Will the global credit crunch force European leagues into salary caps?
UEFA president Michel Platini is an advocate for salary caps in European leagues
Caps will force rich clubs to live within their means, especially during credit crisis
NFL, NBA, Major League Baseball offer differing structures as to how caps operate
Michel Platini has been an eager advocate of the introduction of salary caps since his election as the president of UEFA. His idealism, as well as his power base among the smaller nations of Europe, makes him a natural supporter of a scheme that might reduce the power of the giant clubs of England, Italy and Spain, and allow many more teams a realistic chance of winning trophies.
What makes the Platini dream a real possibility in soccer's near future is a more practical concern -- the global credit crunch that has already begun to bite at even the richest clubs. When Chelsea's billionaire owner Roman Abramovich wants to squeeze the purse strings, all things are possible.
The financial meltdown among the world's biggest banking institutions, aggravated by lax governmental regulation, has a clear parallel with the untrammeled ability of rich men to use soccer as a plaything and distort the sporting market.
A new system of salary caps, forcing the clubs to live within their means, and promoting more equal competition within domestic leagues and across Europe, is an idea rapidly gaining support.
The Football League in England is considering such a scheme and FA chairman Lord Triesman also believes it should be examined. Others, such as Bayern Munich chairman Karl-Heinz Rummenigge, want the idea debated at a time when the level of player wages at some clubs has reached a monstrous and obscene level.
Whether the motivation is to reduce costs or to promote a more level playing field between clubs, what is now called "competitive balance," the use of salary caps is widespread in team sports and leagues across the world -- from Australia to the U.S. to European rugby.
Can they all be wrong? Or is it the case that European soccer is now finally going to pursue the path of financial sanity?
Salary caps come in many guises, and I think it's instructive to look at the three variations currently being used in the trio of major North American sporting leagues where the riches generated, and the wage levels of the star players, are on same scale as the wealthiest European soccer leagues.
The NFL employs what is known as a "hard-cap" system. This means there is an absolute limit on the amount of cash each team can spend on player salaries in any season. It is equal for each club and there are strict penalties for breaking the barriers, either by fines or the cancellation of player contracts. There is also an absolute lower limit on salaries, so that the club owners must spend at least 85 percent of the salary cap figure on wages. This gives protection in the system to players, whose overall earnings cannot be driven down.
A clear result of this hard-cap has been to even out the strength of NFL clubs. The richest owners are not able to stockpile the best players in the way that Real Madrid or Manchester United can in soccer. Another perceived benefit has been to cut the cost of running teams, and it is widely accepted that the NFL has the most stable finances in American sports.