A recent article I wrote about The Marquee Conundrum actually developed into an interesting debate about the sporting merits of a salary cap. It is an interesting discussion that often boils down to someone’s political and economic beliefs.
To understand the salary cap debate for the A-League, a broader understanding of salary caps around the sporting world is needed.
The NFL first introduced a salary cap in 1994, the NBA had theirs implemented in 1984. The NHL has one and MLB has a “luxury” cap.
Australia, of course, has salary caps for the AFL and NFL.
The basic reason most of these leagues introduced a salary cap is as a method of keeping overall costs down, and to ensure parity between teams so wealthy teams cannot entrench dominance by signing many more top players than their rivals.
In theory and ultimately, in practise, the salary cap achieves these motivations but it still hasn’t come without what I would call “glaring contradictions”.
The most obvious contradiction is when you put the word “sport” next to “salary cap”.
Sport is about being the biggest, best, fastest, most innovative and most dominant participant to win a prize measured by athletic or technical prowess.
A salary cap is about forcing every team onto an even playing field and to curb dominance.
Put simply, a salary cap is not sporting.
One of the other curious contradictions of salary caps and the sporting world is that the USA, which is the supposed to be the home of capitalism and the free market, has implemented what in essence is a socialist ideology.
Many Americans will call you communist if you dare suggest they socialise healthcare but every weekend during the winter months they cheer for their favourite team in their favourite league that is run with a “socialist” salary cap designed to “spread the wealth”.
For them, you cannot get more “American” than the NFL/NBA/NHL or MLB yet all these organisations are all wearing “red underpants”.
The curious contradictions continue in Europe.
Most European nations, for all intents and purposes, are socialist set ups. With the French with their 35 hr work week or Denmark with it’s high taxes and collective wealth, you can really see socialism at it’s finest.
Sports in Europe, however, is where the socialism experiment ends and the free market/capitalism is the norm.
Football is the obvious example where the rich clubs keep getting richer and the poorer/weaker clubs fight tooth and nail for a slice of the pie.
Sounds like the current state of America to me.
Formula One is also another example of the free market in European sports. While it is a world’s fair, essentially all the F1 teams are based in Europe and they are all left to their own devices to try and win the championship.
There have been recent moves in football and Formula One to reign in costs but these implementations are still far removed from a salary cap.
Back to the argument regarding the A-League and it’s salary cap.
I believe that the salary cap has necessarily played it’s part in the founding of the A-League but sooner rather than later it has to go.
A salary cap was needed for the inception of the A-League because we may well have seen an “eyes bigger than stomach” scenario.
In the initial excitement of the new league, clubs may have tried to outdo everyone else including their own economic sense.
No salary cap at this launch stage actually would have resulted in “failure to launch” and it all may have ended in tears.
This argument is no longer valid as the league is now established and the sting of constant red ink has scarred CEO’s of most A-League clubs.
Money is flowing in from bigger TV deals, sponsorship is at all time high and all the clubs have a solid fan-base.
Our league is in no danger of economic collapse which is why removing the salary cap is not fraught with danger anymore.
I was recently turned to an interesting article about the A-League financial story. It was called “In Search of Blue Oceans: An Analysis on the A-League Business Model”.
Check it out, it is an interesting read.
In business terms, “Blue Ocean” basically means trying and doing different things to the competition.
Removing the salary cap is a “Blue Ocean” move that I believe could strengthen the A-League immensely.
Many people will argue that if you remove the salary cap that smaller clubs will become weaker and the larger clubs will dominate.
The salary cap is now stifling the league and while it keeps the Central Coast Mariners closer in competitive terms to the Melbourne Victory, it is actually ensuring they will continue to struggle financially year on year.
By removing the salary cap, you allow the bigger clubs to purchase a lot more higher quality players with the result being that you see a better product on the field.
Fans will flock to see better quality football, TV revenue rises, sponsorship deals increase in size and the money base increases.
I still believe the TV deal and league naming rights should be centralised and that pie should be divided evenly, everything else is up to the clubs and may the best organisation win.
Central Coast would not die this way but would actually thrive due to more money coming their way. It would be up to them to find alternative ways to compete with Melbourne Victory on the football pitch.
Don’t be fooled in thinking that because of the evenness of the A-League you are watching genuine sport.
Football is different to the AFL and NRL in that it is a sport on a truly global scale and the management of it has to be “Blue Ocean” compared to our more established competitors.
We have the active supporters, a truly unique sporting experience in this country.
The next unique step is to remove the salary cap and let teams compete and improve the standard that way.
It may very well keep Central Coast in Gosford.
Just understand that the term “sporting salary cap” is a huge contradiction.
Football_Wunderkind
Roar Pro
+1
nordster
Guest
Just on smaller clubs and their crowds....would they go down that far without a cap? Many of them are not doing that great on the table anyway yet they still have their committed core built over time. The top clubs could capitalise and push further i agree there....they need to embrace growth rather than be held back by other clubs.
