A level playing field? Not this way
New proposal requires teams to hold licenses for Champions League, UEFA Cup
Most clubs wouldn't be able to meet financial requirements, which are strict caps
New plan would allow rich clubs to get richer -- which is why they're in full support
A little more than a week ago, I was invited to a roundtable chat with UEFA president Michel Platini. One phrase stood out: "We need to reintroduce the concept of morality in football. We have to permit everybody to have a chance to win."
Whatever else one thinks of Platini, there is little question that, during his tenure, he has been forthright and earnest. He's not a bureaucrat or a politician, he's a former footballer who wants to do what he thinks is best for the game.
And so, to some degree, his words struck me as a bit bizarre. The game has pretty much always had bigger clubs and smaller clubs -- the playing field has never been level in terms of resources. But heck, if that's the route he wants to go down, fine. Let's consider it. Let's turn the game into a version of the NFL: profit-sharing, salary caps, the draft and a host of other devices aimed at promoting parity year after year.
Except that's not what he was talking about. Platini was talking about a proposal from the European Club Association -- a body representing some 150 European teams -- that would alter the landscape of the game radically. The ECA, led by Karl-Heinz Rummenigge of Bayern Munich and Joan Laporta of Barcelona, has proposed the introduction of salary caps.
These would only apply to European competition (the Champions League and the UEFA Cup, or Europa League as it will soon be known), since UEFA doesn't have jurisdiction over individual leagues. Basically, clubs wanting to participate in European competitions would need a license. And they could get that license only if they meet certain financial requirements: In particular, wages and transfer deficits could not be more than a certain percentage (to be determined, but likely somewhere between 50 and 70 percent) of revenue.
So, for example, if Manchester City has a turnover of $130 million (which it did, according to Deloitte & Touche) and the cap is set at 60 percent, the club could only spend some $78 million on transfers and salaries. And that, of course, would be a problem. City, even without signing Kaká, had a negative-transfer balance of some $120 million this year. Throw in the total wage bill, which -- and this is a very rough estimate -- can't be too much less than $80 million, and City would be some $120 million over the cap. So no Champions League, then.
The vast majority of Champions League clubs have wage bills alone which account for more than 70 percent of revenues; in some cases, it's more than 100 percent. How would they cope? Platini says there would be some kind of "transition allowance" to give them a chance to get up (or down) to speed.
Basically, this would mean spending less on transfers and far less on wages. You would think, as Jim Holden writes in this month's issue of World Soccer, this would anger the big clubs. Far from it. They would love this (which is why, incidentally, Bayern and Barcelona are leading the way).
Why? Because if you cap these expenses, a soccer club's costs basically become fixed. Player costs are far and away the single biggest expense a club can face. So if I know that I'm earning $10 and I won't be spending more than $6 on the players, I, as a club, am laughing all the way to the bank. Apart from stadium maintenance and long-term capital investment in stadiums (which in some countries is a moot point, as the grounds are publicly owned), clubs basically have no significant expense. Which, in turn, means owners will continue to profit. If somebody has to make a buck off the game I love, I would much rather it be the guys on the pitch than the suits in the owners' box.
But there's another far more important reason why the big clubs love this. The status quo would be preserved. Bayern Munich had revenues of $370 million during the 2007-08 season. Schalke 04, the Bundesliga club with the second-highest revenue, brought in $187 million. With a cap set at 60 percent, that would mean that Bayern shells out some $110 million more per season than Schalke. Sound fair? Didn't think so.
The proposal would basically make it impossible for smaller clubs to compete with the big boys. Even if you had a Roman Abramovich or a Massimo Moratti or a Sheikh Mansour, it wouldn't matter. The ECA's proposal does allow it to invest above and beyond the limit, but only for "non-player expenses" -- new training facilities, stadium expansion, etc. So great. You get a giant, brand-spanking new stadium with 11 stiffs on the pitch who don't have a prayer of beating Manchester United or Barcelona. Wonderful.
Platini calls it clubs "living within their means." But those "means" are determined by history and birthright. Never again would we see a Hoffenheim or a Verona win the title. When I put this to Platini he simply said: "Well, those smaller clubs could do it the old-fashioned way, they could invest in their academy and grow their own stars."
Yeah, right. Even assuming they did that, the minute a homegrown star makes it, a Bayern or a Juventus or a Real Madrid will simply come along and offer them three times as much, knowing that there is no way a little club could match their contract.
The doom-sayers say that this is the only way to preserve stability in the face of global recession. We have to cut costs, they say. But soccer is one area where the free market can actually fend fairly well for itself. A soccer club isn't like a car manufacturer or an oil company, it doesn't have huge factories or offshore rigs and the enormous fixed costs that come with them. If a club is struggling with debt, provided there is a modicum of effective financial oversight, it can (and should) reduce its costs by offloading players and shedding salaries. In fact, that's what the authorities should be focusing on: the enormous debts accumulated by clubs and whether they are sustainable. And, if they're not, force them to lower costs.
There are dozens of things Platini can do to ensure that everyone has a chance to win. The ECA's proposal (on which he officially "has no position," though he is obliged to consider it) is not one of them. In fact, it would only ensure that the rich get richer and the little guys watch on TV.