Next Season and Salary Caps

ADD

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Our good friend Mr Parry is still proposing salary caps to come in supposedly for next season but actually with a years' grace. The proposed levels are tiny at £2.5m for L1 and £1.5m for L2 - even we would have breached it this past season with our poor squad!
They are also suggesting a vote on a maximum 20 player squad of which 8 would be home grown youngsters....
That would definitely scupper MM's historical preferences on a largeish squad of veterans - he will have to change tack and look more favourably on youth players than he has ever historically done with us.
I was also wondering what are the likely short term implications given there will be so many players available as free agents. The law of unintended consequences would suggest that clubs that still have money would bring in relatively top quality players on big bucks but only on 1 year contracts to "buy" their way to promotion safe in the knowledge that if they succeed they have tonnes of headroom if promoted to Championship (£16m extra) and £1m headroom if promoted to L1... but safe in the knowledge that if they do get promoted they will not be out of their depth financially as all clubs will be capped...
Salford et al will be even more incentivised to spend big this close season on that basis sad to say...
 
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The salary cap is one of the few things Parry has got right and is fully supported by Palios. I don't think anybody will be able to buy their way to promotion with a maximum budget of £1.4 million. The cap will result in a much more level financial playing field, which will benefit us as a club that runs on a relatively small budget.

The quality of management will become far important, and we have one of the best in the lower divisions.

I also doubt the youth requirement will ever make it to the final plan. In any case, I don't agree that Mellon necessarily prefers veterans. Our recruitment last season was driven by financial restrictions to a large extent and he has given plenty of opportunities to young players and those in their prime since he arrived (Norwood, Norburn, Ihiekwe, Wilson, CBT and so on).
 

bigmart

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I am not a fan of salary caps and hope that they are not brought in. Before the virus struck we were.in the process of being able to increase the budget season by season which survival in league one would have had us do.enabling us to bring in better players and hopefully meaning progress up the league table.
 
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I am not a fan of salary caps and hope that they are not brought in. Before the virus struck we were.in the process of being able to increase the budget season by season which survival in league one would have had us do.enabling us to bring in better players and hopefully meaning progress up the league table.
A salary cap makes it easier for us to compete financially and is of huge benefit to us.

With a cap, we would have the joint highest budget in League Two next season. Without it, clubs like Salford and Mansfield would have double our budget.

We can increase our budget incrementally season on season, but we can never compete with clubs that are heavily bankrolled.

It is an absolute no brainer, which is why Palios is one of the prime advocates of a cap.
 
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drwhoman

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The simple fact is that however we might improve financially over time we would never be able to compete with clubs who have seriously wealthy owners, and, or, huge fan bases to deliver large revenues. We could only ever be a mid table team at best. It was the Johnson money plus good management that gave us what we had twenty years or so ago. A cap levels the playing field.
 
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Even putting our interests to one side, a salary cap is a necessity for League One and Two clubs at the moment. The spending levels were unsustainable even before Covid, and without it a lot more clubs will go the way of Bury and Macclesfield.
 

Boz

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It's complex. I don't think there should be such a vast gulf between L1 and L2 in terms of the figure allowed as that will create problems for promoted sides and enforce the divide between the leagues, which after our demotion is the last thing we need. Suspect that wages are going to be significantly depressed in the coming season though.
 

ADD

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A salary cap makes it easier for us to compete financially and is of huge benefit to us.

With a cap, we would have the joint highest budget in League Two next season. Without it, clubs like Salford and Mansfield would have double our budget.

We can increase our budget incrementally season on season, but we can never compete with clubs that are heavily bankrolled.

It is an absolute no brainer, which is why Palios is one of the prime advocates of a cap.
But next season there is a year's grace RLC which makes sense as clubs have players on multi year contracts. The issue is on that basis 2 of the promotion places are sorted with us and the others to fight over the other one plus playoff.
 

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Also I may be misreading this but I have seen nothing in terms of the salary cap being linked to revenues. Don't see the point of that as surely it stifles growth of the business on the footballing side? You simply cover your costs and then pocket any extra? Is that what others understand?
 
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But next season there is a year's grace RLC which makes sense as clubs have players on multi year contracts. The issue is on that basis 2 of the promotion places are sorted with us and the others to fight over the other one plus playoff.
My understanding is that some restrictions are introduced next season, with full implementation the year after. So even next season we would be better able to compete with the bankrolled clubs.
 
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Also I may be misreading this but I have seen nothing in terms of the salary cap being linked to revenues. Don't see the point of that as surely it stifles growth of the business on the footballing side? You simply cover your costs and then pocket any extra? Is that what others understand?
I think it is deliberately not linked to revenues, as income can be manipulated through creative accounting (eg. owners sponsoring stadiums). I would imagine the genuine trading income of most League Two clubs is broadly similar, with the exception of outliers like Bolton and Macclesfield, at opposite ends of the spectrum.

