The future of the A-League salary cap

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By Pippinu, 4 Jun 2009 Pippinu is a Roar Guru

Tagged:: A-League, football, salary cap a-league

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Many views have been expressed on the operation of the salary cap system since the inception of the A-League some four or so years ago. The pros and cons can be summarised as follows.

Pros:
1. Guarantees financial discipline.
2. Gives all teams an equal chance (relatively speaking) at winning some silverware, thereby attracting and capturing interest for what are essentially new football clubs.

Cons:
1. Provides insufficient reward for those clubs achieving success.
2. Provides insufficient incentive to continue improving.
3. The overall quality of play stagnates because good players can’t be attracted to the league and/or the better younger players are quickly lost to overseas leagues.

A few alternatives, or at least improvements to the present system, have been suggested over the last few years, and these can be categorised as follows:

1. Introducing additional categories along the lines of the newish youth player category; and
2. Following the Bundesliga model of linking the salary cap to the turnover of the respective clubs in some way, shape or form, such that the higher the turnover, the higher your salary cap is.

It has recently occurred to me that a winding back of the salary cap regime is possible without it necessarily ushering in an era of overspending and financial irresponsibility.

How?

By focusing on two rules:

1. The foreign player limitation (which will retain a linkage to the ACL rules, or at least as close as possible); and
2. Over age rules, i.e. each club being allowed a maximum of so many domestic players over a certain age.

Let us take each rule in turn.

Foreign player limitation
Let us assume it will remain very similar to what it is now, or is about to become (and pardon me if my understanding of it is a bit fuzzy), but I’m thinking of the 4 plus 1 rule, meaning 5 foreign players, of which one must come from within the ACL.

The new salary cap regime would be limited to this category of player alone.

This is the one category of player where the sky can be the limit, but it’s also a category which carries a fair bit of interest and which can quickly usher in a sense of excitement for fans.

I would favour a salary cap applying to this category of player only, but a relatively generous one to enable the recruitment of decent players (say, around half of what is currently applied to the whole squad, or around the $1.2 million mark).

Overage limitation
This initially sounds counter-intuitive, so hear me out first. Let us assume that over and above the 5 foreign players, each club is allowed, say, a maximum of 10 domestic players aged over 21 at the start of the season.

The rest of the roster can be filled up with any amount of players aged below 21.

No salary cap would apply to either the over or under 21s. What is the immediate effect of this rule?

1. Clubs must have very strong youth programs to have a steady stream of ready made players who can step into teams as required.
2. There is a strong incentive to retain the elite youth players (those on the verge of going overseas), for maybe one more year, and the capacity is there to do so because no salary cap is applying to all domestic players.
3. For the non-elite youth players, well, let’s be honest, they are relatively cheap, so the absence of a salary cap is neither here or there.
4. As for the maximum 10 players aged over 21, well, let’s be honest again. If they’re good enough to play in a top overseas league, they are out of our price range anyway, no need for a salary cap there. On the other hand, if they’re playing for an average comp, the A-League club now stands half a chance of competing, but with a maximum of 10 such players, there’s less risk of financial irresponsibility.
5. It may open up the opportunity to attract Socceroos home before they turn 34.

One downside: what happens if there are a surplus of over 21 players, and insufficient spots on rosters? I’m not sure whether such a scenario would ever arise, or whether you would even notice it.

If your 141st over 21 player can’t squeeze into a club, what does that mean exactly?

His place is being taken up by an under 21 player – hardly a disaster.

Managing the movement of players from one category to another would present a bit of a challenge, but over time it would become a standard part of list management at all clubs.

In case anyone hasn’t worked it out yet, much of the financial responsibility comes from clubs being forced to carry as many U21s as over 21s (with the presumption that your U21s are generally going to be more affordable, with some notable exceptions).

The main attraction for me here is seeing the focus taken right away from squeezing players’ wages into a very tight salary cap, to more one of balancing your under and over age players and focusing on the development of youth.

And I can’t help but think that this a good thing.

