Championship salary cap next season? (2 Viewers)

[Liquid Gold]

Take your point, but I think wages should be judged against turnover of the club. Problem is, if you include owners’ contributions then if they sell there is no guarantee that the new owner will want to fund losses like the previous owner. The only legal alternative would be for owners to personally guarantee contracts (or a certain amount of contracts outside the turnover threshold) though in practice very few would agree to this. Let them put money in for transfer fees, no real issue with that, but if sustainability is the order of the day then it’s got to be well thought out.

But then all the club has to do is sell the players on the cheap and the expense is gone. If you sit at your turnover forever you are literally just cementing your place in the ladder. There needs to be a way of clubs being able to sustainably target higher up. Perhaps if an owners was bound by law to cover all contracts the club signed when they were owner even if they sold. Would you seriously have wanted the FA to enforce turnover % while we were in league two and Bournemouth in the Prem?

 

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[tisza]

What will be interesting is how League treat Derby and Wednesday with their obvious attempts to manipulate FFP and football finance rules.
Let them off and it'll be open season on FFP manipulation.

 

[Sky_Blue_Dreamer]

But then all the club has to do is sell the players on the cheap and the expense is gone. If you sit at your turnover forever you are literally just cementing your place in the ladder. There needs to be a way of clubs being able to sustainably target higher up. Perhaps if an owners was bound by law to cover all contracts the club signed when they were owner even if they sold. Would you seriously have wanted the FA to enforce turnover % while we were in league two and Bournemouth in the Prem?

Of course they could sell the high earners on the cheap or let them go for free. But isn't that also playing into the hands of the bigger clubs? Sharks circle and pick up good players for peanuts. Plus how would that affect the ability to raise finance and solvency? If you've got a player that the market would rate at £50m and you have to give him away/sell him cheap to get his wages off the books that's a massive hit on the balance sheet. It'd be practically impossible for any auditor to sign a club off as a going concern because the situation could change massively in a very short space of time.

 

[Liquid Gold]

Of course they could sell the high earners on the cheap or let them go for free. But isn't that also playing into the hands of the bigger clubs? Sharks circle and pick up good players for peanuts. Plus how would that affect the ability to raise finance and solvency? If you've got a player that the market would rate at £50m and you have to give him away/sell him cheap to get his wages off the books that's a massive hit on the balance sheet. It'd be practically impossible for any auditor to sign a club off as a going concern because the situation could change massively in a very short space of time.

That's when squad size caps come into play, the big clubs might be able to pick up a decent player on the cheap but that would mean they have to sell/release a decent player on the cheap.

 

[Orca]

Most clubs have promotion rises or bonuses. What I’m talking about is a complete overhaul of the contract system so clubs aren’t forced to pay crazy wages on relegation and players are rewarded properly for promotion. Surely you get that?

Clubs aren't forced to pay anything. If a player won't sign for you because he won't accept a relegation wage cut in his contract, then don't sign him. We know the football authorities are basically useless in their governance, so clubs should have their own house in order, like any business should.

 

[NorthernWisdom]

Salary caps are a bad idea, just look at the issues caused in rugby.

Club should also be personally responsible for running themselves. They wanna run themselves into a lot of debt in the pursuit of the Premiership? It’s up to them.

Just about every club has had a benefactor to help them make that jump (we did, with David Cooke).

The main thing is a system that ensures the cash is granted, not loaned, to the club.

 

[Liquid Gold]

Clubs aren't forced to pay anything. If a player won't sign for you because he won't accept a relegation wage cut in his contract, then don't sign him. We know the football authorities are basically useless in their governance, so clubs should have their own house in order, like any business should.

Yeah you don't sign them and pick from the huge queue of players waiting to play for below market wages. Don't be so naive.

The whole point is that governance is so bad and needs to be overhauled not just ignore the problem and tell clubs to act responsibly, that clearly isn't working.

 

[Orca]

Yeah you don't sign them and pick from the huge queue of players waiting to play for below market wages. Don't be so naive.

The whole point is that governance is so bad and needs to be overhauled not just ignore the problem and tell clubs to act responsibly, that clearly isn't working.

I don't disagree with the premise, but there are plenty of clubs who act responsibly off their own bat.

 

[Liquid Gold]

I don't disagree with the premise, but there are plenty of clubs who act responsibly off their own bat.

Who are you thinking of?

 

[Nick]

Really don’t agree with cushions post relegation. Don’t agree with parachute payments either. Players need to accept if they get a club relegated they will lose wages or need to leave. Otherwise you completely distort the competitiveness of the league.

Exactly, they should all have relegation clauses in their contracts.

They can either be released or they take a massive wage cut.

