The Premier League announced new spending rules yesterday which aim to cap player salaries without implementing a salary cap and which seek to limit club losses by demanding that rich owners promise to back those losses for three whole years.
Reading the bold print, because there will not be any fine print until April when the actual rules are voted on, the most stringent rule is the £4m per annum limit on wage increases for teams who have a wage bill already in excess of £52m. At first glance this seems like a very tight inflation cap on player salaries. But the actual statement reveals that the restriction on salary inflation only applies to the increased revenue from the League’s bumper new television rights deal.
In layman’s terms, the League is saying, “here’s £20m extra per year, you can only use £4m of that on increased salary”. This is not a cap on salary, this is a cap on how much of the extra television money can be spent on salary. Increases in wage bills are unlimited as long as the money comes from matchday revenue, commercial operations, or some wealthy person just putting money into the club.
The other rule which Premier League chief Scudamore is trumpeting is the “£105m loss” rule. Again, reading the bold print, the rule simply states that any owner who wishes to make more than £105m in losses over a three year period must provide a further three years of financial backing for those losses. From the PL’s very own press release:
Any club that makes a loss up to that limit [£105m over three years] will be subject to a tighter regulatory regime that includes:
- Secure owner funding for three years ahead
- Increased future financial information over the next three seasons.
This is, of course, not what’s being reported by the big papers. There are quotes about points deductions for teams who run afoul of the losses rule and of how the rule would be implemented (for example, that certain types of spending - infrastructure, etc. – doesn’t count) but you have to understand how corporate communications work to get why that’s being reported but is not included in the actual press release.
Every word of that press release was picked over by several editors, including a corporate communications director, and then approved by the Premier League’s team of solicitors. If the press release doesn’t mention points deductions or details of how they plan to audit clubs then that was left off intentionally because it is not actually agreed upon. The only things that have been agreed upon are that teams can only use £4m per year of the new television rights and that any owner who incurs more than £105m in losses in the next three year period (up to 2016) will need to provide secured funding for that club for the next three years (up to 2019). That’s what’s been agreed to, nothing else.
What we are hearing in the press is, most likely, Scudamore’s dream scenario. Whether that dream will become reality may hinge on one abstaining vote, Reading.
Normally it takes 14 current Premier League teams to vote to change the rules. This vote squeaked by with 13 because Reading abstained. The important thing to remember is that teams could change their mind between now and the actual implementation vote in April. It’s also interesting to note that Chelsea voted in favor of the rule change and are the only owner-financed team to do so. The same Chelsea team which turned a £1.4m profit last year after £166m in debt was converted into equity.
And the press are already hinting that this regulation has fewer teeth than a family in Stoke.* The first hint is that reporters are admitting that UEFA’s Financial Fair Play accounting rules are more strict than the proposed Premier League rules. And, of course, the biggest hint is that Sir Alex Ferguson has stated today that all these rules (both UEFA and the Premier League) are toothless.
But what if these rules were toothsome? What if the League set a cap on salary growth and a real cap on losses and anyone who ran afoul of that cap were deducted points? It would only ensure the hegemony of the teams who are currently at the top of the spending table.
Capping growth and losses is not the answer to inequality in football. If you want to have a level playing field you have to implement a ceiling for teams like Man City and Chelsea. Manchester City already have a £200m per annum wage bill. Arsenal have a £143m per annum wage bill. That’s a difference of £57m a year. In today’s conversion that’s €67m per year. Just to understand the massive difference in those two wage bills I present to you the estimated salaries of the world’s top players:
- Zlatan, €14m
- Messi, €12.7m
- Ronaldo, €12m
- Yaya Toure, €11m
- Rooney, €15.61m
- Total for that starting 5? €65m.
That’s just the difference between Arsenal’s current wage bill and City’s current wage bill. Imagine the players one could afford with the difference between Reading and Chelsea?
And worse, if the debt cap is introduced in a meaningful way then that means someone like Usmanov or Kroenke couldn’t put any money into players and bring a club like Arsenal level on spending and squad value through debt financing as Chelsea and City have done. The same applies to any future buyer for a club like Everton.
If you believe that spending, and especially wages, largely correlates with success on the pitch (and most people do) then if they are successful and their rules have teeth, what we are looking at is the Premier League attempting to create a permanent class of haves and have-nots.
Under these rules clubs like City, Chelsea, and United will be perennially challenging for the title; teams like Arsenal, Liverpool, and Tottenham will be left fighting for European football; and the rest of the League will be left permanently trying to stave off relegation. You wonder why Swansea, Villa, West Brom, Southampton, and Fulham voted with Man City against these rules? Because they don’t want to be a permanent underclass.
I, for one, hope that this rule is shot down in flames. If you want to level the playing field you have to implement real spending limits, the same for all teams, and real salary caps, again the same for all teams. Anything else is just rewarding the clubs who gained an unfair advantage through financial doping in the past.
*The average family of four in Stoke has one tooth, which they share. Like they say, a family that masticates together stays together!