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The Crowd Says (45) | Page 1 of Comments

janex said | June 4th 2009 @ 9:21am | Report comment

We are playing the game in Australia, and there are Australian ideals that will be factors, i.e. A-league finals and due to the size of the pie, the importance of the salary cap to be a successful and entertaining competition. Australians are not going to buy merchandise, pay for season tickets, watch games or support passionately a team that has NO chance of winning, and sits at the bottom of the table. That is also an Australianism with sport which needs to be considered and acknowledged. That is if we want the game and competition to grow exponentially.

Lets look at a successful salary cap model. An AFL club’s operating cost per annum avg. $15 mill, player salary cap $7.5 mill, next year $8 mill and 2011 $8.5 mill. The AFL contributes to each club (16) $6 mill currently, AFL club players roster number at 55 approx per club. Funding for the salary cap comes largely from the AFL’s $780 million TV rights deal – the richest ever in Australian sport.

The FFA will be in a strong position when the new TV deal comes up for negotiations in 2011, (TBC) Socceroos at 2010 WC, International club competition, FA cup style comp, expanded A-league to 12 with possible two new teams to enter from Melb & Western Syd. Interestingly that the head personnel at the FFA and A-league are both successful administrators from the AFL, that gives me personally a great deal of confidence that the successful culture will be implemented. Importantly the bigger picture is that Australia is in the AFC, the asian market is the worlds oyster, the fastest growing, biggest TV audience, its goes on. So TV rights is not confined to just the domestic audience.

We cannot ignore the criteria that the FFA, in administering the game at all levels need to abide to from the AFC, it’s a given.

Lets concentrate on quality, quality and quality. That will occur with a larger salary cap, bigger names at their prime will be playing in the A-league.

For too long the mentality in this country has been to transfer, propagate, and import methods from another land to clone our game. We have Australian issues that require Australian solutions. Lets stop trying to twist, and stretch the current system to be more like……. and lets start building a model that is going to make a domestic league something to be proud of and longer term a powerhouse in Asia. Australian’s have proved over and over that we punch well above our weight.

Lastly, I think we have to stop comparing to AFL and NRL etc. Neither comp has the international profile and international potential football has. I used the AFL salary cap as a successful model of what the tip of the iceberg is for A-league sooner rather than later. Patience is a virtue, and football at all levels in this country will be virtuous.

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Pippinu said | June 4th 2009 @ 9:30am | Report comment

Janex
I actually had a lot of trouble following what you were trying to say.

You appear to be in favour of the current salary cap, but you want to see more quality.

You don’t want to compare to the AFL and NRL, but you appear to dedicate over half your thread to the AFL (and seeing that you were the first post, no one had actually mentioned anyone else, least of all me).

I will just finish by saying that this proposal effectively supports the ideals of a salary cap, without actually having one in place – that’s the crux of my argument, that’s the sort of discussion I’m trying to start.

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Art Sapphire said | June 4th 2009 @ 9:40am | Report comment

Pip – my head hurts after reading all that. Gonzo journalist one day – future FFA administrator the next.

I thought you were addicted to Football Manager but I did not realise they have come out with a copy of Football Administrator. In this game you are a virtual Ben Buckley and your objective is to climb thru the ranks with tact, diplomacy and the odd bribe to reach the ultimate goal of becoming the virtual Herr Blatter. Good Luck Pip!

Personally, I would wait to see how much money the FFA get from the new TV deal and how much they then distribute to the clubs. I would prefer a cap based on percentage of total turnover but we probably need a few more seasons as we bed down the new teams for this to be contemplated.

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Pippinu said | June 4th 2009 @ 9:51am | Report comment

Art

that’s a fair enough comment about waiting until the outcome of the next deal (a few years away).

But once again, this article is questioning whether we need this type of salary cap, or whether its goals can be garnered by other means.

The question would remain, even if the quantum of the salary cap rose, but its operation remained substantially the same.