 

[Sky_Blue_Dreamer]

That's when squad size caps come into play, the big clubs might be able to pick up a decent player on the cheap but that would mean they have to sell/release a decent player on the cheap.

Didn't realise you were adding a squad cap in as well.

 

[Liquid Gold]

Didn't realise you were adding a squad cap in as well.

Always adding a squad cap. Will did things better than anything else imo

 

[Sky_Blue_Dreamer]

Exactly, they should all have relegation clauses in their contracts.

They can either be released or they take a massive wage cut.

But big players will choose to be released. They quickly get another big contract. But in doing so the club will have to forego transfer fees so although it gets the wage bill down it could result in an immediate significant 'loss' on the balance sheet. Paying transfer fees would become a very risky business for all but the top clubs. and would have to value all their players at zero to be prudent.

 

[Sky_Blue_Dreamer]

Always adding a squad cap. Will did things better than anything else imo

Agree entirely. Fixes more problems than anything else IMO - hoarding of talent, gulf between top clubs and the rest, ability of youngsters to get competitive games, increase in overall ability of the leagues (and thus hopefully national team).

It HAS to come in eventually.

 

[Liquid Gold]

But big players will choose to be released. They quickly get another big contract. But in doing so the club will have to forego transfer fees so although it gets the wage bill down it could result in an immediate significant 'loss' on the balance sheet. Paying transfer fees would become a very risky business for all but the top clubs. and would have to value all their players at zero to be prudent.

It would just need a major adjustment in the balance sheet to recognise that players could be sold at a much lower fee, they wouldn't be able to hold players at a massive value and every club would be adjusting at the same time so no unfair advantages.

Problems come in if other European leagues don't do the same. That's where American sports have an advantage in a closed system, teams and players have to suck it up and accept the rules.

 

[Sky_Blue_Dreamer]

It would just need a major adjustment in the balance sheet to recognise that players could be sold at a much lower fee, they wouldn't be able to hold players at a massive value and every club would be adjusting at the same time so no unfair advantages.

Problems come in if other European leagues don't do the same. That's where American sports have an advantage in a closed system, teams and players have to suck it up and accept the rules.

I get your point in terms of competitiveness as everyone wold be doing it at the same time, as they did with Bosman.

But it does have a massive effect on their solvency if you're suddenly writing down/ off huge swathes of assets on the balance sheets. Exterior lenders and creditors would get a bit jumpy and borrowing rates for the clubs would increase significantly due to that reducing a clubs competitiveness and increasing outgoings in interest payments etc.

It'd favour the larger clubs who are hardly at any risk whatsoever of relegation (don't know if a similar clause would be added in for European football for them) so can maintain their balance sheet asset value.

Although write-down would be the prudent course of action it would only taken a few clubs taking the risk not to do so to effectively force the others to follow suit or risk being uncompetitive. Which then becomes a massive risk to the long term stability of the club if they get relegated because they'd take the massive balance sheet hit as players left and income dropped massively all in one go.

 

[wingy]

Sort the Prem out.
The rest will follow .

 

[oldskyblue58]

Sorry but balance sheets should already state player values at fair value. So in theory the players are stated at their current worth not their original cost. That's a companies act and accounts regulation. Relegation usually happens before most clubs financial year end so loss of player value should be already included at that point

Not to mention most clubs don't file their accounts until well in to the following season so many disposals are known and can be adjusted to the actual value

Simply telling clubs to write down players to some figure to expedite a sale decreases balance sheets and creates losses. It is artificial if the market values them higher and in its self such devaluation could damage clubs. Write a player down from 50m to 25m to encourage sale to get wages off the books might save 5 or 6m in wages but creates 25m losses on the profit & loss account as well. I would think it also restricts the room for sales negotiations

Also many clubs are dependent on player sales to survive they need to maximise that income which could easily out weigh a short period of high wages.

An alternative would be not to class players as assets at all and write off in year of purchase and show sale in year of disposal. But thats going to create losses too as well as some years of profit

What might help is that players have to be paid for in full on purchase. That might well drive the transfer and wages market down

Yes i agree squad sizes should be regulated and to stop the big clubs stockpiling players. That in its self will help drive wage costs down to a degree. Have no loan market probably would drive wages down also because currently stockpiled players would not be paid premier league wages And would have to seek contracts at lower rates or alternative careers.

Pretty certain most professional clubs would structure deals to cover reduction in basic salary on relegation. The system i think needs sharpening but it already tries to incentivise via bonuses.

The real problem isn't wages as such it is that too many clubs do not seek to work within the means -cash- available to them. Until that happens then nothing changes. You wouldn't do it in another non football business why should football be different. Of course the natural end game to that is that some clubs go out of business - if they are not viable sorry but so be it.