The real benefit of an absolute cap is it prevents the unsustainable spending of clubs like Salford, which creates wage inflation and presents other clubs with the choice of behaving responsibly, and failing to compete, or taking unreasonable risks.
 

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Ok thanks for the updates RLC... hadn't seen the bit about some restrictions occurring next year unless that it is the squad sizes? but that is dependant I believe on a separate EFL vote still?

I understand that income can be manipulated very easily if it is not policed properly but on the otherhand assuming in a post COVID world that clubs can generate £2.5m and £1.5m in L1 and L2 respectively there is no incentive football wise at least to grow gates/ secondary income a la what MP is doing since all the extra money goes straight into the owner's pockets. It may be me being ultra cynical of Parry and his mob (why I have no idea!) but whilst it does theoretically stop money bags like Salford, Mansfield and FGR it seems to stifle innovations such as MP growing business in China/ Indonesia/ leisure centre etc. etc.

Also I note that on another forum suggestions that this is the beginning of a move to L1 and L2 being cast adrift into an ultimate semi professional era with the Championship and Premiership moving closer together. The gap between Championship at £18m and £2.5m at L1 being cited as being deliberately set that high so as to avoid movement between them - I mean realistically a team with a £18m budget what are they supposed to do if relegated - at that level surely you have at least 50% - 70% (say) of your playing staff still under contract for the following season so with a £9-£12m budget you are massively breaching the salary limit already plus you need additional players to make up the 28 player squad so what actually happens? They have to be allowed to reduce their budget over several seasons as they can't breach player's contracts but they wouldn't do anything as with a £9m+ squad they would go straight back up next season - ie there would be 4 guaranteed yo yo clubs so all promotion possibilities for genuine L1 clubs would disappear with each season the 4 former Championship clubs finishing miles ahead of the rest of L1 with the only risk being the 4th team losing in the play off final.
Call me a cynic but am I missing how this will work - or maybe that is the EFL intention??
 
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Ok thanks for the updates RLC... hadn't seen the bit about some restrictions occurring next year unless that it is the squad sizes? but that is dependant I believe on a separate EFL vote still?

I understand that income can be manipulated very easily if it is not policed properly but on the otherhand assuming in a post COVID world that clubs can generate £2.5m and £1.5m in L1 and L2 respectively there is no incentive football wise at least to grow gates/ secondary income a la what MP is doing since all the extra money goes straight into the owner's pockets. It may be me being ultra cynical of Parry and his mob (why I have no idea!) but whilst it does theoretically stop money bags like Salford, Mansfield and FGR it seems to stifle innovations such as MP growing business in China/ Indonesia/ leisure centre etc. etc.

Also I note that on another forum suggestions that this is the beginning of a move to L1 and L2 being cast adrift into an ultimate semi professional era with the Championship and Premiership moving closer together. The gap between Championship at £18m and £2.5m at L1 being cited as being deliberately set that high so as to avoid movement between them - I mean realistically a team with a £18m budget what are they supposed to do if relegated - at that level surely you have at least 50% - 70% (say) of your playing staff still under contract for the following season so with a £9-£12m budget you are massively breaching the salary limit already plus you need additional players to make up the 28 player squad so what actually happens? They have to be allowed to reduce their budget over several seasons as they can't breach player's contracts but they wouldn't do anything as with a £9m+ squad they would go straight back up next season - ie there would be 4 guaranteed yo yo clubs so all promotion possibilities for genuine L1 clubs would disappear with each season the 4 former Championship clubs finishing miles ahead of the rest of L1 with the only risk being the 4th team losing in the play off final.
Call me a cynic but am I missing how this will work - or maybe that is the EFL intention??
As I have said, Palios proposed a cap before Parry and he did not do it to suggest that Leagues One and Two go part time. His motivation is completely the opposite; to secure the long term future of the lower divisions of the professional leagues.

A salary cap is necessary, not because of conspiracy theories, but because it is a financial necessity for lower division clubs at the moment.

The gulf between League One and the Championship is already huge regardless of any cap and Championship wages are actually likely to decline in future years, as those clubs are massively overstretched and are not immune from the impact of Covid.

In regard to other income streams, they would still be of huge benefit to us in future in making the club stable and sustainable, and funding capital projects in the long term. Just because the earnings would no longer be spaffed immediately on wages does not mean there would be no incentive to achieve genuine sustainability.

I think basically you need to ask yourself why Palios would be a prime advocate of a cap if it would be detrimental to us.
 
