Championship clubs are considering a salary cap to help prevent spiralling financial losses as the economy heads into a recession. Most clubs in the division are losing significant money because they pay what one chairman described as "unsustainable" wages on players they hope will win them promotion to the Premier League.
Without the cushion of the multimillion-pound television deal enjoyed by the 20 Premier League clubs, Championship clubs are reporting tougher economic conditions, with away gates beginning to suffer and sponsorships and corporate hospitality harder to secure.
Adam Pearson, the chairman of football at Derby County, warned that football is inadequately prepared for the economic downturn. "The game is close to meltdown at all levels," he said. "Club boards are under pressure to gain success and that leads to them paying ridiculous wages. It cannot carry on or it will end in disaster. There is a growing feeling now that some sort of wage cap has to come in."
A salary cap for the Championship has been discussed theoretically ever since the 2002 collapse of ITV Digital, which plunged many Football League clubs into financial difficulties. In the reforms which followed, League Two clubs did agree in 2003-04 to limit their spending on wages to 60% of their turnover. That has lasted ever since but League One clubs jettisoned the same system after just a single season, 2004-05.
The Football League's chairman, Lord Mawhinney, is a confirmed advocate of a salary cap in all three divisions, particularly the Championship where wage inflation, trickling down from the Premier League, is more acute and several big clubs are making annual losses of £4m-5m. In a series of meetings of Championship clubs during the past year Mawhinney is understood to have pressed the case for a salary cap and called for votes, but failed to gain the support of a majority.
Now many club chairmen and chief executives are reporting that the mood has changed, prompted by alarm at the effect the recession is having. Many clubs are preparing to seek sponsorship for next season, a task one senior club source said is proving "difficult" because it is "grim out there". Second-tier sponsors especially, who do not have their name on team shirts but pay to advertise or sponsor matches or stands, tend to be more local businesses than the big companies attracted by the Premier League, and many of those are struggling so have less money to spend on football.
Mawhinney, who is understood to have lined up a series of meetings with club owners to press his case, will, however, have to persuade some who accept that wages must come down, but do not favour a league-wide restriction.
Rupert Lowe, Southampton's chairman, said: "The British economy is in dire trouble and it is seriously going to affect football. Players' wages are at unsustainable levels in a recession, and our ticket sales, corporate hospitality and sponsorship are down. Boards should keep wages below 60% of turnover, but I have never been in favour of a cap."
Informed sources say that as clubs assess the scale of the downturn, more than half are now in favour of introducing a salary cap. Some are debating the level it should be placed at, with a feeling growing that 60% is too high and arguing that the limit should be set at 50% of turnover.
Ray Ranson, the Coventry City chairman, said he believes football will be relatively resilient in the recession because people traditionally remain loyal to their clubs in difficult economic times, but clubs should nevertheless rein in their excessive spending on players' wages.
"A salary cap should not limit individual players' wages," he argued. "But restraining wages to a proportion of turnover would be a good thing and in today's climate, people should think seriously about it."
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Comments
If you stopped promotion to the prem then I could see it working but otherwise there will always be someone willing to splash a bit of extra cash to reach the promised land. And what what would it mean if Zebeel had taken over? Would they not be allowed to spend their cash.
I think tighter financial regulation to show that clubs have the resources to pay their bills and more open accountability would be more useful.
I think it is a good idea - that way it will stop clubs like us giving silly contracts to over inflated stars in the desperste attempt to get back into the PL.
Incentives to top up money should be given if need be - even percentage of shirt sales with names on back or something like that.
What's wrong with 10k a week at this level - any level for that matter FFS
and agree it should be across the whole of football
Never one to miss a conspiracy theory Pete : - )
Would think there are plenty of players at this level who'd be over the moon at £10k PW
I remember Richard Murray proposing the need to trickle down more money to the lower leagues at a Premiership chairmans meeting a few years ago which was thrown out almost unanamously (Sp?)... I wonder if a few of the chairmen involved in voting out the proposal would have liked to changed things with hindsight of how their clubs are now. I was listening to Talk Sport last night and Stan Collymore was making an excellent point about the need for a more even distribution of money to help the lower league clubs funding.
