as a very loud support base at the majority of their games. Football fans in Germany are also treated like normal people, instead of complete savages that must be supervised at all times. They have cheap beer, cheap travel to games, AND safe standing terraces! All this combined has created a great football culture in germany because it is always favourable to its fans. Unfortunately this is something that can only be dreamed of in the premier league. 

This is the result of a league where the fans are at the heart of the sport: 

References: 

1. Total Football Forums / Bundesliga, April 20th 2012
2. German soccer beats England on profits. Financial times, May 31st 2012.
3. How the Bundesliga puts the Premier League to shame, The Guardian, 11 April 2012
4. How the Bundesliga puts the Premier League to shame, The Guardian, 11 April 2012

The controversery Ibrahimovic

The transfer of Zlatan Ibrahimovic from AC. Milan to Paris Saint Germain made a big controversery in France because of the big amount of the transfer fee and the net salary of Zlatan. 

With the Qatary Nasser Al-Khelaïfi buying the PSG, the club of Paris has the ambition to be one of the great team in Europe. So, they have to buy great football players as Thiago Silva for an amont of 46M€ Zlatan Ibrahimovic for 20M€. Milan declared that the Swedish football player will be paid 14M€ per year.

This big amount will placed Zlatan Ibrahimovic at the top more paied players behind Samuel Eto'o (20M€) and Didier Drogba (15M€). However PSG declared that this amount is not real. The real wage of Zlatan is 9M€ per year.

All this money make the same polemic every time a big transfert is made. But in this time of crisis, the controversery became bigger. Furthermore, with the project of the French president François Hollande to implement a 75% tax for the wages above 1M€, PSG has to pay more. 18M€ for a net salary of 9M. 

However, the polemic has no reason to be made. Indeed, the transfert of Ibrahimovic is good for France because PSG will spend 9M as an annual fee. Furthermore the arrival of Ibrahimovic will increase the competitiveness in the Ligue 1 and bring a new image in Europe. 

Welcome to New age Football !

If you are here, it's because you are passionate with Football. Because, we are ! All of the three authors are interesting in football and will talk about it.

In this blog, we will talk about the modern football. We will compare with old school football and will discuss about all the issues in the modern sport. The comparison with other sports may be interesting so we will do this as well.

I hope you will enjoy this blog, and see you soon.