Next Big Thing: Radical proposals for the transfer market – salary caps, luxury tax and removing trading windows
https://theathletic.com/1596690/2020/02/11/transfer-window-radical-salary-cap/
Three years ago, football fan Craig Tennant took to the website Change.org and launched a petition. Accompanied by the hashtag #HateFootballLoveBarnsley, the disgruntled Tykes fan appealed to FIFA to abolish the winter transfer window.
His argument centred on the feeling that lower-placed clubs can be easy prey in January, as successful and wealthy outfits first destabilise and then cherry-pick talent, often throwing the player’s club — in this case Tennant’s Barnsley — into mid-season disarray.
Tennant wrote: “A football club should be able (to) assemble a squad in one summer window and if the recruitment isn’t good enough, or they don’t give youth the chance, they should not have the power or opportunity to destroy smaller clubs’ seasons. This isn’t good for the fans. It is isn’t good for the smaller clubs. The only people it benefits are the greedy footballers themselves and the playboy owners. Ban the window.”
The petition was ‘signed’ just 200 times but Tennant is far from alone in his thinking. There are plenty at Tottenham Hotspur who feel the uncertainty surrounding Christian Eriksen loomed menacingly over the first half of their campaign, while former Arsenal manager Arsene Wenger echoed such thoughts during his ill-fated attempts to keep Alexis Sanchez in January 2018.
Speaking in September 2017, Wenger said: “The players who do not play or the players who are tapped up in October, they already start again to think, ‘Where do I go in January?’ That’s not a way to be on board with a football club. I believe that we have to bring some decency to the game.
“We all complain today that (football) has become too much of a business, but we can do something about it. We have that responsibility in the game. The ideal situation would be to have a transfer period that is closed 48 hours before the first game of the championship and to close it completely until after the season.”
Wenger’s grand reformation never did come to fruition and, even in his new guise as a FIFA bureaucrat, we should not expect this particular proposal to gain too much traction. Yet as football seeks to reconcile stable finances with entertainment, governing bodies such like FIFA and UEFA, clubs and agents are constantly seeking to innovate and reform.
Most recently, the Premier League sought to end the instability that pockmarked the beginning of the campaign by shutting the English transfer window before the first weekend of the top-flight season. Yet, as the rest of Europe did not align, Premier League clubs became concerned that their own players were still for sale, or even able to agitate for a sale, despite England’s own buying capacity to sign replacements being voided.
As such, the Premier League last week voted unanimously to revert to the former model. Future changes, therefore, will need to be measured carefully.
Over recent weeks, The Athletic has spoken with leading figures within football and inside other sports to hear suggestions as to what could be done to improve the transfer window. The answers, from salary caps to luxury taxes, could lead football into a very different future…
Remove trading windows altogether
The most extreme change would be the “reverse Wenger” with deals taking place all year round. Sports lawyer Jake Cohen explains: “The idea of placing restrictions on when somebody is able to change jobs would be unimaginable in most fields. For example, if I could only move from one law firm or company to another in the month of January or during the summer, I would feel very strongly against that.
“If you removed the short windows, it would give clubs more breathing room for greater strategy and planning. A moratorium on player movement could be imposed during the latter half of the season to ensure squad stability in the run-up to the end of the season and the culmination of the domestic and continental tournaments, similar to the ‘trade deadline’ employed in most US professional sports.”
Cynics would argue that a more liberalised trading system could trigger greater uncertainty during the campaign. Yet it may also be that an absence of defined windows allows clubs to adopt clearer strategies and they could be less inclined to bring in “bodies” in panic as a deadline looms. This would also remove much of the pantomime that has come to dominate the final day of transfer windows.
Greater regulation of agents
Within the boardroom, concerns centre less on the period where transfers can take place and more on tweaks that can be made to protect the security of clubs. It is no secret that clubs would like to see greater regulation over agents and a clearer way to establish who to trust when attempting to sign a player.
Cohen explains: “To be an NBA agent, the application process is fairly intensive. Applicants must pass a written exam and successfully pass a background check. In order to have certification renewed by the players’ association, agents must complete seminars designed to ensure agents remain up-to-date on relevant issues and must also have acted for at least one player in a contract negotiation.
“NFL agents must also not only possess an undergraduate degree, but also a master’s or law degree. These are serious requirements most people do not meet. This is in stark contrast to football, where just about anyone with £500 can become an FA registered intermediary.
“The deregulation, which was implemented at the FIFA level, has opened the door for unscrupulous actors to try and con players, clubs and reputable agents. I have acted on deals for players, agents and clubs, and I have seen cases where several agents have tried to claim a fee by purporting that he or she was the agent of the player involved. Unfortunately, it is also a regular occurrence in the industry to come across individuals who claim they act for a certain player, when basic follow-up will show that they are misrepresenting themselves.”
Stop big clubs stockpiling talent
There is concern that the talent base within football is becoming ever more constrained within a select few clubs. A recent report by the European Clubs’ Association noted that 96 per cent of the 250 most valuable players are concentrated in Europe’s top five leagues across only 50 clubs. If this direction of travel continues, the doomsday fears of a European Super League become credible.
