£20m Championship Salary Cap

[Raich Carter]

1 hour ago, G STAR RAM said:

Because although I am a Derby fan, I also recognise the fact that there are another 91 teams in the football league.

Mate, I'm with you 100% but that ain't how it works. 

[Tamworthram]

10 minutes ago, DarkFruitsRam7 said:

That's capitalism.

Regardless, isn't the focus of the argument on sustainability for football clubs, rather than the moral issues associated with extortionate wages?

But isn’t the sustainability of football clubs directly linked to players wages? Along with transfer fees and agents fees of course. I’m not talking about the moral issue caused by their extortionate wages, as I say, I don’t blame them, but rather the financial impact on the football club.

The last I saw, our total staff costs amounted to c£40m, of which I suspect the overwhelming majority was players wages, compared with a revenue of c£29m. There aren’t many, if any, other industries where this would be considered acceptable. 

[DarkFruitsRam7]

1 hour ago, RandomAccessMemory said:

I agree with this.

As a general reply to the thread, I don't think it's correct to call it hypocritical, I think it should be seen as looking at it from a position of experience and not wanting the same mistakes to be made in the future.

We've been very lucky that we've had Mel who has been prepared to fund this for as long as he has, but it has become somewhat of a millstone around our necks for at least the past few seasons with a lot of players being obviously very well paid and not actually getting much/any time on the pitch. The previous two seasons to this one seemed to be the peak, yes we loaned some out, but we would quite likely have been paying a portion of their wages. Other clubs haven't been and won't be as lucky with that funding and if football carries on the way it is and costs keep spiralling out of control then there will be more club casualties yet.

Yes, we have spent big wages. This has mainly been to try and keep up with the parachute payment receiving clubs who can afford to blow everyone else out of the water with wages and stockpile all of the best players at this level with their extra cash, which we have seen doesn't actually tend to work, yet still happens every single year without fail. We have obviously been trying to get that wage bill down for the past couple of years, but it can't happen overnight as once a player is signed that is pretty much that until the end of their contract, unless you can get someone else to take that contract on, or you can agree a pay off somewhere in the middle.

I don't agree with a specific wage cap per player, like the £20k a week example, I think that's too restrictive, I don't believe it would encourage an open Championship market as a player earning their £20k has very little incentive to shake up their whole home life to move potentially half way across the country to another club operating to the same parameters.

An overall wage cap that allows for some cheaper players and some more expensive players I think would be the best option if we were to go down the wage cap route, ie. it is up to each club how they choose to allocate their wage bill amongst their playing staff, so there would be the opportunity for players to move in the same division and earn more if they are seen as an important buy for a particular club.

 

15 minutes ago, Tamworthram said:

But isn’t the sustainability of football clubs directly linked to players wages? Along with transfer fees and agents fees of course. I’m not talking about the moral issue caused by their extortionate wages, as I say, I don’t blame them, but rather the financial impact on the football club.

The last I saw, our total staff costs amounted to c£40m, of which I suspect the overwhelming majority was players wages, compared with a revenue of c£29m. There aren’t many, if any, other industries where this would be considered acceptable. 

Sustainability definitely is linked to player wages. But do you honestly think MM is doing this from the bottom of his heart to protect the other 71 clubs in the FL72? Because it smacks of self interest which, as I've said, I'm most likely fine with, but I really don't think it should be dressed up as some sort of moral crusade. We spent big when it suited us, and now we're calling for league-wide restrictions when we're skint.

Of course, it's wiser to wait to see if this story is true and, if it is, hear MM's reasons for making the proposal. But I highly doubt this is based on a deep-seated desire to 'fix' football for everyone.

[Shaftesbury Street]

2 hours ago, DarkFruitsRam7 said:

To propose this (if he has indeed proposed it) after we've tried and failed to spend big, without some sort of moral renunciation of our previous actions, just comes across as a bit hypocritical and as a desperate attempt to stop others from spending the money they have at their disposal.

 

I don't think he's approaching it from a moral 'good for the game' standpoint, more to highlight the none level playing field. The issue is parachute payments and the chasm between Championship and Premier league revenues, always has been. 

[DarkFruitsRam7]

Just now, Shaftesbury Street said:

I don't think he's approaching it from a moral 'good for the game' standpoint, more to highlight the none level playing field. The issue is parachute payments and the chasm between Championship and Premier league revenues, always has been. 

The non-level playing field that we exploited in 15/16  and 16/17? Imbalances don't just come from parachute payments.

[angieram]

No, it isn't,  but I agree with @RandomAccessMemory that it is based on experience. Although maybe inadvertent, it will help all clubs to manage longer term, otherwise the current boom or bust lottery will continue.  Is that such a bad thing? 

[Ghost of Clough]

52 minutes ago, DarkFruitsRam7 said:

That's capitalism.

Regardless, isn't the focus of the argument on sustainability for football clubs, rather than the moral issues associated with extortionate wages?

