Monday, December 22, 2008

Salary Cap in English Championship League

One of my biggest complaints about Major League Soccer (Mickey League Soccer) is that the MLS uses a hard salary cap--at least in theory because there are two significant exceptions--the designated players who has only part of his salary counting against the cap and a Generation Addidas player who has none of their salary counting against the cap. In many respects, the hard salary cap puts MLS clubs at a significant disadvantages when it comes to international play and the development and retention of talented players.

But the Coca-Cola Championship, the league just below the English Premier League, is now considering a salary cap according to the The Guardian (hat tip Sports Law Blog).
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.
Clubs in the Championship work to get promoted to the Premier League, with the top two teams moving up automatically and the next four compete in a playoff for the third promotion spot. At the bottom of the table, the worst four teams get relegated down to League 1. The problem is that the Championship has to survive on game day revenues, merchandising and sponsorships, the Championship does not get tens of millions of dollars in TV revenue.

I generally don't like the idea of a salary cap, as I think it favors the owners at the expense of the players and creates disincentives on a number of levels. I understand the desire to have a salary cap for the owners, but when ever a salary cap is in place, you will often see a degradation in the level of play because you are not trying to get the best players you can afford, but rather you are looking to keep you payroll down under and artificial limit, so owners tend to look more at second class talent rather than the best available talent.

What will this mean for the Championship if a salary cap is imposed? Well first, it will not attract top class owners who want to buy a club on the cheap and then invest and make it grow, like the owners of Queen's Park Ragners are doing or the owners of Hoffenheim have done, and then turn a profit when or if the club is sold. Second, you will see the gulf between the top flight and the lower leagues widen with the promoted teams all but assured of going back down the next year. Sure, you might see a club like Stoke City or Hull City stay up for a season, maybe two, but it will become a rarer occurance.

1 comment:

Anonymous said...

Late to the discussion...

(Liverpool fan here)

The EPL needs, badly, a salary cap. Possible world economic downturn combined with fresh, incredibly wealthy owners is a dangerous thing. How much will Man City drive up the prices on players since they have now offered 2-3x a player's current worth?

Secondly, it's better for the league. 4 teams have dominated my entire lifetime. Ridiculous - I know American's wouldn't put up with that long of a reign. I imagine it's a terribly drawn life if you happen to be an Everton/Wigan/Middlesborough fan.

Finally, it can work and work well. (Well, maybe not internationally...)

I don't think you'll find the NBA/NFL complaining too much. Players get paid fairly, owners make out like bandits and the entire league is very profitable.