All the modern evidence suggests extreme polarisation and, as the ESPN journalist Gabriele Marcotti recently noted: “The top 30 clubs [in Europe] make nearly as much as the rest of the continent combined and the top one per cent of clubs earn 20 per cent of the club game’s total revenue.” Measures have already been taken, most notably through Financial Fair Play restrictions, but there may be a need not only to redistribute resources, but also talent itself.
As top-tier clubs increasingly desire two high-quality players per position, the stockpiling of elite talent is increasingly restricted. Marcotti’s suggestion is to reduce the number of senior players, outside of those developed by the club’s youth system, that can be registered in a first-team squad. This, he argues, would limit hoarding and encourage opportunities for young players.
Introduce a salary cap
Another way forward, albeit one which would surely met by huge resistance, could be a salary cap. Valencia president Anil Murthy tells The Athletic: “FIFA and UEFA have been looking at the agents’ issue for a long time, as well as commissions and salary caps.
“The passionate part of football for a long time has been to see these big stars. Can you imagine Barcelona without Lionel Messi, for example? So, it would obviously have to be a global salary cap. There would be different formulas. Maybe you tell a team they have only two players earning a certain amount of money? I don’t know whether football is ready for that yet. Eventually if things get out of hand…”
But PSG signed Neymar from Barcelona for a fee reported to be £200 million. Is this not out of hand? Murthy laughs. “I imagine at some point in time there will be some kind of rule to limit the number of really expensive players in each team. But what’s funny about football, is that some clubs have spent billions and still cannot win the Champions League.
“It is, however, an issue in terms of inflation for all clubs because you are pushing people’s expectations when a 15-year-old player can ask for a £15 million transfer. We have seen a goalkeeper move for £80 million. When did that start happening? That creates problems. Eventually it has to adjust. If people stop going crazy and running after the idea that, ‘I have to sign this 15-year-old, maybe I can let him go and get someone else for £2 million’ it can be better.“
In rugby union, the Premiership employs a salary cap and the league believes this produces more even contests. Privately, they speak of hoping for final scorelines that do not have a points difference greater than seven, therefore ensuring competitive and absorbing sport.
In practice, it means clubs can spend up to £7 million as a basic cap, excluding the salaries of two players. Clubs also receive £600,000 in “academy credits” for players aged below 24 who joined the club before their 18th birthday. The Premiership recently doled out a landmark punishment against champions Saracen, who were heavily fined and will be relegated to the second tier following breaches of the salary cap.
Senior sources within rugby union told The Athletic that other sports have contacted the Premiership for advice about establishing salary caps. One director explains: ”We have other leagues looking at us and contacting us. We know they have been paying attention very keenly to the verdict on Saracens. We hear from American sports, too.
“Another factor to take into account from rugby, is that the national federation has a stipulation that to play for England, you must also play in England. This means it is easier for training camps and collaboration over fitness and nutritional regimes. There could of course be challenges to this in the future but the current coach Eddie Jones is so pragmatic he almost discards those players who go abroad. His idea is that if you want the No 8 shirt off a player, go and play against him in England and prove you are better than you opponent.”
In the case of football, it would seem both undesirable and counter-productive to limit a player’s freedom to play abroad in this way. Certainly, the cosmopolitanism of the Premier League has been behind its market-leading success. Yet the appeal of a salary cap remains to some, and not only in the men’s game. In women’s football, the Football Association has imposed a salary cap but there is opposition.
Sports lawyer Cohen explains: “In the Women’s Super League in England, there is the rule about salaries accounting for no more than 40 per cent of a club’s “operating costs.” In practice however, this 40 per cent figure is basically whatever each club wants it to be, so it is not really a cap on player wages and each club decides how much it wants to spend. The current 40 per cent rule seems nebulous, particularly as it is hard to quantify incomings, as women’s teams are often a subsidiary of a broader organisation, such as the men’s football club or its foundation.
“The FA has advocated for a salary cap. I would take the view that a hard salary cap would do considerably more hard than good, and the Professional Footballers’ Association and even some clubs, most notably Chelsea, have been opposed to restricting the ability of clubs to heavily invest in the women’s game.”
A luxury tax
If a firm salary cap is open to manipulation, could football learn from Major League Baseball or the NBA through a luxury tax? This would allow clubs with greater resources to outspend a salary cap but they would be taxed on their excess payment and the money could be redistributed to poorer clubs.
In the Premier League, for example, money is already distributed through the huge broadcasting rights deals but a luxury tax could provide a secondary tier of redistribution to encourage both sound finances and provide greater solidarity down the ladder. The challenge, of course, would be persuading football’s powerhouses to sign up.
Cohen explains: “A luxury tax system imposes a spending threshold and, while clubs are free to spend above that threshold, they are “taxed” for every pound spent above it.
“As a hypothetical, if the luxury tax threshold is set at £10 million, a club spending over that could be taxed at a rate of 25 per cent of any amount spent over £10 million and below £15 million. Any amount spent over £15 million and below £20 million could be taxed at 50 per cent, and any amount spent over £20 million could be taxed at 100 per cent. The tax collected goes into a pot to be redistributed on an annual basis to the clubs who didn’t pay the tax that year.
“The tax revenue collected by one of the smaller clubs could not only ensure they remain financially viable, but also provide the revenue needed to re-sign a top player they might otherwise lose to a bigger club. It also ensures that clubs will continue to invest, but not massively overspend.”
Too radical for football? Let’s see.
