It’s Transfer Season – Does the Premier League Need a Salary Cap?
For over a decade, there have been discussions about the Premier League’s salary caps. However, with every passing season, more teams are feeling the pinch with no fundamental changes in sight. This concept of capping salaries has been around for a while and aims to create a level playing field. This even became a topic of discussion in parliament with the Financial Fair Play (FFP) law being introduced. But unfortunately, the law has so many loopholes that it remains wholly ineffective.
One thing to keep in mind as you read this article is—will a salary cap only work in the favour of those who don’t need to follow its rules? If the UK enforced a salary cap, would this simply rebalance Europe and bring the likes of Arsenal, Man City, Manchester United and Liverpool back down into the mix.
It remains to be seen. Let’s explore how salary caps work together.
What Is a Salary Cap System?
A salary cap system would make it so that there are limits to what teams are able to spend on a player’s salaries. This would mean that no matter if you’re a rich team or a more middle-of-the-road team, you’ve got the same buying power. As a result of such a change, we’d see teams that have consistently struggled able to reach new heights. But furthermore, we’d see changes to how organizations view and invest in their players and the team as a whole.
Does Any Sports League Have Salary Caps In Place?
There are numerous sports leagues worldwide that have firmly set salary caps. In North America, the National Football League, National Basketball League, National Hockey League, Major League Soccer, Major League Rugby, and more have salary caps in place. The Super League and Gallagher Premiership for rugby in the UK have salary caps. Australia and New Zealand teams across all sports operate with salary caps. There are very few other sports leagues in the world that have salary caps, with one or two in France, China, and Russia. However, salary caps are becoming more significant discussion points across the sports world.
What Do Salary Caps Influence?
The way a salary cap works is that it doesn’t influence the experience of sports event goers. Ticket prices and merchandise don’t see changes in price or things of a similar nature. Instead, a salary cap allows smaller, less prominent teams with less capital to lure away high-profile players from larger teams. How? Because everyone is working on a similar playing field regarding the amount of money they can offer. Sure there will always be the teams that can barely reach the salary cap. Still, most have money to spend, just not enough to match the ridiculous salaries high-profile Premier League teams offer their star players.
How Do Salary Caps Change Sports?
Salary caps can have an incredible impact on sports. Right now, we’ve got a handful of teams with deep pockets getting everything and every player they want. All this happens while smaller teams remain chained to obscurity and low returns due to having no diversified talent in their teams. It’s not to say they’ve got awful players. It’s more about their lack of options that is stifling them. Players that join lower-tiered teams are eventually stolen by significant teams in the league, meaning there is little stability or consistency in teams that can’t match outlandish offers.
A salary cap means more teams have the chance of gaining national and international recognition. Finally, the last significant benefit of salary caps is the ability to control costs better.
Overall, you’d build a stronger league or well-crafted teams. It’s beneficial to the sport as a whole as better teams mean better competition and better games to enjoy and cheer on.
The Downsides of Salary Caps
Changing something that has existed for the entire history of a league can be a tough transition. When you start announcing salary caps, established players earning massive amounts of money per season will naturally revolt against the system that made them a star in the first place. You’re attacking their earnings, which until the salary cap was unregulated. Players who feel they’re losing the most tend to strike.
You’ve got salary caps attacking a high-profile player’s earnings. However, they also affect future earnings in a different way. When a player gets a million-dollar contract, they don’t get it split evenly over the course of however many years the contract is valid. It can be higher one year and lower the next depending on the structure of the contract.
Should The Premier League Have a Salary Cap?
Now for the big question, should the Premier League have a salary cap? Well, the answer depends on who you ask. Of course, everyone might have wildly different opinions on the matter, but here’s what we can say for sure.
Most people will acknowledge that the Premier League is an example of ‘free market economics.’ You’ve got a supply of top-level athletes who are picked worldwide and demand from big clubs with the ability to write fat checks.
It’s not necessarily an easy question to answer. In recent years Chelsea and Manchester City posted an annual loss of £1.5 billion between them. That’s two teams out of twenty in the league. That’s a staggering amount of money, and maybe it’s a prime example of why a salary cap might just be the answer to solving issues like this. There are major disparities in how much one team spends on wages versus the other. Let’s take Manchester City, which spends roughly £360 million, and compare it to Norwich City, which spends around £100 million. We’re not talking a few million pounds difference. We’re talking £260 million. This isn’t a gap. It’s a chasm. How do these teams fair on the field? It’s predictable. Manchester City dominates Norwich City due to the fact that they can afford some of the best players in the league.
The major downside of allowing inconsistent spending between teams is that we’re getting predictable games where we’re not surprised when a team like Manchester City plays Norwich City. Is that what we want out of football?
The Premier League is made up of 20 teams. If you were to add up the annual salary spend and divide it by 20 teams, you’d be left with £190 million per team. That’s a reasonable amount to spend per team. However, 25% of the teams are spending more than this. So we’re not talking about a little over £190 million. As we’ve seen with Manchester City, the amount of money being spent is astronomical compared to a theoretical salary cap and the reality of other teams’ spending.
At the end of the day, it’s clear what a salary cap would mean for the Premier League. It would be a rough transition that could last years to resolve. However, in the end, we’d get a better Premier League. The teams would improve across the board, and we’d be able to enjoy a more competitive league with teams on similar playing fields in terms of skill levels.
If anyone benefits from a salary cap, it’s the fans. Right now, players in the league are fighting against salary caps, and it could be years until it’s brought to the table and approved. Until then, we’ve got an idea of what a salary cap means for the league and why it matters. So the question now falls on you, where do you stand on the premier league instituting a salary cap for their teams?