@owlstalk Posted June 13, 2020 Share Posted June 13, 2020 Championship clubs urged to cap wages at 70 per cent of revenue by Deloitte The financial firm believes football can learn lessons from other sports, such as rugby union and Formula One A salary cap at 70 per cent of a club's revenue will be crucial to the survival of Championship sides affected by the coronavirus pandemic, according to financial services firm Deloitte. The company's Annual Review of Football Finance 2020 found each of the three divisions of the English Football League achieved record revenues in 2018-19, topping a combined £1b for the first time. Despite that, second-tier sides had a wages-to-turnover ratio of 107 per cent and lost a combined £300m in 2018-19. Deloitte says the problem is therefore not how money is distributed within the English game, but that there needs to be tighter controls on how it is spent, especially at Championship level. Dan Jones, the head of Deloitte's sports business group said: "League One and League Two were doing a lot of the right things already - yes you had isolated incidents like Bury but you could isolate those and say they were down to bad management - systemically they were in a better place than they had been 10 years previously. "What has happened with the pandemic is that if you take the ability to play football matches in front of crowds away from League One and League Two clubs they haven't got the broadcasting money to fall back on, that is going to be very painful and it's going to be very hard for those clubs to manage that situation. You can't anticipate and plan for that situation. "For the Championship though that was a situation where you look at our 18-19 numbers, you've got 107 per cent of revenue going out on wages, you can see the problem looming, £300m of losses across the Championship clubs, you can see what the problem is. "A salary cap is a very blunt instrument, but if you were to say you can only spend 70 per cent of revenue on salary, and apply that in 18-19, you take £300m out of the wage bill and you pretty much wipe out the losses to the Championship at a stroke by that single measure." Football needs to learn from other sports Deloitte, which has been involved in providing financial information to EFL clubs involved in discussions with players over wage deferrals and cuts, believes football can learn lessons from other sports, such as rugby union and Formula One. "You wind the clock back 18 months, two years, everyone was saying how can we make it work (in Premiership rugby) and you then have the Saracens case and you see that actually these things have worked, they can have teeth, they can be enforced," Jones added. "Formula One is the same, it's just introduced a new cost cap. It's a sport where that's been talked about forever as something that the sport needs and it's always been 'oh, it's too difficult, it's too complex, you can't do it'. "I just think if Formula One can do it, if Premiership Rugby can do it, I don't see why the Championship can't do it. The need is more urgent and more long-standing in the Championship than it is even in those other sports." 4 Owlstalk Shop Link to comment Share on other sites More sharing options...
Nero Posted June 13, 2020 Share Posted June 13, 2020 Salary cap is the way forward. Completely agree. But these comments ignore the elephant in the room. The problem is Premiership sides simply wont allow it for relegated sides. 7 Link to comment Share on other sites More sharing options...
whatdial Posted June 13, 2020 Share Posted June 13, 2020 Worked well in rugby for Saracens Link to comment Share on other sites More sharing options...
Animis Posted June 13, 2020 Share Posted June 13, 2020 It's a fairly well known point, and one most businesses have to adopt, but football has ceased to be a business - just look at the SWFC model. Problem is that since owners started throwing money into clubs; Jack Walker probably the first example, football has lost it's financial disciple; simply because it didn't need to whilst these owners used the clubs as a hobby. The owners don't (didn't) have to answer to anyone. Add the gross subsidy revenue from Sky and parachute payments and you have a out-of-control cocktail of nonsense, where players can command a couple of hundred thousand a week in salaries - in what world is this common sense? Then people complain about financial fair play restrictions as though that's the problem - like people complaining about speed cameras because the can't break the law. 6 Link to comment Share on other sites More sharing options...
TheGaffer Posted June 13, 2020 Share Posted June 13, 2020 It's daft to relate it to revunue though when you have parachute payments. It could work if you say 70% of the average revenue for the past 3 seasons for all clubs for instance. Might mean some clubs max it out and others not but at least it's a level playing field for all clubs in the amount they are allowed to spend Link to comment Share on other sites More sharing options...
Guest timrud Posted June 13, 2020 Share Posted June 13, 2020 The pandemic has presented an oppertunity to make changes that otherwise would never get off the ground. There should be a transition perioid where Prem players who already have a contract are exempt from calculations for a wage cap. Any new Prem contract has a reduction built into it for relegation. Link to comment Share on other sites More sharing options...
S36 OWL Posted June 13, 2020 Share Posted June 13, 2020 4 minutes ago, timrud said: The pandemic has presented an oppertunity to make changes that otherwise would never get off the ground. There should be a transition perioid where Prem players who already have a contract are exempt from calculations for a wage cap. Any new Prem contract has a reduction built into it for relegation. Which would make parachute payments un-nessasry. 2 Link to comment Share on other sites More sharing options...
Guest Posted June 13, 2020 Share Posted June 13, 2020 14 minutes ago, Nero said: Salary cap is the way forward. Completely agree. But these comments ignore the elephant in the room. The problem is Premiership sides simply wont allow it for relegated sides. Absolutely spot on - and then the problem does swing back in a way to the distribution being a significant factor. Clubs come down from the Premier League with players on big wages - a salary cap based on income is a good idea in theory - but then you get these 3 teams with parachute payments for the next 3 seasons if they don't get promoted. That is a significant advantage if everyone is working from a salary cap of 70% of income. That is also why many clubs at our level are overspending on salaries - they have to offer big wages because 6,7,8 clubs, maybe more at any one time have parachute payments in this division and the players have the power, if clubs trying to compete don't offer comparable wages then the highest valued players get farmed by the clubs that have the parachute money. Too simplistic to say distribution isn't an issue when this is the case. Link to comment Share on other sites More sharing options...
