What is meant by a salary cap in Sport and would this ever be used in English football?

Economic Downturn

Ever since the beginning of the economic downturn many industries have come under the financial microscope with the sporting industry of football proving no exception. With many clubs going into administration – even some in the Premier League – the amount of money being spent and consequently lost is an issue which is fast becoming big news.

There are many proposed schemes being discussed such as the UEFA proposals for financial fitness and one which always seems to recur, in fact was last mentioned in 2008 as a possible solution, is that of a salary cap.

Salary Cap

What is a salary cap?

A salary cap sets the maximum amount that a sports star plying his trade in a particular sport can be paid. This limit is set by the governing body of the sport requiring all teams to sign up to the regulations. Once teams have signed up they will only be able to pay their players a specific maximum amount. Consequently teams will have to provide their financial figures to the governing body to rule out any possible wrongdoing.

Do any sports currently operate a salary cap?

The use of a salary cap can be seen in England in both forms of Rugby – Union and League – and is a key component of all sports in America and also Australia.

What is the idea behind the salary cap?

The main reasons behind fixing a salary cap on a particular sport are as follows:

  • To ensure the financial fitness of the entities taking part in that sport

  • To guarantee the supposed fairness of the competition.

Financial Fitness

As clubs will only be able to pay players a certain amount of money in wages then their maximum expenditure will be cut thus reducing the losses that they can potentially make. One of the current problems surrounding English football is that when wealthy businessmen are in ownership of some of the clubs they will not only pay huge amounts of transfer fees to other clubs to secure the services of a player they will also use vast amounts of money in wages as a bargaining tool to tempt those players to sign for their club over other clubs.  As many of the bigger clubs employ the services of many high profile stars the current wage bills are astronomical meaning that they are unable to recoup this back in the money the club makes causing the club to make consistent losses.

Fairness of the competition

Another argument often put in favour of introducing a salary cap is that it will increase the fairness of the competition, for example the current position is that some clubs have huge sums of money meaning they can tempt any player to play for them. As other clubs do not have this much money they simply cannot compete in the transfer market. If the ability of the big clubs to tempt these players was removed as they cannot pay the huge wages then it may enable more clubs to bid for the services of the payers making the league in theory more competitive.

Does this work in practice?

The MLS (Major League Soccer) in America runs a salary cap system whereby all players are on a certain wage but then clubs also have the ability to breach the salary cap in relation to two players – this is the reason why LA Galaxy were able to sign David Beckham.

Would a salary cap work in English football?

A salary cap may work in theory to ensure the fairness of competition and to reduce the possibility of football clubs going bust but there are a number of reasons why this would not work in English football. They are as follows:

  • The discrepancy between English football and the rest of Europe

  • The structure of football is already set

  • Problem of policing the system

  • Possibility of the league becoming less exciting

The discrepancy between English football and the rest of Europe

If English football teams were unable to pay the huge amounts of money in wages but the equivalent teams in the other leagues around Europe were able to do this then many of the big stars (English included) would choose to ply their trade in the other leagues in Europe where they can still play top-flight football and earn the money which they feel they deserve. As a consequence the big name players would not be attracted to come and play in English football which would certainly be to the detriment of the English league. Furthermore the English clubs would become less competitive when it came to European competitions such as the UEFA Champions League.

The structure of football is already set

Football in England has been operating in the same way for years. The system may have been changed slightly since the introduction of the FA Premier League and the huge sums of money that coupled with the introduction of Sky has brought in but the basic structure remains the same. Furthermore, the FA Premier League has been operating for 16 years and to change it now would be extremely difficult. Consequently, if it was introduced in one league it would have to have a knock-on effect across all leagues in Europe and arguably the world. This form of new regulation is something which FIFA (the World Governing Body of football) would be reluctant to do.

Problem of policing the system

There are so many players plying their trade as footballers in the UK that it would be extremely difficult to police the system. All clubs operating in the FA Premier League have large squads and that is not even mentioning the leagues below them. Players as young as 15 are playing first team football and many elder players are playing on much later – as a consequence of this there is a huge amount of players. Policing the salaries of all of these players would take huge time and effort.

Furthermore in many sports that operate salary caps teams will always look at ways to breach the rules. This can be seen extremely recently in the sport of rugby in Australia with a high profile team found to be in breach of the rules. This investigation has taken huge time and effort and has also thrown the current season into disarray.

The possibility of the league becoming less exciting

This may seem a strange proposition since only 4 teams have won the FA Premier League in its 16 year history with it always being dominated by the same teams. However, if we look towards the MLS we can see a league which is not exciting with players moving there at the end of their career to become the one who is above the salary cap. As a consequence the young exciting players will move abroad. Currently in the FA Premier League we see one of the most exciting leagues in world football – the imposition of a salary cap may well have the effect of changing that.