On salary caps and transfer limits

Cristiano Ronaldo cost Real Madrid a pretty penny

Cristiano Ronaldo cost Real Madrid a pretty penny

Two things have struck me recently about the transfer season. First, FC Barcelona’s president Joan Laporta suggested that Europe could use a salary cap. “There are interesting things that we have to study in Europe, such as a salary cap,” he said. “Maybe we have to establish some parameters for revenues and players’ salaries but maybe not as strict as in MLS.” While an interesting idea in theory – the NBA-style system of tying salaries to revenues – the biggest clubs, including Laporta’s, will never in a million years agree to that.

Following that, UEFA suggested today that it was concerned with Real Madrid’s and Manchester City’s spending. UEFA general secretary David Taylor said, “I would say in this financial climate, it is surprising – a little bit destabilizing of the market. It is certainly raising the ante in terms of the player costs, in terms of the general market place, which is not a thing that gives us a great deal of comfort in these difficult times.” I don’t think UEFA can actually do anything but Taylor makes a good point: Real Madrid and Manchester City are throwing the transfer system out of whack.

Economically, the fallout can go one of two ways. First, transfer prices continue to rise which creates two permanent groups of buyers and sellers. The biggest, most profitable clubs will perpetually buy both the best players and the best young players, creating a sort of oligopoly. Thus the Big Four (or Big Five, if Manchester City joins and nobody drops out) in the Premiership will be permanent and the Other 16 (or 15) will never have a shot at (a) winning the Premiership and (b) getting a spot in the Champion’s League. Clearly, that’s just one small step from a European Super League.

Second, the transfer prices continue to rise due to inflation but teams begin, in effect, extorting money from Real Madrid, Manchester City, Chelsea, Bayern Munich, Manchester United, etc. by setting one price for that group and one price for everyone else. Take Karim Benzema. Lyon demanded £40 million from Real Madrid and Manchester United but perhaps they would have accepted £30 from, say, Wolfsburg (that’s not the case, of course; it’s just an example). The point is that two separate transfer markets would develop, one for the biggest clubs and one for everyone else. It is my position that this scenario is far more likely and is, in fact, already in effect.

What does that have to do with Laporta’s musings? Everything and nothing. Since most clubs are privately held, there’s really no way to verify finances and they have no incentive to make those numbers public. The salary cap is thus out of the question (set aside that everyone – except Real Madrid with its apparently unlimited line of credit – already has a salary cap: it’s called a budget). A salary cap can only work in a US-style closed league system; the European system, with promotion and relegation and its theory that anyone can found a club at the lowest levels and work its way up, means a salary cap is anathema.

Laporta’s idle musings were probably just that. Taylor’s concerns, while valid, may or may not be born out by the market. Either way, UEFA is essentially powerless to stop it since, to my knowledge, it cannot put a limit on how much teams can pay for player transfers.

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1 Comment

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One response to “On salary caps and transfer limits

  1. Pingback: English FA boss opposes transfer limits « Spot Kicks

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