EFL Proposing Salary Caps

[northstandexile]

It isn’t eight academy players, it is eight home grown players, meaning they have had be signed by an English club for three years before their 21st birthday.

 

[Chris FGR]

It isn’t eight academy players, it is eight home grown players, meaning they have had be signed by an English club for three years before their 21st birthday.

Isn't that most League 2 players then?

 

[Kenneth E End]

As another idea, I’d suggest that no team from a lower division should be paying anything towards any loan players, and they must continue to be paid in full by their parent club.

May not solve the problem of hoarding, but perhaps it would reduce the location or budget factor.

 

[northstandexile]

Isn't that most League 2 players then?

Yes, that it is why it isn’t an issue.

 

[Luke Imp]

Apparently signing on fees and agents fees will fall within the cap along with all costs associated with players i.e. pension contributions etc as well, rather than just salaries per se. Didn't say anything on bonuses but I can't imagine it's possible to include stuff like that in it, but the appearance one will be an opportunity to get around some of the cap I imagine.

Our Chief Exec also seemed to indicate that the cap will rise slightly in L1 because it wouldn't get enough votes as it stands and expects it to end up around £3m-£3.5m, which is about the current average for L1.

 

[Indian Dan]

Also proposed, any club late with wages gets an immediate 3 point deduction with no right of appeal.

Can’t quite see who within a club would blow the whistle on that, though.

 

[Kenneth E End]

Our Chief Exec also seemed to indicate that the cap will rise slightly in L1 because it wouldn't get enough votes as it stands and expects it to end up around £3m-£3.5m, which is about the current average for L1.

I dare say if the limit was £3.5m in L1 and £2m in L2, that would be a lot more sensible, although there isn't a £1.5m gap in TV money between the two divisions.

 

[Kenneth E End]

Also proposed, any club late with wages gets an immediate 3 point deduction with no right of appeal.

Not that I disagree with the principle, but the EFL and their "no right to appeal" mantras really aren't doing themselves any favours with their recent record in court.

 

[TrinidadsNumberOne]

Also proposed, any club late with wages gets an immediate 3 point deduction with no right of appeal.

Can’t quite see who within a club would blow the whistle on that, though.

Any player who knows if the club that's not paying them goes down, then they have a clause in their contract that entitles them to move on for free elsewhere...

 

[TrinidadsNumberOne]

Apparently signing on fees and agents fees will fall within the cap along with all costs associated with players i.e. pension contributions etc as well, rather than just salaries per se. Didn't say anything on bonuses but I can't imagine it's possible to include stuff like that in it, but the appearance one will be an opportunity to get around some of the cap I imagine.

Our Chief Exec also seemed to indicate that the cap will rise slightly in L1 because it wouldn't get enough votes as it stands and expects it to end up around £3m-£3.5m, which is about the current average for L1.

£3.5 million would be a good transition cap for 2 years or so but I still think it should be lowered in future. There's a lot of clubs with small gates and limited revenue streams at that level already stretching themselves and this would give them the incentive to keep stretching whilst making heavy losses. 4-5 years ago, a £2.5 million budget in League One was considered 8th highest in the league! Which just shows you how ridiculous the increase in solidarity money has been since then.

I think bespoke hard caps are the route clubs need to go down. An independent auditor assesses the clubs books, revenue streams and financial health each year before setting a fixed cap on each club. Yes, some clubs would be allowed to spend more, but it'd stop the lesser clubs from trying to have a £3.5 million per year wage budget as the cap said they could when their existing financial situation would be tested by it.

Agents fees need to go down at this level, when I see clubs spend six figures on agents fees per year I find it alarming. As for bonuses, you can easily count appearance fees towards the cap, but you couldn't count things such as promotion bonuses. It'd be unfair to fine teams hauled into the dock for the crime of winning promotion when most teams can't do that. So bonuses depending on final league position must be exempt from the cap.

 

[AdamStag]

The EFL should be much tougher on admin as well.

There’s been several clubs who’ve gone into admin more than once within a relatively small period of time (the Luton example was pretty harsh for what they’d done from what memory serves)

But say a club goes into admin (not now, when things are “back to normal” - whatever that might be) so they get 10 points, if they do so again within a decade they get 20 points and so on.