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Fundamentally, with a salary cap it becomes feasible for a club like us to compete at the top end of League One and reach the Championship again. Without a cap, it is a virtual impossibility.
 

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I am against a salary cap for some of the reasons ADD has stated. Clubs will only go to the wall if they are poorly managed without a salary cap. A cap based on revenues would make some sense and, yes, it means "Revenue" needs to properly defined and audited. A flat salary cap is a lazy option from the EFL which could have a number of unwanted effects.

There is a massive Revenue range in each league - how can it possibly be fair that a club the size of Ipswich can only spend the same on wages as Accrington? In theory this gives Accrington as much chance of promotion as Ipswich but with zero chance of financially bridging the gap to the Championship. What happens to an Ipswich? On £20k+ gates where do their profits go - back to the owners and out of football?

With a salary cap we will never again see the fairytale rises of teams through the leagues - Wimbledon, Swansea, Bournemouth, Burnley, Wolves. Everybody will have their place and the opportunity for the innovative financial planning that allows any business to progress and make "step" changes will be removed. Whatever, MP says I believe that we potentially fall into that category and a flat salary cap will significantly reduce the option of upward mobility.

Yes, it also reduced the likelihood of downward mobility but isn't football all about jeopardy? Poorly managed clubs should be able to slip down the league pyramid (Leeds, Man City, Norwich, Southampton, Notts County, Carlisle etc etc) and be replaced. And, yes, clubs should go bust if they are insolvent - the onus should be on the individual clubs/business to ensure their own financial wellbeing through managing their costs to match their revenues. A flat salary cap really is a sledgehammer to crack a nut when there is still so much potential to assist in improving the financial management of EFL clubs in a much more nuanced way.

All I can see in the long term is a two tiered system with little movement between tiers. In one fell swoop all of the odious principles that would have been achieved by U23 teams in the Checkatrade, the introduction of B teams into the pyramid, feeder teams, pushing more power and wealth up the pyramid will be set into an irreversible motion. Ultimately, Leagues 1 and 2 will become even less relevant with more fans deserting their local clubs for the HAVES in the top divisions.

Sorry, but I find this whole notion truly depressing. It is not coincidental that it is being rushed through at a time where many clubs are struggling through no fault of their own due to the impacts of a global pandemic. This is even more of a case of turkeys voting for Christmas than the debacle that has just seen us demoted.
 
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I am against a salary cap for some of the reasons ADD has stated. Clubs will only go to the wall if they are poorly managed without a salary cap. A cap based on revenues would make some sense and, yes, it means "Revenue" needs to properly defined and audited. A flat salary cap is a lazy option from the EFL which could have a number of unwanted effects.

There is a massive Revenue range in each league - how can it possibly be fair that a club the size of Ipswich can only spend the same on wages as Accrington? In theory this gives Accrington as much chance of promotion as Ipswich but with zero chance of financially bridging the gap to the Championship. What happens to an Ipswich? On £20k+ gates where do their profits go - back to the owners and out of football?

With a salary cap we will never again see the fairytale rises of teams through the leagues - Wimbledon, Swansea, Bournemouth, Burnley, Wolves. Everybody will have their place and the opportunity for the innovative financial planning that allows any business to progress and make "step" changes will be removed. Whatever, MP says I believe that we potentially fall into that category and a flat salary cap will significantly reduce the option of upward mobility.

Yes, it also reduced the likelihood of downward mobility but isn't football all about jeopardy? Poorly managed clubs should be able to slip down the league pyramid (Leeds, Man City, Norwich, Southampton, Notts County, Carlisle etc etc) and be replaced. And, yes, clubs should go bust if they are insolvent - the onus should be on the individual clubs/business to ensure their own financial wellbeing through managing their costs to match their revenues. A flat salary cap really is a sledgehammer to crack a nut when there is still so much potential to assist in improving the financial management of EFL clubs in a much more nuanced way.

All I can see in the long term is a two tiered system with little movement between tiers. In one fell swoop all of the odious principles that would have been achieved by U23 teams in the Checkatrade, the introduction of B teams into the pyramid, feeder teams, pushing more power and wealth up the pyramid will be set into an irreversible motion. Ultimately, Leagues 1 and 2 will become even less relevant with more fans deserting their local clubs for the HAVES in the top divisions.

Sorry, but I find this whole notion truly depressing. It is not coincidental that it is being rushed through at a time where many clubs are struggling through no fault of their own due to the impacts of a global pandemic. This is even more of a case of turkeys voting for Christmas than the debacle that has just seen us demoted.
I think you are misunderstanding what Palios intends and what the implications of a cap would be. There were be more, not less, likelihood of a fairytale rise through the divisions with a cap, as the advantage of the big clubs like Sunderland and Portsmouth in the lower divisions would be greatly reduced.

