Salary Cap? | Page 4 | Vital Football

Salary Cap?

Gaz_Imp

Vital Football Hero
#61
Something needs to change.

I am not convinced a straight forward salary cap is all that’s needed though. Let’s say we have 3 clubs:

Accrington: Revenue £2 million
Lincoln: Revenue £4 million
Sunderland: £8 million

Made those revenue figures up for those clubs, but you get the idea. Let’s say a wage cap is introduced of £3.5 million.

Your mid sized league 1 club, us in the case, could probably go close to that cap and be able to survive.

But your smaller club, in this case Accrington, well they can’t afford it. But actually, I fear what a cap could do here is give them an incentive to gamble. ‘Big clubs can only spend £3.5 million, we’ve got a good manager we believe in, let’s borrow £1.5 million, match the big clubs and go for it!’ - therefore I think there should be a set cap plus a maximum % of revenue that can be spent, whichever is less. For example, if we said a cap £3.5 million or 80% of revenue, whichever is least, this would stop this potential problem. In that case Accrington could not spend more than £1.6 million.

But then what about Sunderland in this example? They are being penalised for generating a lot of revenue which is there’s to spend really. Perhaps we should just say clubs can spend 80% of revenue? But we have seen how this can be manipulated, for example through owners paying in sponsorship money. So again, I think something different should be done here. Again, not using exact figures, more informed people would need to decide on actual figures, but I think something like this would work this way: ‘A wage cap of £3.5 million plus 25% of revenue over £5 million’. This means clubs who generate plenty of revenue see some sort of reward in their playing budget. But if owners want to try and find loopholes to put revenue in to their club, well they can, but would need to put in a million to generate 250K in the playing budget.

So overall a wage cap with two provisions:
1. A maximum of 80% of revenue can only be spent where this is less than the wage cap.
2. Where a clubs revenue exceeds a certain amount they can spend a certain percentage of this in addition to the wage cap.

There is then still a lot to think about in terms of relegated clubs!
 

hulloutpost

Vital 1st Team Regular
#62
Something needs to change.

I am not convinced a straight forward salary cap is all that’s needed though. Let’s say we have 3 clubs:

Accrington: Revenue £2 million
Lincoln: Revenue £4 million
Sunderland: £8 million

Made those revenue figures up for those clubs, but you get the idea. Let’s say a wage cap is introduced of £3.5 million.

Your mid sized league 1 club, us in the case, could probably go close to that cap and be able to survive.

But your smaller club, in this case Accrington, well they can’t afford it. But actually, I fear what a cap could do here is give them an incentive to gamble. ‘Big clubs can only spend £3.5 million, we’ve got a good manager we believe in, let’s borrow £1.5 million, match the big clubs and go for it!’ - therefore I think there should be a set cap plus a maximum % of revenue that can be spent, whichever is less. For example, if we said a cap £3.5 million or 80% of revenue, whichever is least, this would stop this potential problem. In that case Accrington could not spend more than £1.6 million.

But then what about Sunderland in this example? They are being penalised for generating a lot of revenue which is there’s to spend really. Perhaps we should just say clubs can spend 80% of revenue? But we have seen how this can be manipulated, for example through owners paying in sponsorship money. So again, I think something different should be done here. Again, not using exact figures, more informed people would need to decide on actual figures, but I think something like this would work this way: ‘A wage cap of £3.5 million plus 25% of revenue over £5 million’. This means clubs who generate plenty of revenue see some sort of reward in their playing budget. But if owners want to try and find loopholes to put revenue in to their club, well they can, but would need to put in a million to generate 250K in the playing budget.

So overall a wage cap with two provisions:
1. A maximum of 80% of revenue can only be spent where this is less than the wage cap.
2. Where a clubs revenue exceeds a certain amount they can spend a certain percentage of this in addition to the wage cap.

There is then still a lot to think about in terms of relegated clubs!
You make some valid points especially in theory. Unfortunately in practice don't we already have something based around percentage income that some clubs get around by for example dubious ground sales. I believe the drive towards a fixed amount whilst far from ideal may be more about about making it transparent, fixed criteria and easier to police.
 

