Premier League Wage Cap

There is apparently a new law in Premiership football.    Rule E.18 states that:

“If in any of Contract Years 2013/14, 2014/15 and 2015/16 a Club’s aggregated Player Services Costs and Image Contract Payments:

E.18.1. exceed £52m, £56m, or £60m respectively; and

E.18.2. have increased by more than £4m when compared with the previous Contract Year or by more than £4m, £8m or £12m respectively when compared with Season 2012/13;

then the Club must satisfy the Board that such excess increase as is referred to in E.18.2 arises as a result of contractual commitments entered into on or before 31 January 2013, and/or that it has been funded only by Club Own Revenue Uplift and/or profit from player trading as disclosed in the Club’s Annual Accounts for that Contract Year.”

For the 2013/2014 season the ‘ extra amount of PL Central Fund revenue that can be used to fund player wage costs (cumulative)’ amount if the cureent wage bill is over £52m is £4m, for the 2015 season the allowed increased amount for clubs currently paying over £56m is £8m.

So what does this mean in the real world? Nothing.  Looking at the data for the 2012-2013 season, which is the latest available data, only a handful of clubs had wages bill less than the exempt amount of £52m. It would probably be fair to say that wages have increased quite a bit since then,  I think that 6% per annum would be a sensible amount so the table below shows the clubs that are still in the Premiership and an estimate of what their wages bill will be for the 2014-2015 Premiership season.  I have also shown the percentages of the Manchester City wages bill:

Premiership Wages

Team20142015 Est.City %
Manchester City233262100%
Manchester United18120378%
Chelsea17920177%
Arsenal15417366%
Lliverpool13214857%
Tottenham Hotspur9610841%
Queens Park Rangers788833%
Aston Villa728131%
Fulham677529%
Everton637127%
Newcastle United627027%
Stoke City606726%
Sunderland586525%
West Ham United566224%
West Bromwich Albion546123%
Norwich City515722%
Swansea City495521%
Southampton475320%

The way I see it , and I could be wrong, is that for next season if a club is currently  paying over £56m in wages then they will only be allowed to increase that wages bill by £8m.  The only two teams that are likely to benefit from this exemption are Southampton and Swansea, so they will be able to raise their wages up to the level of Manchester City – that is very unlikely to happen.  Ok, this is a very simplistic way of looking at this, Danile Geey’s article goes into much more detail.

How can this nonsense be seen as ‘Financial Fairplay’?  Manchester City are so far ahead of everyone else in terms of wages that the playing field can never be seen as level.  What chance do smaller teams have to compete with a side that can attract the top players in the world because of their ability to pay ridiculously high wages to these stars?  Clubs will be allowed to increase wages outside of the limited amount if they are from football related profit, from transfers or prize money, but what hope is there of any of the smaller clubs being able to qualify for the Champions League and earn enough money to fund wages increases or for them to make enough on player transfers?

Basically the Premier League have said they will do nothing to bridge the existing gap between the top paying teams and the other Premiership sides.  Manchester City, Manchester United, Chelsea, Arsenal and Liverpool can continue with their unfair advantage and nobody else will be allowed to bridge the gap. In which universe could this be seen as ‘Financial Fairplay’?

What I think would be fair would be to take an average of all the club’s wages bill, ignoring the top and bottom side and set that as an absolute salary cap.  This would work out at £99m, let’s say £100m to make it easier, so Manchester City would have to reduce their wages bill by £162m. Now that would be ‘Financial Fairplay’.