The cap obviously massively benefits small, well run clubs, as the huge financial advantages of massive clubs and bankrolled clubs are lost virtually overnight.

In terms of equality of opportunity, the cap would have a similar impact as the old maximum wage, which greatly favoured smaller clubs and allowed Blackpool, Burnley, Bolton and others to compete for titles.

Salary restrictions based on turnover simply don't work, as FFP had demonstrated. Lawyers and accountants will always find loopholes to inflate 'income' whereas a straight cap on spending can't be contested.

The alternative to a cap is more of the casino capitalism we have seen in the last thirty years. In the long term that makes it difficult for responsible clubs like us to even survive, let alone compete above League Two level.
 
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Just to address a point directly, why would Accrington be less able to bridge the gap to the Championship ? They would have built up reserves in League One due to lower wage levels which would actually make it easier to bridge the gap. As it stands, they are in no position to even compete for the players to give them a chance to challenge for promotion.

A salary cap would reward clubs that are stable and well run, not simply those that have the biggest pockets.
 

bigmart

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Just to address a point directly, why would Accrington be less able to bridge the gap to the Championship ? They would have built up reserves in League One due to lower wage levels which would actually make it easier to bridge the gap. As it stands, they are in no position to even compete for the players to give them a chance to challenge for promotion.

A salary cap would reward clubs that are stable and well run, not simply those that have the biggest pockets.
Macclesfield and Morecambe in league two would not be able to reach the maximum amount of player budget as they cannot afford it and there budgets are comfortably below a maximum amount.

Our chances of getting to the championship could be enhanced with a salary cap but once there it will be impossible to compete. If it wasn't for the money pj put into the club we would not have had the journey we had.
 

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I think you are misunderstanding what Palios intends and what the implications of a cap would be. There were be more, not less, likelihood of a fairytale rise through the divisions with a cap, as the advantage of the big clubs like Sunderland and Portsmouth in the lower divisions would be greatly reduced.

The cap obviously massively benefits small, well run clubs, as the huge financial advantages of massive clubs and bankrolled clubs are lost virtually overnight.

In terms of equality of opportunity, the cap would have a similar impact as the old maximum wage, which greatly favoured smaller clubs and allowed Blackpool, Burnley, Bolton and others to compete for titles.

Salary restrictions based on turnover simply don't work, as FFP had demonstrated. Lawyers and accountants will always find loopholes to inflate 'income' whereas a straight on spending can't be contested.

Then alternative to a cap is more important of the casino capitalism we have seen in the last thirty years. In the long term that makes it difficult for responsible clubs like us to even survive, let alone compete above League Two level.
No I am understanding the impact of a fixed cap. I agree with you that that the advantage of a Sunderland and Portsmouth would be reduced. Why should they be? Why should a large club with a large fan base and large revenues have their advantages removed? This is financial engineering of the worst kind. How can a rise through the divisions work when there is likely to be such a gulf between salaries paid to L1 and Championship players? I'm afraid that a ceiling is effectively created between the 2.

Small, well-run clubs do not need a salary cap by definition. It is the management of poorly-run clubs (whether large or small) that needs to be addressed.

The maximum wage was removed for good reasons. Good businesses should be able to grow and thrive, as should the earning capabilities of all employees. Under these rules Norwood would have had no reason to leave us for Ipswich. Taking our parochial hats off, are we really saying that would have been a good thing?

I agree that FFP has not worked but this is a case of throwing the baby out with the bath water. More effort and regulation should be applied to improve it. In principle it makes sense and shouldn't be scrapped because the EFL are too incompetent to manage or administer it. There is so far to go with improving FFP before such a drastic action as fixed salary caps should be brought in.

A fixed salary cap follows the law of the lowest common denominator.
 
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Macclesfield and Morecambe in league two would not be able to reach the maximum amount of player budget as they cannot afford it and there budgets are comfortably below a maximum amount.

Our chances of getting to the championship could be enhanced with a salary cap but once there it will be impossible to compete. If it wasn't for the money pj put into the club we would not have had the journey we had.
Our chances of competing once in the Championship would probably be greater as we would have built up significant reserves in previous years due to a reduced wage bill. It is the expenses of lower division clubs that will be reduced, not their income. In any case, I think the introduction of a cap in League One would lead to a reduction of wages in the Championship in the long term, as clubs relegated from the second tier would face a points deduction if they went down with too high a wage bill.

Morecambe and Macclesfield would still be in a better position to compete under the new rules than they are now.

Your point about PJ really makes my argument for me. Under the status quo, unless you find a Russian billionaire lime Bournemouth, a small club will never reach the higher levels of the game.
 
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