Appreciate its only the fans that would suffer but hopefully a stronger deterrent might help

 

[Kenneth E End]

The EFL should be much tougher on admin as well.

There’s been several clubs who’ve gone into admin more than once within a relatively small period of time (the Luton example was pretty harsh for what they’d done from what memory serves)

But say a club goes into admin (not now, when things are “back to normal” - whatever that might be) so they get 10 points, if they do so again within a decade they get 20 points and so on.

Appreciate its only the fans that would suffer but hopefully a stronger deterrent might help

I can't really disagree with you, but the administration in 2003 was forced by the fans themselves to get a scrupulous owner out of the club; it's a bit harsh to be counting that occurrence the same as the others.

 

[AdamStag]

I can't really disagree with you, but the administration in 2003 was forced by the fans themselves to get a scrupulous owner out of the club; it's a bit harsh to be counting that occurrence the same as the others.

That’s why I used that as an example - not all situations are the same and it would be interesting to see how they’d police it.

 

[Kenneth E End]

£3.5 million would be a good transition cap for 2 years or so but I still think it should be lowered in future. There's a lot of clubs with small gates and limited revenue streams at that level already stretching themselves and this would give them the incentive to keep stretching whilst making heavy losses. 4-5 years ago, a £2.5 million budget in League One was considered 8th highest in the league! Which just shows you how ridiculous the increase in solidarity money has been since then.

I think bespoke hard caps are the route clubs need to go down. An independent auditor assesses the clubs books, revenue streams and financial health each year before setting a fixed cap on each club. Yes, some clubs would be allowed to spend more, but it'd stop the lesser clubs from trying to have a £3.5 million per year wage budget as the cap said they could when their existing financial situation would be tested by it.

Agents fees need to go down at this level, when I see clubs spend six figures on agents fees per year I find it alarming. As for bonuses, you can easily count appearance fees towards the cap, but you couldn't count things such as promotion bonuses. It'd be unfair to fine teams hauled into the dock for the crime of winning promotion when most teams can't do that. So bonuses depending on final league position must be exempt from the cap.

I've just done a few calculations based on a £3.5m L1 budget. It would penalise us and the other relegated Championship clubs massively; and we had the smallest Championship budget this season. We would probably be spending £200k on severance pay for this stupid July wages rule. The gap between the two divisions would be getting wider and wider.

If we let all of our out of contract players go this summer bar one, I'd estimate we'd only have 16 senior pros with only £100k to play with. And that is based on everyone taking a 15% relegation pay cut, no performance bonuses, no sign on / loyalty payments, no NI contributions (so that 13.7% would put us over budget as it is) no agents fees, no pension contributions etc.

 

[TrinidadsNumberOne]

The EFL should be much tougher on admin as well.

There’s been several clubs who’ve gone into admin more than once within a relatively small period of time (the Luton example was pretty harsh for what they’d done from what memory serves)

But say a club goes into admin (not now, when things are “back to normal” - whatever that might be) so they get 10 points, if they do so again within a decade they get 20 points and so on.

Appreciate its only the fans that would suffer but hopefully a stronger deterrent might help

I'd go to a massive overhaul regarding admin in this country. It's an absolute pisstake compared to other leagues abroad and you can see just why it is through the rise of clubs like Bournemouth who clearly have never given a fuck about budgeting accordingly and still don't.

12 points deducted is an acceptable punishment, but the football creditors rule is a joke and paying small businesses pennies in the pound before huge money is once again spent at these clubs is also a joke. There should be draconian limits set on the spending of any club taken over until debts are managed to sustainable levels. And if it puts off buyers and forces the club to be relegated many divisions like Bury will be? Tough shit. Shouldn't be spending beyond your wildest dreams in the first place.

It's so unfair when you see well run clubs cutting their cloth being kicked to the wayside by clubs with a "boom or bust" approach over the years. It's why, even though I obviously sympathised with their fans, I had next to no sympathy for Bury as a club. They'd been playing the boom or bust game for years with different owners and it was about time a club had the book thrown at them.