In the short term ccc clubs would not be able to make the jump to the pl imo, but its not just the normal leagues that are in trouble, the pl is surely far more expossed to the financial market as the clubs have so much more to lose??
In the economic world a fantastic idea
In the footballers worlsd an awful idea
what would happen to that 'parachute' money? well i don't think it would go accross the board to all ccc teams, it would just mean a slightly bigger % of tv wonga for all prem clubs.
I'm no lawyer and certainly no Euro lawyer. I've little doubt that individual salary caps are not permitted but what about maximum salary thresholds, either as a proportion of turnover or just a global cap for each club? That way players would receive a market driven price for their services but the clubs would need to balance the needs of individuals within an overall sum.
Also the salary-cap level could be reduced by 1% a season until it is at 50%.
Player: I will sign for you if you pay X amount of £s
Chairman of club: No way we're paying that!
Player: I will sign for you if you pay x amount of £s
Chairman of club 2: pi55 off you greedy git!
player: I will sign for you if you pay me X amount of £s
Chairman of club 3: on ya bike!
Chairman dont pay the wages demanded, players dont get overpaid.
Too simple? I thought it was ;-)
correct , greedy chairmen trying a quick fix to success and premiership bucks !!
"I was keen to join Charlton but they didn't meet my career goals" (wouldn't pay what I wanted)
Likely Fan reaction
Ambition, lack of
Foresight, lack of
Goals, will now score against us
Missed, another one we have
Jigsaw, final piece would have been
Board, must go
Foreign Investment, must have it.
Money, where did it all go?
Unlikely fan reaction
Board, well done for making an independent stand against player wages
Does 'Brussels' still post on here, i seem to remember her being a lawyer that specailised in Sport. She could probably give us as steer on the legality of the situation.
It was a pretty crappy piece in all honesty as the radio 4 interviewer did not challenge either representative on anything they said.
For example; 19 yr old Charlie Kick-a-Ball is on £15k p/w playing around 10/15mins of football every 2 weeks for a PL side but cant get into the side because Carlos Kick-a-Ball is in front of him. A CCC side offer him £8k p/w to join them with the promise of 1st team football. He declines because of the almost 50% cut in wages....
We're already seeing this now with the gap between wages in the PL and even the top CCC sides meaning that the transfers between the top CCC and bottom / middle PL sides, which was once pretty fluid, is drying up.
Also if wage caps are measured as a % of turnover wouldn't that stop the smaller sides being able to compete? I know it may protect them and everyone from over extending themselves but it would mean that in essence you're creating a two tier system, such as in the PL, where the best FL players can only be afforded by the biggest FL teams.
As I said. Good idea in principle, but, IMO, this is not the answer.....I'm not saying I know what is mind you.
It is feasible to set financial trading criteria & levies (wealth taxes) to which participating members would contract, allowing for those seeking/ able to spend beyond the cap. Relegated PL clubs would be in this category though any cap will exacerbate an already cataclysmic change.
The criteria enable any cap to be policed with breaches triggering agreed levies. There is no specific trading restraint other than the need to show the financial ability to meet such costs and pay the previously agreed levies.
For a salary cap to work however it will need to operate at all levels of the professional game at least nationally if not across Europe. A sound financial discipline it problematically brings an element of a level playing field. Professional football like so much of life today is dominated by self interest.
Those operating at the highest levels of “our sport” control its operational regime and finances to their advantage. Not blind to the financial benefits of a cap, any level playing field threatens their sovereignty within the game. Only if they can “ring fence” their market would they even entertain it.
The point re stockpiling talent is well made. The US professional sport disciplines re terms & conditions of recruitment, employment & remuneration of players need to be studied. There are lessons to be learnt. In football it is too easy for wealthy clubs to stockpile talent to the detriment of them and the game.
Allowing exceptions for players to be placed on injured reserve and practice squads the limiting of the number of professionals & apprentices each club can employ will a) spread the talent pool b) focus on developing the talent held under contract.
A model where a club wishing to acquire a new player has to release somebody else for transfer (allowing other clubs to agree terms with that player) would enable freedom of movement and perhaps remove the anathema of the transfer window. It would certainly focus the mind and the abilities of the coaches.
Again sadly in the world of todays professional football it is hardly like to happen - Is it?
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