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Pippinu said | June 4th 2009 @ 9:55am | Report comment

I would ask that readers think through the scenario where absolutely no salary cap applies to domestic players – what do we think would happen precisely? (especially if there was some sort of cap on the number of players you can carry over the age of 21)

Would a player like, say, Matthew Kemp, or Stephen Pace, or even Andrew Packer, attract a larger salary in the absence of a salary cap?

I’m arguing that they probably wouldn’t – and that’s why I’m arguing that the focus of a salary cap should be on foreign players (which is where clubs are most likely going to break the bank in a bid to win silverware).

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Towser said | June 4th 2009 @ 10:12am | Report comment

Pippinu

If theres no salary cap on domestic players whats to stop the biggest clubs(MV for instance)buying the cream of those domestic players?

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Millster said | June 4th 2009 @ 10:14am | Report comment

Pip – good article on a key issue. And I like your thinking re alternative structures for the cap to be much more focused on the foreign players, or to be age-related. I think these are exactly the kinds of considerations we need to move to. (One small detail is whether an Aussie who had played overseas would be or wouldn’t be within the cap – a Harry Kewell for example)

I also think we need to use a much better cap to promote club stability and loyalty. You may recall that I wrote a piece about how the “soft cap” in the American NBA achieves this and how that model could transfer to A-League. Here is the URL for those who want a quick look. http://www.theroar.com.au/2008/02/05/the-nbas-soft-salary-cap-and-its-potential-for-the-a-league/

Anyway good stuff. My long-term view is against the notion of a salary cap altogether as I think any salary cap creates a whole lot of compromises for a code. But in the meantime we need one for financial stability reasons, so Ireally applaud you for thinking of ways of making it work the best possible way.

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Art Sapphire said | June 4th 2009 @ 10:21am | Report comment

Good point Towser –

This might also apply to Australian players who gets offers from Asia. These guys will never make it in the big leagues of Europe but get offered big salaries to play in China, Korea like North, Griffiths, Big Og.

If there is no salary cap on domestic players you will end up with a situation where clubs will be tempted to pay over the odds to stop their players from going to Asia.

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nath said | June 4th 2009 @ 10:23am | Report comment

I agree that the salary cap should be a percentage of turnover, although i believe an incentive should be added for club / player loyalty. For each season that they are at the club a percentage of their wage should fall out of the salary cap.
The workings of the percentage outside of the cap could be as follows.
1-2 Years 0% Total earnings $100000
3-4 Years 5% Total earnings $105000
5-6 Years 10% Total earnings $115500
7-10 Years 17% Total earnings $135135
10+ Years 22% Total earnings $165000
So through out the players time at the club would only ever have to declare $100000 in the salary cap. The rest would be classed as top ups. This would also promote club loyalty and stop the merry go round of transfers as we have seen in the past, ie Topor Stanley who has had 3 clubs in 5 years!

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Pippinu said | June 4th 2009 @ 10:29am | Report comment

Towser

This is where the over age limit comes into it. MV can only carry 10 overage domestic players on their books.

Now let us assume MV could sign the 10 best overage domestic players tomorrow. For starters, it would probably have to get a few of its books just to make room for one more.

But I’m curious – who would be the 10 very best overage domestic players? There are probably 20 to 30 who are all at a very similar level – in other words, it’s almost impossible for a team to monopolise the cream of the crop (IMHO).

On top of that, there’s a real bonus in devloping your own players, putting them on 4 year contracts, etc.

Millster
I would include someone like Harry as a “domestic” player, or non-foreign, or whatever term you wish to use.

But I don’t see it as an issue – those sorts of Socceroos are so far above our paying capacity, that it’s a rarity that any club will cough up the money to buy them.

I know that GCU have grabbed a beauty with Culina – but here’s an interesting question. Would GCU fork out the money to have three or four Socceroos of Culina’s quality? Maybe (but it would mean a massive amount of red for years to come).

Most importantly, could an Australian club pull three or four such players at once from their foreign clubs? I’d say that would be next to impossible, regardless of the salary they were able to offer.

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