If the cap fits

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The salary cap in sport is basically a mechanism that serves two main functions; to keep the spending of clubs down, and to preserve some level of parity between teams. Many professional sports especially the major leagues in the United States (NBA, NHL, MLB, NFL) have them as well as the NRL and AFL in Australia. It is worth pointing out though that these four major American competitions and two Australian ones are arguably the pinnacles of their respective sports so it makes it less likely to lose players to inferior competitions for money, unless we are talking obscene amounts such as what we have recently seen in the Chinese Super League. The cap, in these cases, is ideal for keeping player salaries down to a relatively reasonable level.

For football competitions it is a little less clear as to which competition is the best in the world and then even which is the best regionally. The competition amongst leagues and clubs for players dwarfs that of any other sport especially as in many cases like the ACL and UCL to name but two, clubs from different countries are in direct, on-field competition.

The ability of A-League clubs being able to sign or retain players ahead of bigger money offers from elsewhere is made much harder with a cap in place. However, the financial reality of the situation is that, cap or no cap, the A-League clubs would struggle to match what Asian rivals and the clubs in the bigger leagues in Europe could offer. For this reason alone the salary cap doesn’t, at this stage, do any harm to the league or the clubs. This doesn’t mean some tweaking of it couldn’t improve things though.

The A-League salary cap for 2012-2013 season was A$2.48 million  which works out to be an average of around A$107,826 per player in a 23 man squad, assuming there were no marquee players in the squad. With two marquees, who are exempt from the cap, it rises to about A$118,095 for the remaining 21 players. This is not bad money for an athlete but it isn’t really competitive to what’s on offer elsewhere in world football. Our regional rivals such as the J.League and K league Classic had average salaries in 2013 of AUD215,000, and AUD156,000 respectively.

While the argument for a salary cap is more than valid, there are ways in which it’s use can be better employed to protect players and clubs. Now the NBA has had a salary cap since the 1946-47 season and pretty much since then has seen it change and evolve along with the competition. The actual cap they use has more bits and baubles than a Griswald family Christmas. However, there are some very good ideas that the A-League could adopt.

There are always exceptions to the rules and this is where the NBA idea of a “soft cap” comes in to play. The soft cap is basically to allow teams to retain their current players. It is never good to lose players every season after they have played well simply due to not being able to fit them under the cap. Retaining the fan favourites is always a good way to get people to keep coming back to games and renewing memberships.

The NBA’s Larry Bird Exception is one way this is avoided. If a player who has been at the club for more than 3 years is out of contract then he can be resigned above the maximum wage by a certain percentage.

With no official maximum wage in the A-League this could be adjusted to the player can be signed to a higher contract with only the amount of his previous contract counting towards the cap. For example, if a player was on A$200,000 a season and negotiates his next contract at AUD300,000 then the extra 100,000 would be exempt. In theory, the player would’ve proved his value to the team over those three seasons so clubs are in a better position to determine what they would be willing to pay. Of course if a player asks for an amount which exceeds his actual value, then it is up to the clubs to walk away.

What about those one or two year players who were signed on short-term deals? They would have a percentage of their new contract exempt. For example, a player negotiating an extension after two seasons could have 75% of the added value to his original contract exempt. A player extending after only one season, 50% exempt.

Another way to increase the chances of retaining the players and getting value for money is being able to offer performance incentives in their contract that are excluded from the cap via incentives which are deemed “unlikely” . This is where if a player scored 8 goals last season, he would be offered a bonus at the end of the year if he scored 9 or more the following season. The NBA only count the incentives towards the cap which are considered “likely” targets, which are equal or lower than the player’s current average in the relevant statistic. This works on all levels because the player is rewarded for increasing his performance levels and clubs and fans are rewarded through more goals, more assists, or more wins.

The final idea grafted from the NBA’s model is the “luxury tax” which basically allows clubs to spend over the salary cap as long as they pay a fine of a dollar for every dollar they spend over an agreed point. The clubs and the league decide together at what point the tax kicks in. For example, once a club spends more than 20% over the salary cap, they have to pay the tax. This money from the tax is then shared amongst the league and other clubs. This would be a good idea to keep clubs living beyond their means yet gives them some leeway to still retain players and strengthen squads.

One of the biggest things that these ideas represent is placing the responsibility of running a football club back in the hands of the owners and boards whilst still protecting the integrity of the league. There is the concern that clubs and boards will spend outside their means and there have been cases around the world where this has occurred. However, if this is a real concern that the HAL and FFA have then why are they granting licences to people and clubs that they have no faith in?

These amendments would also allows for the natural growth of clubs and the building of history. Sydney can have their own loyal super star like Juventus had with Del Piero, Manchester United have with Giggs, or Liverpool have with Gerrard. Keeping these players in their respective leagues and club doesn’t weaken the league, it strengthens it.

Adam Howard

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