AZ_RBB
Guest
NRL is a 16 team 26 round competition.
Football_Wunderkind
Roar Pro
Actually out of the 3 competitions, NRL is the probably the fairest of them all. It is the only professional league in Australia where the teams play each other home and away. The AFL season always grinds my gears with it's incomplete version of a true league system.
asanchez
Roar Guru
That was $10m a year guys, not $10! Please discuss...
asanchez
Roar Guru
I think the question about abolishing the salary cap is a matter of if not when. The only remaining question is are we ready for the salary cap to be abolished right now? My answer is a definite NO! At best 8 out of the 10 clubs are actually in the black right now. That's a minimum of 8 clubs if not 9 losing money. So we're not ready on that front. There's only 5 clubs that get good crowds, the other 5 clubs don't get great crowds, and if we abolished the cap now the 5 clubs that get good crowds would be making more money and be able to get better players, which in turn would reduce the smaller clubs chances to compete, and completely damage their slow building crowds long term. It would decrease the competition. So on that front, were also not ready. We're only a 9YO competition. We're not ready to get rid of the cap just yet. I like the idea, but we're a fair way off yet. If, and it's a big if, all the clubs are getting over $10 a year to cover all their costs, then we can revisit it. But I suggest a different system, why don't we; 1. Keep increasing the salary cap every TV deal, which should continuously see good player being lured to the A-league 2. Longer term, for the FFA to have a marquee fund of $3m-$5m per club per year, which it pays from the TV deal, to each of the clubs for a maximum of 2 marquee players per season. This would be separate of the team salary cap. 3. An FFA panel would sign off on all the Marquee players, deciding if they fit the criteria or not. I don't think abolishing the salary cap is a bad idea long term, but I think this system would work better here in OZ.
mushi
Guest
I think you've made the exact mistake that the article warns about in mislabeling something as a blue ocean. You are simply using an old strategy no longer employed by the competition to target a increased share of the exact same defined competitive market
nordster
Guest
A larger cap is ok in the interim if they remove the minimum wage floor. But its still arbitrary really when u cut across all the clubs and their specific situations. The real issue is the mentality around equalisation rather than raising the cap. Thats what will hold football back long term...the lack of real competition, up and down the league.
nordster
Guest
Yes *a* player can be signed. The aleague says all teams can afford them equally so they all get the same amount effectively. Oh the stupid, it burns.... In reality, some teams can afford more than others. In football, some teams have 'marquee' level players, others do not. Just a fact of life in big bad football...too much to handle for the egalitarian cult of Strayan sport though. Mediocrity is fine for walled off sports, not so much for football. As for ADP being a bad signing? Well im no smurfette but even i'll bow down to their board on this one....
1860melbourne
Guest
Probably too soon in the evolution of the league to scrap the cap!! Also I have a feeling the salary cap is here to stay in some form forever.But in ten years time I would like to see the introduction of 'over the cap' payments . Assuming a salary cap of 5 million in ten years time. You are allowed to pay your top 6 players whatever you feel they deserve.
Ian Whitchurch
Guest
The stupid, it burns. Lets start with the start - footy clubs make stupid hiring decisions. ADP is one of them - he hasnt delivered wins, and he hasnt pushed Sydney FC's attendance beyond it's long term average. Money-wise, although he has improved crowds, he's a wash ... and this being Sydney, his effect on the crowds will last two seconds beyond his employment. Bluntly, what restricts the ability of the A-League to sign players isnt the salary cap - you can hire *a* player for as much as you like, and stay under the cap. Notably, neither Messi nor Ronaldo were mentioned in discussions about marquiee players, a fact that m,ay be regretted by fans demandeing first-class competition.
Griffo
Roar Guru
No doubt the salary cap was needed to kick off the A-League. To totally abolish it too soon would stifle the league, sending it backwards, before any stability would eventuate. Being happy for clubs to go to the wall is a poor attitude. The cap will go eventually, but I think it will increase by a lot more than it is now first. Having a much larger cap would enable better players to fill the foreign quota, while also paying our own stars more and giving them something to keep them here longer. A flip side I can see is that mediocre players won't be payed mediocre wages. As the talent pool grows you would hope the coaching staff won't hesitate to jettison woeful players for better technique per buck for younger talent coming through. Until clubs increase their revenue greatly, they cannot afford or attract better players, cannot perform in the ACL (money isn't everything about players here, travel and a full season beyond qualification are factors not changed by money), and so cannot raise profile, revenue, player and coaching quality... Rather than cold turkey the cap will increase until the A-League (along with a greater number of professional clubs) is ready to transition to a non-capped league. Either way getting a much larger media deal (and other forms of revenue like online streaming and ad revenue) is needed to fuel the increase in costs of a quality league.