If Corona had never happened, I reckon we'd have seen a fair amount of administrations anyway. It was clear Shaun Harvey kept giving clubs chance after chance as he didn't want the EFL brand to be compromised by administrations as it could affect the price of future TV deals (and of course, his heavily inflated salary and bonuses). Rick Parry would've been a lot tougher on clubs but for now, toughness isn't the way forward. Once furlough ends, I can see a fair amount of clubs appointing the administrators. We could see a farce of a league next year where 10 clubs could start on minus 12 so, in exchange for the points deduction, a reduced wage cap should be placed on these clubs so they can get their finances back in order for when the fans come back.

 

[TrinidadsNumberOne]

I've just done a few calculations based on a £3.5m L1 budget. It would penalise us and the other relegated Championship clubs massively; and we had the smallest Championship budget this season. We would probably be spending £200k on severance pay for this stupid July wages rule. The gap between the two divisions would be getting wider and wider.

If we let all of our out of contract players go this summer bar one, I'd estimate we'd only have 16 senior pros with only £100k to play with. And that is based on everyone taking a 15% relegation pay cut, no performance bonuses, no sign on / loyalty payments, no NI contributions (so that 13.7% would put us over budget as it is) no agents fees, no pension contributions etc.

I think what you'll see in the future are league enforced mandatory pay cuts for relegated Championship teams players (maybe as high as 50% but realistically you're looking at 25% minimum). But you'll also see that for a year, relegated Championship clubs will be allowed a relaxed cap (they're given an eighth of a Championship solidarity payment plus all L1 solidarity and TV payments as it is I believe for one year) to get their house in order. And most of the time, relegated Championship clubs will sell players anyway to build a L1 squad on leaner salaries but with the hunger to compete. So it'd even itself out in the end I feel.

 

[Kenneth E End]

Although parachute payments are a bit of a pain in the side of most football clubs that don't benefit of it, they could be rolled out to all divisions - perhaps offering 25% of what would've been received in the division above, although that may just promote "yoyoism".

 

[Luke Imp]

I've just done a few calculations based on a £3.5m L1 budget. It would penalise us and the other relegated Championship clubs massively; and we had the smallest Championship budget this season. We would probably be spending £200k on severance pay for this stupid July wages rule. The gap between the two divisions would be getting wider and wider.

If we let all of our out of contract players go this summer bar one, I'd estimate we'd only have 16 senior pros with only £100k to play with. And that is based on everyone taking a 15% relegation pay cut, no performance bonuses, no sign on / loyalty payments, no NI contributions (so that 13.7% would put us over budget as it is) no agents fees, no pension contributions etc.

Yep, that's the problem that needs ironing out because you can't go from 'x' to 'y' in one summer and that's likewise from L1 to L2. And as previously said in this thread, what happens if a team comes up with a bigger budget than the proposed L2 cap? That will have happened plenty of times down the years. It's going to be difficult to have a one size fits all cap, moreso in L1 probably where you have two or three genuinely big clubs a season in it (Ipswich, Sunderland, Portsmouth this season).

 

[AdamStag]

Yep, that's the problem that needs ironing out because you can't go from 'x' to 'y' in one summer and that's likewise from L1 to L2. And as previously said in this thread, what happens if a team comes up with a bigger budget than the proposed L2 cap? That will have happened plenty of times down the years. It's going to be difficult to have a one size fits all cap, moreso in L1 probably where you have two or three genuinely big clubs a season in it (Ipswich, Sunderland, Portsmouth this season).

Well you couldn’t in that sense. You’d need time to bring it in line with what the cap is which defeats the object if your club has players on 2/3 year contracts in decent wages (which you shouldn’t really be doing anyway)

Probably the biggest issue you’d have there would be sides dropping from the championship into league 1

 

[TrinidadsNumberOne]

This is what Gary Neville has said.

“It is going to be the biggest game-changer for lower league players in the last 30 or 40 years. No matter what club, crowd or income you have, you will be restricted in the money you can spend.

“The PFA is sleepwalking at this moment. I don’t think they recognise that coronavirus is an issue for players and a crisis for clubs. There will be deferrals and cuts in the immediate term but there is a major reset coming in terms of player wages at League One and League Two level and, potentially, the Championship if the salary cap extends there, which I believe it may do in the future.”

It adds up to one harsh reality for players: lower wages. Neville added: “The salary cap will be severe, well below average salaries being paid at the moment. It is a game-changer for clubs at that level but also players, who will be earning a lot less.”