Just to be clear" means available" is not just turnover and player sales, you have to include other sources including owners funds. But you have to look at whether it creates unsupportable debt.

Also a problem is the football creditors rule which seems to underwrite the stupid financial gambles some owners take.

The governance is a real issue. Largely because it is controlled by the clubs themselves and there is no appetite to deal with the real core issues

 

[tisza]

Sorry but balance sheets should already state player values at fair value. So in theory the players are stated at their current worth not their original cost. That's a companies act and accounts regulation. Relegation usually happens before most clubs financial year end so loss of player value should be already included at that point

Not to mention most clubs don't file their accounts until well in to the following season so many disposals are known and can be adjusted to the actual value

Simply telling clubs to write down players to some figure to expedite a sale decreases balance sheets and creates losses. It is artificial if the market values them higher and in its self such devaluation could damage clubs. Write a player down from 50m to 25m to encourage sale to get wages off the books might save 5 or 6m in wages but creates 25m losses on the profit & loss account as well. I would think it also restricts the room for sales negotiations

Also many clubs are dependent on player sales to survive they need to maximise that income which could easily out weigh a short period of high wages.

An alternative would be not to class players as assets at all and write off in year of purchase and show sale in year of disposal. But thats going to create losses too as well as some years of profit

What might help is that players have to be paid for in full on purchase. That might well drive the transfer and wages market down

Yes i agree squad sizes should be regulated and to stop the big clubs stockpiling players. That in its self will help drive wage costs down to a degree. Have no loan market probably would drive wages down also because currently stockpiled players would not be paid premier league wages And would have to seek contracts at lower rates or alternative careers.

Pretty certain most professional clubs would structure deals to cover reduction in basic salary on relegation. The system i think needs sharpening but it already tries to incentivise via bonuses.

The real problem isn't wages as such it is that too many clubs do not seek to work within the means -cash- available to them. Until that happens then nothing changes. You wouldn't do it in another non football business why should football be different. Of course the natural end game to that is that some clubs go out of business - if they are not viable sorry but so be it.

Just to be clear" means available" is not just turnover and player sales, you have to include other sources including owners funds. But you have to look at whether it creates unsupportable debt.

Also a problem is the football creditors rule which seems to underwrite the stupid financial gambles some owners take.

The governance is a real issue. Largely because it is controlled by the clubs themselves and there is no appetite to deal with the real core issues

I thought players were valued on the basis of their contract rather than a theoretical market value. ( For the balance sheet)?

 

[oldskyblue58]

Used to be and that is still the starting point but accounting rules have changed. For instance if you read the otium accounts they now state that contracts are apportioned but then adjusted for any permanent diminution in value.

They dont revalue up as thats unknown but any known or expected drop in value is accounted for

Home grown players are not valued.

 

[tisza]

Used to be and that is still the starting point but accounting rules have changed. For instance if you read the otium accounts they now state that contracts are apportioned but then adjusted for any permanent diminution in value.

They dont revalue up as thats unknown but any known or expected drop in value is accounted for

Home grown players are not valued.

Are players' values depreciated over length of contract?

 

[Sky_Blue_Dreamer]

Are players' values depreciated over length of contract?

I think so. It would certainly be the most sensible way of doing it using S/L method.

 

[tisza]

I think so. It would certainly be the most sensible way of doing it using S/L method.

I think the "old" way depreciated them based on the value of their playing contract. But now technically a player in the last year of his contract would surely be worth nothing?

 

[Liquid Gold]

This is the sort f thing we're up against. Our top earner nowhere near someone not even in their match day squad

West Bromwich Albion Player Wages 19/20: Top 20 Highest Earners

Player wages in football seem to rise every year, with players earning tens of thousands of pounds per week – more than they will ever need – for kicking a ball around on a pitch. West …

wbareport.com

 

[Sky_Blue_Dreamer]

I think the "old" way depreciated them based on the value of their playing contract. But now technically a player in the last year of his contract would surely be worth nothing?

Well if they wanted to do that they could just take a year off the contract in the depreciation calculation.

They could still get a small fee in the summer of their final year and as you would only have to adjust the asset value by the difference of the amount received against realisable value then it shouldn't be a huge amount anyway. Just keeps the value in the balance sheet for a bit longer.

 

[SeaSeeEffCee]

This is the sort f thing we're up against. Our top earner nowhere near someone not even in their match day squad

West Bromwich Albion Player Wages 19/20: Top 20 Highest Earners

Player wages in football seem to rise every year, with players earning tens of thousands of pounds per week – more than they will ever need – for kicking a ball around on a pitch. West …

wbareport.com

Why don't SISU just back Robins and quadruple the budget?