Gaz_Imp

Vital Football Hero
#63
You make some valid points especially in theory. Unfortunately in practice don't we already have something based around percentage income that some clubs get around by for example dubious ground sales. I believe the drive towards a fixed amount whilst far from ideal may be more about about making it transparent, fixed criteria and easier to police.
We do. And as a result clubs do thing like sell their ground to generate income as can use most this. Difference with my solution is however they get income in, can only use a low percentage of it so takes away the incentive. Got to put a lot in for a little. But those clubs who generate revenue legitimately see some sort of reward.
 

Scotimp

Vital Football Legend
#64
So what do the likes of Sunderland do with the huge surplus income generated?

If they have an average home gate of 30,000 paying, say, £12 per head, that generates around £360,000 per game; that equates to £8.3 million per season from gate money alone, without taking sponsorship and other commercial income into account. A salary cap of £2.5 million could leave them with an extra £7.5 million in income that they are unable to use. That renders 75% of their support base financially irrelevant.

There has to be a link to income, surely? I cannot see any way this can work otherwise.
 

Sincilbanks

Vital 1st Team Regular
#65
So what do the likes of Sunderland do with the huge surplus income generated?

If they have an average home gate of 30,000 paying, say, £12 per head, that generates around £360,000 per game; that equates to £8.3 million per season from gate money alone, without taking sponsorship and other commercial income into account. A salary cap of £2.5 million could leave them with an extra £7.5 million in income that they are unable to use. That renders 75% of their support base financially irrelevant.

There has to be a link to income, surely? I cannot see any way this can work otherwise.
Perhaps give it back to the supporters in the form of cheaper tickets and sundries purchased in the ground?
 

hulloutpost

Vital 1st Team Regular
#66
Perhaps give it back to the supporters in the form of cheaper tickets and sundries purchased in the ground?
War chest for when they eventually need it in The Championship. And any club going up to The Championship will need it. Think of it as a x years investment bond rather than an instant access savings account where x = number of seasons to go up.

Deliberate or otherwise a salary cap under those circumstances could actually make the bigger clubs financially healthier and more stable as their reward for success on a level playing field. In fact the longer they take achieving promotion the more competitive they would potentially be upon returning to The Championship.

It may seem counter intuitive but actually favours sustainability over boom and bust. If they're not good enough to get promoted on a level playing field that's tough but at least the club is not put at risk by panicking and splashing silly money....which in turn artificially raises wages in L1.......and round and round we would go again.
 

Huntsward

Vital Reserves Team
#67
I assume those with a surplus would spend it on improving infrastructure, facilities, better managers and coaching staff, sports science, scouting, youth and academies, etc. Perhaps some form of work around would involve providing better accommodation for players, education for their kids, happy wife happy life. This could make the difference in the quality of player willing to sign whilst maintaining a level playing field with regards wages. I don’t see a problem with that. The richer clubs should be entitled to make use of their financial advantage whilst ensuring that all clubs are able to compete and most importantly survive within their means, which is surely the main objective of introducing a salary cap.
 

Davidimp

Vital Football Legend
#68
They could use it to off their debts, instead of living beyond their means or build up a war chest if they do get promoted.
Think 2.5 million is a bit low for league one.
 

gijsbert_bos

Vital Football Hero
#70
Does the propsoed salary cap just cover wages? If so I imagine anyone with a surplus could use it to pay transfer fees. There's also the grey area alluded to above of "signing-on fees"/image rights/bonuses etc that I'm sure would be manipulated to circumvent the cap.
 

brisimp

Vital Squad Member
#71
I think there should be a salary cap in all 4 divsions however the prem will never go with it. As for relegation say from championship to lge 1 there should be no parachute at all otherwise the playing field becomes unlevel. Clubs will have to write clauses into players contracts stating relegation affects it. Extra money from tickets .merchandise etc could be filtered into better facilities or academies etc otherwise bury wigan and bolton wont be the last to struggle
 

Luke Imp

Alert Team
Staff member
#73
Does the propsoed salary cap just cover wages? If so I imagine anyone with a surplus could use it to pay transfer fees. There's also the grey area alluded to above of "signing-on fees"/image rights/bonuses etc that I'm sure would be manipulated to circumvent the cap.
Don't think it involves bonuses because they're a difficult one to account for but includes agent fees and signing on fees are included I believe.
 

