salary capping.

[Mr Popkins]

League to extend salary cap


The plan is to stop clubs from getting into financial problems
The Football League has outlined plans to extend its salary-cap scheme - which starts in Division Three this season - to the First and Second Division inside two years.
All 24 sides in the Third Division, who kick off the new term on Saturday, have signed up to the "salary cost management protocol".

They have pledged to limit player wages to 60% of their turnover - and total salary costs to 75% of their revenue.

Any club failing to meet these targets will be penalised by having to return their £33,000 grant from the Football Foundation, to be dished out once they submit budget forecasts later this month.

Around a dozen Division Two sides and six in the First Division are expected to join the scheme voluntarily and will not have to forfeit their grants - £51,000 for a Second Division club and £330,000 for a Division One team - if their wage bill is too high.

But that will soon change, with fines and even points deductions mooted as penalties once the scheme is applied to the entire Football League.

We want to extend the scheme as quickly as possible and are looking at the Second Division starting next year and the First the year after

Andy Williams
Football League
The Football League will host talks about expanding the scheme in the spring. Division Two outfits are pencilled in to join in August next year and Division One sides in summer 2005.



does anyone know if brighton are voluntarily joining this sceme?

 

[Tooting Gull]

On first view, seems like more of an internal cost guideline than a salary cap, someone like Hull this season will still be able to spend loads more on players than a Lincoln, as they have much higher revenues.

 

[beorhthelm]

sounds like a pretty fair way to impose some sort of control - which is definatly needed if some clubs are to survive. If you can attract large crowds, then you should be able to put on a decent squad for your fans.

However the problem i can see is that small clubs stay small in a catch 22 sort of way.

But do we want to keep a league of 72 local clubs or end up with a couple of divisions of large ones

 

[dunno]

There are ways around salary capping - houses, cars and even being employed by 'other companies'. This happened a lot in the 50's - in the days before the maximum wage was abolished - top players were 'employed' by other companies owned by directors of the football club and for doing very little in return - they could double their salary!

 

[Guinness Boy]

I posted about salary caps when I was in Oz as it's how their Rugby League & AFL works. In principle it's a fine idea - makes for an entertaining league each season. The difference is that the Aussie leagues are closed shops. All sorts of dodgy backhanders do go on but last season the Bulldogs got caught out and were handed a points deduction that sent them from top to bottom of the league.

This seems more like an attempt to put the sound financial contraints that DK has already done for BHA on all clubs.

It's true, with European games this can never expand further but it's a shame in a way, idealistically it's a way to save clubs and have competition based on sport rather than money.

 

[Pavilionaire]

The problem with a salary cap linked to turnover is that it will force small clubs to offload their big stars to stay within the cap. This could mean the difference between getting promoted or standing still, and rules out the opportunity of speculating to accumulate.

Witness Bobby Zamora and the Albion. We increased his wages significantly in the hope that his goals would fire us to Div 1, and thereby give the club an opportunity to move up another level. This is what actually transpired, but if the salary cap had been in place could we have done this?...

 

[Brovion]

I remember your post Guiness Boy. I also remember not reading it properly and trying to argue against a point you hadn't made!

I'm still broadly against it. I think it's an excellent set of guidelines, but I wouldn't want to see it enforced. Imagine being docked points because one of your costs went a few pounds over-budget!

If football is going to continue in its present form, i.e. as a collection of individual clubs as opposed to a set of centrally-controlled franchises, then these clubs must be free to run themselves as they see fit - within legal guidlines and within the competitive rules of the League.

The only change I would like to see is if clubs overspend and end up in Administration then they should be expelled from the League and not allowed to cobble together a rescue package. The knowledge that they can probably 'get away with it' is what lets clubs overspend in the first place.

 

[Lord Bracknell]

Fine in principle.

But it could lead to a further polarization between the rich clubs and the poor ones.

And what about the Albion?

Our short-term turnover is severely limited by the capacity at Withdean. When we escape to Falmer and the higher income that comes with a bigger stadium, I guess we'll be OK. But I'd hate to see us under pressure to offload players next season, just because the Second Division rules put a cap on salaries.

Incidentally, here's a calculation:-

Assume turnover = income from ticket sales + £500,000 from other sources (TV, etc).

7000 seats @ £20 a game = £140,000 a game

25 games a season @ £140,000 a game = £3.5 million a season

Add on the £500,000.

Turnover = £4 million a season

60 per cent available for players' wages = £2.4 million

Assuming a squad of 24, this is £100,000 each per year (or just over £1,900 per player per week, on average).

15 per cent goes on other salaries (manager, coaching staff, admin staff, etc). That's £600,000.

Out of the remaining £1 million, we have to pay Ecovert and the bus companies for the use of the stadium and the park and ride running costs (say £800,000 a year). Which leaves about £200,000 a year for other running costs, office rent, travel to away games, expansion plans, debt repayment and general development.

This is not a business that anyone would get into if they wanted to make a tidy profit. In fact, it's not a business that a bank would lend money to.

Unless, of course, there was a cunning plan.

Bring on Falmer!

 

[sully]

Our position shows exactly why the plan is flawed.

If we owned our ground, the 60% of turnover would be a restriction. However, as we have to pay a fortune to a third party in order to use it, it's probably more than we can afford.

It can't and won't work. There are lots of ways of making your turnover look higher than it really is and will just lead to fraud.