I think more teams will easily comply with a more draconian cap than people think. Wages aren't going to be the same they were before and they'll never rise back to the levels we have now for many, many years.

 

[Boletus Edulis]

If the gap between capped League 1 and uncapped Championship is so huge, then you create an automatic incentive for teams to find every trick in to book to get around it. And let’s face it the EFL don’t have a great track record as either a policeman, jury or judge.

 

[TrinidadsNumberOne]

If the gap between capped League 1 and uncapped Championship is so huge, then you create an automatic incentive for teams to find every trick in to book to get around it. And let’s face it the EFL don’t have a great track record as either a policeman, jury or judge.

The gap may be huge at first, but it won't be for long. Only takes the banks to call time on Championship clubs rising debts and then they'll have a significant problem which would be nothing to do with us...

 

[Indian Dan]

If the gap between capped League 1 and uncapped Championship is so huge, then you create an automatic incentive for teams to find every trick in to book to get around it. And let’s face it the EFL don’t have a great track record as either a policeman, jury or judge.

I bloody hope you’re right there!

 

[Kenneth E End]

The gap may be huge at first, but it won't be for long. Only takes the banks to call time on Championship clubs rising debts and then they'll have a significant problem which would be nothing to do with us...

Isn't a lot of debt to individuals though? I doubt the banks would've allowed such deficits to build up on their watch without already calling it in or putting in some heavy interest rates.

That said, banks also want to lend money - they need a continuous stream of lending (and refinancing); someone paying their mortgage off early isn't profitable for them. Its why Spurs recently have managed to refinance their debt to their advantage.

Whilst there is such a huge carrot in the PL paradise, teams are going to keep chasing it.

 

[TrinidadsNumberOne]

Isn't a lot of debt to individuals though? I doubt the banks would've allowed such deficits to build up on their watch without already calling it in or putting in some heavy interest rates.

That said, banks also want to lend money - they need a continuous stream of lending (and refinancing); someone paying their mortgage off early isn't profitable for them. Its why Spurs recently have managed to refinance their debt to their advantage.

Whilst there is such a huge carrot in the PL paradise, teams are going to keep chasing it.

We haven't seen the full extent of this crisis upon the Championship yet, and we won't until the latter stages of this year, but before the COVID 19 crisis happened, a banker said that his hometown club were perilously close to the limit on their overdraft and were trying to negotiate a deal which would've seen the limits increased. The banker himself said, although it must be called in soon, they were wary of the damages it could cause to the club, the wider area and people's jobs that they took a more sympathetic view on it and allowed them to restructure their debt on condition that they didn't start taking the piss. I don't know the identity of this club in question, but some do stick out like a sore thumb with regard to this.

The problem is, this was before COVID 19. And the moment banks start to feel the pinch in an upcoming recession, debt restructuring on terms that will be more beneficial to clubs will become a lot harder to negotiate. Overdrafts will be nowhere near as generous in future and some clubs are going to be crippled by higher tax bills and higher interest rates on lending in the future.

Unfortunately, in Britain, we live in a "buy now, pay later" culture that stretches to wider society, let alone football. A large minority of the population are very complicit in all of this, and perhaps this is why we see overspending in football as normal when we really shouldn't. And it's this culture that will be massively exposed once furloughing ends and taxes rise and interest repayments on lending rise too.

 

[Luke Imp]

Interesting to note that following the EFL AGM on Monday, the majority needed for a salary cap is now set at two thirds rather than 75% apparently, following feedback from clubs.

 

[TrinidadsNumberOne]

Fully expect salary caps to pass. But I assume the vote won't take place until the Championship season concludes for obvious reasons?

 

[Luke Imp]

Yeah maybe so, probably needs voting on sharpish after the conclusion of that, though.

 

[Boz]

They need to get the calibration right. The suggestion that L1 should have double the cap of L2 is unworkable imo.

 

[TrinidadsNumberOne]

They need to get the calibration right. The suggestion that L1 should have double the cap of L2 is unworkable imo.

I agree with this. Difference between both divisions shouldn't exceed £500,000 imo. £1.25-£1.5 million difference will only cause a gulf to pop up in the one area of the pyramid which is the most interchangable in football.