Football_Wunderkind
Roar Pro
It is good in theory but would never be practical. Just like there is a disparity in skill, commitment, vision and athletic ability amongst players there should be a wage disparity. Players who do more for the team should be paid more and they will tell you that themselves. If you are more talented at your job and bring in more business and create more wealth for your company then you should be paid accordingly. I know that that the salary cap doesn't ultimately restrict what you pay player A and player B but in the A-League at the moment it definitely restricts the ability for clubs to go after the best players. Didier Drogba is the perfect example. After Chelsea he was signed by Shanghai Shenhua because they could afford to sign him. As what happens a lot with players going to China is they get a massive culture shock. The food, pollution, traffic and club politics causes a big proportion of foreigners to flee quite quickly. Ask Bernie Ibini. If Sydney had the ability to sign Didier Drogba do you think he would have scuttled off so quickly with our fantastic lifestyle plus a similar pay packet? AFL and NRL have such a popular league because people want to see the best week in / week out. The A-League needs to remove the salary cap so it can attract more of the best like ADP. Regarding your banking system comment. You are so right about that. It is a disgusting system that is making a handful of players and bankers obscenely wealthy.
Ian Whitchurch
Guest
The magic key is revenue sharing - make the players partners, not employees. You've outlined the problem with plan A yourself - "let the big clubs become big &hope the small dont fold" ... hope is not a plan. Just like North Queensland Fury, just like Gold Coast United, just like Wooolongong Wolves, just like Auckland Kingz, the small clubs will fold. Not might. Will. You;ve seen it before, and you'll see it again. Not might fold, will fold. Regarding the second option, yes, Australia will remain a bit player. Until you can get a banking system and a tax office that will let clubs run up debts of hundreds of millions, we can't match the salaries that are offered by other leagues. But what we can do is ensure the best chance for talented Australians, and while we're doing that, have a decent quality league for fans to watch. A fifty/fifty revenue split is all that it will take.
Ian Whitchurch
Guest
You are talking about the ability of clubs to hire players by offering them money. All the leagues that were mentioned restricted the utter crap out of that, via the reserve clause and other means. What does the reserve clause mean ? You were the Cincinatti Reds and wanted to hire that out-of-contract Boston pitcher ? Thats nice, he's under the reserve clause. His opinion as to who he wants to play for and why is irrelevant, talk to his club, because without his club releasing him, he cant play for you. As an aside, these clubs had good reasons to do that, because the structure of professional entertainment is such that successes are very successful, and failures beget failure. The end result of that is the Canton Bulldogs, Leeds United, Gold Coast United and so on - clubs that failed because they were failures, and it doesnt matter what they do on the paddock, the story is always the same. You are attacking the salary cap, but the actual key is the free movement of players between teams.
Ben of Phnom Penh
Roar Guru
"Don’t be fooled in thinking that because of the evenness of the A-League you are watching genuine sport". So.... AFL, NRL and the A-League aren't genuine sporting competitions? It is a line that misses what sport is about. The fact that we force our sides to compete through style, innovation and management (as opposed to just buying titles) is wonderful. It forces management to think outside of the box rather than just reach for the pocket, to develop players rather than just buy them. It forces our sides to look for a competitive edge. The salary cap does stifle some of the bigger clubs, however whenever I look at the SPL I cannot help but think that this is what our future would look like without the cap. Maybe one day we can afford a Bundesliga model with a shifting cap, but until we can afford clubs that are majority member owned. One suspects that is still some way off.
Football_Wunderkind
Roar Pro
I am talking about "salary cap" The first NBA salary cap you talk of was abolished after 1 season. Semantics really. All your facts are actually strengthening my argument though. I am talking about the modern day salary cap we see today. But please do go on...
nordster
Guest
In sport for starters! Much more over regulated. Ask Australian business if they are happy with their regulatory burden more broadly...most sectors are not...i guess they are just evil capitalists, cue the Dickensian themed music.... ;) Its funny whenever anyone here brings up over regulated they are accused of wanting to turn us into Bangladesh. To me that point to an over regulated society that is also a little too touchy about it.
Franko
Guest
".doesn’t mean we aren’t over regulated also" - Compared to who??? We have one of the least regulated work forces in the first world. Basically the USA and many developing nations (think Bangladesh) have less labour laws, is that the path you'd prefer to head down?
Ian Whitchurch
Guest
The NBA introduced it's first salary cap in the 1946-7 season, by coincidence it's very first season. They also banned free agency by use of the option clause, which meant that a player who was out of contract still could not sign with any other club without the consent of his old club. http://www.apbr.org/labor.html Then we get the NFL - again, the key is free agency rights, because if you are permanently tied to your last club while still out of contract, you have no leverage - and unsurprisingly, free agency rights were the key to the 1982 players strike. Then we get MLB. Again, the reserve clause was specifically there to prevent players moving clubs for more money. Should I keep going ?