Guest wilyfox Posted June 13, 2020 Share Posted June 13, 2020 You can't put a cap on greed. It will always want more. Link to comment Share on other sites More sharing options...
Guest The Horse Posted June 13, 2020 Share Posted June 13, 2020 Basically, one of the most expensive accounting firms in the world has just said 'don't spend beyond your means'. Anyone of us could have said that. Where's our fee? Eh? Eh?? Link to comment Share on other sites More sharing options...
@owlstalk Posted June 13, 2020 Author Share Posted June 13, 2020 Just now, wilyfox said: You can't put a cap on greed. It will always want more. I think the whole point of the thread, and of the message in the first post is that you CAN Owlstalk Shop Link to comment Share on other sites More sharing options...
@owlstalk Posted June 13, 2020 Author Share Posted June 13, 2020 Just now, The Horse said: Basically, one of the most expensive accounting firms in the world has just said 'don't spend beyond your means'. Anyone of us could have said that. Where's our fee? Eh? Eh?? They advise football. Therefore it's very very relevant that they've said it 1 Owlstalk Shop Link to comment Share on other sites More sharing options...
Jeffjohnsonmyhero Posted June 13, 2020 Share Posted June 13, 2020 If a recession is on its way ,People will have more important things to spend money on than football . 1 Link to comment Share on other sites More sharing options...
akbuk Posted June 13, 2020 Share Posted June 13, 2020 51 minutes ago, Nero said: Salary cap is the way forward. Completely agree. But these comments ignore the elephant in the room. The problem is Premiership sides simply wont allow it for relegated sides. Parachute payments need to be only used to buy contracts make people redundant etc and that rule needs to be made . Link to comment Share on other sites More sharing options...
Guest wilyfox Posted June 13, 2020 Share Posted June 13, 2020 2 minutes ago, @owlstalk said: I think the whole point of the thread, and of the message in the first post is that you CAN If you believe that, best of luck to you. Unless there are restrictions imposed on the premier league, whatever the EFL do is insignificant. Do you think champ clubs want to fork out their whole revenue on player wages?! They're extorted in order to compete. Restrict champ clubs, and you may as well end promotion to the premier league because the divide would be so vast. The quality of the championship has improved in recent years because clubs have over-extended themselves in signing top-tier players & managers. They'd go elsewhere if no longer affordable, and the champ would regress. Link to comment Share on other sites More sharing options...
@owlstalk Posted June 13, 2020 Author Share Posted June 13, 2020 5 minutes ago, wilyfox said: If you believe that, best of luck to you. Unless there are restrictions imposed on the premier league, whatever the EFL do is insignificant. Do you think champ clubs want to fork out their whole revenue on player wages?! They're extorted in order to compete. Restrict champ clubs, and you may as well end promotion to the premier league because the divide would be so vast. The quality of the championship has improved in recent years because clubs have over-extended themselves in signing top-tier players & managers. They'd go elsewhere if no longer affordable, and the champ would regress. Rugby fans said the exact same thing Look what happened there Owlstalk Shop Link to comment Share on other sites More sharing options...
nevthelodgemoorowl Posted June 13, 2020 Share Posted June 13, 2020 (edited) Football is the product not premiership football . The FA which was the ruling body has taken it's eye off the ball and the ruling body status is in the dust bin. The Government could change it but won't. The only answer has to be the intervention of the fans but the FSA and the FSF have little impact in imposing any real influence. No unity amongst the EFL clubs either as they all follow their individual self interest. What the EFL must do is flex their muscles regarding spending from any external source either by blocking parachute payment spending or perhaps handing out penalty points deductions pro rata to the parachute payments; in effect a handicap system. Another alternative would be to break away from any relationship with the premiership and sell games packages to World Wide TV. The FA to charge high end membership fees. But no the EFL the FA just suck it up ! I would just add that ruling bodies should be opened up to ordinary fans, that is the real ownership of the game. Edited June 13, 2020 by nevthelodgemoorowl 1 Link to comment Share on other sites More sharing options...
sheffsteel Posted June 13, 2020 Share Posted June 13, 2020 (edited) 56 minutes ago, TheGaffer said: Might mean some clubs max it out and others not but at least it's a level playing field for all clubs Regards this issue we need to clarify what the aim of the reforms are. If it’s to ensure the survival of football clubs then salary caps for the EFL is a great solution. However if the aim is more about fairness....then it needs to address why relegated PL clubs have resources to continue paying higher salaries....ensuring relegated PL have a clear advantage. The report done by finance experts seems to be ONLY finding solutions to help clubs survive....competitive fairness isn’t in their thoughts. Edited June 13, 2020 by sheffsteel 1 Link to comment Share on other sites More sharing options...
adelphi1867 Posted June 13, 2020 Share Posted June 13, 2020 (edited) 1 hour ago, Nero said: Salary cap is the way forward. Completely agree. But these comments ignore the elephant in the room. The problem is Premiership sides simply wont allow it for relegated sides. That's the 1st thing I thought of when I read the report t'other day. 70% of a relegated Prem club is far more than 70% of any other Club. Maybe some form of transfer ban on relegated teams for the duration of the parachute payments?. The problem is, as I see it, that the Prem is a separate organisation to the FA and EFL, only the fact that ALL football clubs have to be a member of their national Association to enter the global game. Edited June 13, 2020 by adelphi1867 Link to comment Share on other sites More sharing options...
pazowl55 Posted June 13, 2020 Share Posted June 13, 2020 4 minutes ago, @owlstalk said: Rugby fans said the exact same thing Look what happened there Money is a lot different between the two though isnt is. And you would never get Premier league clubs to agree to it. 1 Link to comment Share on other sites More sharing options...
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