Scotimp

Vital Football Legend
#74
Taking the Sunderland example further, let's apply the same process to other clubs using £12 per head (which is an arbitrary figure based upon the £11 per head Lincoln quoted a few years ago). Remember this is league games only - any income from cup ties and commercial activities would be in addition.

The lowest average attendance in L1 last season was 2,862 at Accrington. The figure of £12 per head gives gate income of £790,000 per season. That is well below the proposed salary cap, so would a club of that size be encouraged to live beyond its means in order to compete? Probably not Accrington because of its ownership, but lots of others would be tempted.

So the best supported club in League One (Sunderland) generates £8.3 million in gate receipts and the worst supported club (Accrington) £790,000 using our £12 per head assumption.

At what point does a club's average attendance equate to the proposed £2.5 million cap?

The answer is 9,057. Lincoln' average attendance in L1 last season was 8,985 - just 72 below that proposed cap. So would Lincoln be affected by the imposition of that cap? We don't know, because we have no idea what Lincoln's salary expenditure was last season, but their average attendance generates £2.48 million at £12 per head.

There were 17 clubs in L1 last season with lower average attendances than Lincoln, so does that suggest that only 5 clubs would be adversely affected by a salary cap set at £2.5 million? If so, what is the point? In my experience, it is not the likes of Ipswich and Sunderland in danger of folding - it is the smaller clubs with average income well below that £2.5 million.

On that basis, it would appear that a salary cap of £2.5 million basically means 'business as usual' for the majority of clubs. That may indicate why there are only a few dissenting voices in L1 - probably Sunderland, Ipswich and Portsmouth because they would be the only clubs affected by it.
 

Luke Imp

Alert Team
Staff member
#75
Also worth noting that, I think and stand to be corrected, all money raised via player sales and cup run money can be used on top of that so it's only a hard cap in term of attendances.

Does it work out similar in L2 and their £1.5m, @Scotimp?
 

Scotimp

Vital Football Legend
#76
Also worth noting that, I think and stand to be corrected, all money raised via player sales and cup run money can be used on top of that so it's only a hard cap in term of attendances.

Does it work out similar in L2 and their £1.5m, @Scotimp?
The £1.5 million cap equates to an average crowd of 5,434 using the same £12 per head average; only three clubs in L2 last season exceeded that average by any appreciable amount - Bradford (14,255), Plymouth (10,338) and Swindon (7,913), and two of those have been promoted to L1. Bolton will obviously exceed it next season.

The caveat is, that this is speculation based on guesstimates. Clubs have other sources of income, of course, but they also have a lot more to pay for than just player wages and financial packages: staff wages, upkeep of stadium and training ground, travel and accommodation, transfer and agent fees, reserving money for developments in infrastructure, and much more. But it is hard to see how these salary caps can have much of an effect on the majority of clubs in the lower divisions. Perhaps someone in the know can give us a more accurate assessment?
 

buckielugger

Vital 1st Team Regular
#79
Any club that cant stay in a £2.5m salary cap should simply be relegated. Average of £100k for 25 players. Seems very easy to me. EFL need to grow a pair and take charge.
It actually seems a very high figure to me.
£100k average is pretty big!!
And with such a named figure, then all players are going to expect that amount as being the going rate. In current environment though, reality may need to be quite a lot lower.

Is it also intended for there to be a turnover limit, say 50% of turnover max for a squad of 20 players? (With this £2.5 million as a max for those clubs with large turnovers like Sunderland?)