Financial fair play and the prospect of a salary cap

Date: 19th May 2014

Over the last few days, the Russian Football Union has been discussing plans to put salary caps in place within their top division – the Premier League. The National Football League – which is the equivalent of the Scottish Championship – have put strict salary caps in place on their clubs, which means that all staff can’t earn more than $8,370 per month, excluding bonuses, which the club are free to hand out without facing a repercussions from the government.

The idea was spoken about by the Honorary President of the Russian Football Union, Vyacheslav Koloskov, who is behind plans to implement financial fair play at a domestic level, as well as a European one.

He firmly believes that this will help the long-term sustainability of every club in the country. Currently, Russian clubs have to have at least four Russian footballers on the field of play at any one time, which means that if a club has many foreign players and few Russian ones, these native players can demand higher wages to keep the club within the rules set out by the League. However, Koloskov is in favour of having the rules relaxed, avoiding a scenario where less than average players who demand extremely high wages could be forced into having lower wages in order for their club to adhere to league criteria.

However, many clubs are expected to oppose the idea; worried that it could restrict their future signings due to the wage cap imposed on a domestic level.

What about in Scotland? Currently, the majority of Scottish clubs need not worry about wage caps possibly infringing their transfer outlays. However, what should be noted is the recent decline in Scottish club finances.

Many clubs in Scotland – across all levels – are walking a financial tightrope, some of which have paid the ultimate price. Could a wage cap relative to the level of that club be of benefit to that side? Looking at Rangers, it is well documented how staff throughout the club are receiving a vast amount of money – something a soon to be Championship side simply cannot afford. If a wage cap was in place throughout the SPFL, surely the club would be better off for it?

Although there is a lot of debate around the level of money being spent at the club, and where it is being lost, it is certain that Rangers is not making enough money to ensure stability. If a wage cap was in place at the Ibrox, then losses could be kept to a minimum, something which is of obvious benefit to the club. Although Rangers is a high profile case, there are a number of smaller clubs which could also benefit from this. Right through the divisions in Scotland, clubs are being swallowed up by their wages and running costs. It is very difficult for clubs to reduce their running costs as many of them are out with their own control, but the wages are something that clubs can control.

If clubs had lower wages, which were put in place by their own governing body, then the clubs would have to make these changes which would be of clear benefit to that club. Granted, the clubs would have to vote to make this happen – and it would face the same problems as in Russia – but it does seem to be of clear benefit. However, the prospect of losing several of the club’s star players would be a key deterrent. No club wants to lose its best players. This could have repercussions in terms of ticket sales, shirt sales and future transfer activity.

 

The concept of sustainability in Scottish Football is a tricky one. Look at Formula One; the sport looks to maximise the skill of the driver and the aerodynamics of the car; they all have the same sized engine which effectively makes it a level playing field. If clubs were given level budgets at which they all had to adhere to, then the playing field would be much more even and the league would be much more competitive. Celtic are dominating the Premiership because they have the money to do so. Give the other clubs in the division a similar budget and the chances of Celtic continuing their dominance becomes far less overwhelming.

This idea is similar to the draft system in the National Football League. The team which finishes with the worst regular season record get the first pick of players available to draft for the following season. It’s a similar programme in the National Hockey League; the teams which have the worst regular season record are given the best possible chance for a first pick in the draft, whilst the Stanley Cup winners are sent to the back of the line.

Even in Basketball, in the NBA, the players have taken wage cuts to try and make the sport a more level playing field. Although many argue that the NBA is no less dominated by a few teams than it was ten years ago, at least it can be seen that the authorities, franchises and even the players were willing to make changes to try and make the sport more exciting for fans.

I’m not looking for football to become like American sports – filled with franchises, synonymous with commercialism as much as the sport – but owners, players and the authorities need to try and implement change. Celtic are dominating the Scottish Premiership, usually two or three sides dominate the English Premier League, Bayern Munich and Borussia Dortmund dominate German football and it’s usually Real Madrid and Barcelona fighting it out in Spain; Atletico Madrid have been an exception this season, but will it continue? Even if it does, the top leagues are always going to be won by only a few sides.

In the English Premier League Manchester United hold the record number of wins – 20. Rangers hold the record in Scotland which is more than double that. Football doesn’t need to revert to pre-television-dominated days of old, but perhaps taking lessons from history on the very essence of competitive sport could benefit the modern game.

The possibilities – however good and bad – go on and on. On one hand, a wage cap could be good for the long term sustainability of the club; ensuring financial responsibility and a sensible way of running an organisation. However, this would invariably come at the cost of quality. If players can earn more money moving elsewhere – to countries uninhibited by such restrictions – then the league could see a mass exodus of its top talents.

Whatever happens when it comes down to finances in football is always a touchy subject; there is always a negative with a positive. Although there are no plans in place to move this concept to Scotland, it is just another thing that the SPFL board can consider. It’s time that football caught up with the rest of world sport, strides are being made into technology and it is only natural that finances and competitiveness are to follow.

 

Words – Blair Condie  @bcondie92

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