The Political Economy of Football V2

Should a majority of Premier League clubs vote through the proposed hard spending cap for the 2025-26 season, it would not only aid the competitive nature of what is the world’s strongest domestic league, but also enforce a subtle shift in the perceived power base of English football. The cap idea is based on the concept of “anchoring”, designed to limit the amount of money any club can invest in their squad by tying it to a multiple (probably five) of what the division’s lowest earners get from the league’s centralised broadcast and commercial deals. The Premier League’s broadcast revenue sharing has always been, by European football standards anyway, a relatively noble meritocratic arrangement. It is less that sharing ratio which clubs such as Everton, West Ham and Palace are worried about — and more the consistent advantage clubs such as City, Chelsea and Manchester United have accrued from decades of participation in European football. Not only do the ‘Bi...

QPR chief executive Lee Hoos has back calls for a wage cap in the EFL and discusses different types of wage cap, drawing on the earlier experience of the Super Hoops:  https://en.brinkwire.com/sports/qpr-chief-executive-lee-hoos-backs-the-wage-cap-crusade-in-the-football-league-amid-pandemic/ He also talks about a closer alignment between the Premier League and the Championship. He notes, 'The problem is, if you talk about Premier League 2 it sounds like a breakaway. But I’m just talking about the Championship being more closely aligned to the Premier League.' In many ways the Championship is already a de facto Premier League 2 in terms of its spending patterns, but these may turn out not to be sustainable if they ever were.

As there is a search for a reset of football finances, salary caps are one popular option.  They are extensively used in US professional sports, but here is an explanation of why they wouldn't work so well in Europe's  major soccer leagues:  https://www.espn.co.uk/football/english-premier-league/story/4098021/us-style-salary-cap-would-fail-in-europes-top-soccer-leagues-heres-why The key argument is that they only work if revenues are relatively throughout a league.   This is not the case in the Premier League because of owner subventions and differentials in broadcast and commercial incomes.   A version of financial fair play is a much better way of creating a level playing field.

Proposals for a salary cap on player wages in the EFL were discussed at a special meeting of club chairmen last week. It is thought that it might help to avoid the kind of financial crisis faced by Bolton Wanderers and Bury, the latter club likely to be expelled from the league tomorrow. Of course, in both those cases mismanagement by owners was a key factor, so a salary cap of itself would not be enough. Nicola Palios, vice-chairman of Tranmere Rovers, told The Times, 'The gaps between the leagues are effectively encouraging clubs to gamble to get across that gap, to overstretch themselves, and that leads to the situation we are seeing with some clubs now.' Palios said she would like to see the rules changed so that clubs had to pay off football creditors before starting in the next division. She believes that the system of parachute payments from the Premier League makes the situation even worse because clubs have to spend more to compete. Seven clubs failed to pay wag...