The top earning club earns £40m (excluding parachute payments) and the bottom club earns £10m. You can't have a one size fits all and expect all clubs to be run sustainably. It needs to be % based in relation to revenue.

[Tamworthram]

34 minutes ago, DarkFruitsRam7 said:

 

Sustainability definitely is linked to player wages. But do you honestly think MM is doing this from the bottom of his heart to protect the other 71 clubs in the FL72? Because it smacks of self interest which, as I've said, I'm most likely fine with, but I really don't think it should be dressed up as some sort of moral crusade. We spent big when it suited us, and now we're calling for league-wide restrictions when we're skint.

Of course, it's wiser to wait to see if this story is true and, if it is, hear MM's reasons for making the proposal. But I highly doubt this is based on a deep-seated desire to 'fix' football for everyone.

I’ve not read the full article. Did he dress it up as a moral crusade against over paid players? Either way, I’m not disputing the question marks over Mel’s motives. I was just responding to your question as to why the players should take the hit and the simple answer is:

1) They are, without doubt, paid an extremely good wage. Far in excess of employees in pretty much every other industry. Not their fault but, it is a fact.

2) The principle of sustainability (in my mind anyway) is that you live within your means whether you are an individual or an entity. If your expenses far exceed your income and wages make up the vast majority of your costs then that is where you’re going to look first especially if you know your staff are paid an extraordinarily good salary.

[Shaftesbury Street]

5 minutes ago, DarkFruitsRam7 said:

The non-level playing field that we exploited in 15/16  and 16/17? Imbalances don't just come from parachute payments.

Would you class an owners wealth the same as an injection of money that was intended to stop a club going into freefall, but is actually being used to spend £10-£15 mill on one player?

Not for me. 

Have you read Kieran Maguires take on the Championship finances? He also points the finger at parachute payments.

[RandomAccessMemory]

I notice the DT have now said that the club are not 'spearheading' the drive, but they do refer to Pearce being on the EFL board who they say 'are chairing the discussions on player cost control on behalf of the 24 clubs'.

Maybe it was as simple as Pearce mentioning it as part of this discussion and this has somehow been translated into the club leading the push by the DM as they know that people will use the 'it's hypocritical' stance that even a lot of our own fans have?

The DM do appear to like a story that allows them to paint the club in a negative way, and in fact they seem to have pushed people down that negative path with the wording in the article 'Derby’s conversion to the merits of wage restraint is rather belated given they have been charged with breaching the Football League’s spending rules and are facing the prospect of a points deduction.' when in actual fact the charge is for the 3 year period up to 2017/18 and in these past two seasons they actually have been making the changes to lower the wage bill for future seasons.

[DarkFruitsRam7]

7 minutes ago, Ghost of Clough said:

The top earning club earns £40m (excluding parachute payments) and the bottom club earns £10m. You can't have a one size fits all and expect all clubs to be run sustainably. It needs to be % based in relation to revenue.

But why is he taking it upon himself to ensure that all Championship clubs run sustainably? It seems far more likely that he's doing it to suit our own interests.

Plus, a flat wage cap doesn't sound like it's based on revenue.

4 minutes ago, Tamworthram said:

I’ve not read the full article. Did he dress it up as a moral crusade against over paid players? Either way, I’m not disputing the question marks over Mel’s motives. I was just responding to your question as to why the players should take the hit and the simple answer is:

1) They are, without doubt, paid an extremely good wage. Far in excess of employees in pretty much every other industry. Not their fault but, it is a fact.

2) The principle of sustainability (in my mind anyway) is that you live within your means whether you are an individual or an entity. If your expenses far exceed your income and wages make up the vast majority of your costs then that is where you’re going to look first especially if you know your staff are paid an extraordinarily good salary.

The article mentions nothing about the intentions behind it, and it might well be that our role in the proposal has been greatly exaggerated (wouldn't surprise me at all seeing as it's the Daily Mail).

I get what you're saying about why it's the players that should take the hit. But it just seems a bit harsh (not that they're suddenly going to become poor) when the people most at fault for a lack of sustainability are the owners themselves. It's not mandatory to spend big on wages, as the likes of Sheffield United, Brentford, etc, have shown.

3 minutes ago, Shaftesbury Street said:

Would you class an owners wealth the same as an injection of money that was intended to stop a club going into freefall, but is actually being used to spend £10-£15 mill on one player?

Not for me. 

Have you read Kieran Maguires take on the Championship finances? He also points the finger at parachute payments.

I'm not saying the parachute payment system is perfect. Surely the best way to solve the problem is by doing it directly, rather than implementing a salary cap?

[Ghost of Clough]

2 minutes ago, Shaftesbury Street said:

Would you class an owners wealth the same as an injection of money that was intended to stop a club going into freefall, but is actually being used to spend £10-£15 mill on one player?

Not for me. 

Have you read Kieran Maguires take on the Championship finances? He also points the finger at parachute payments.

Ring-fence parachute payments to make up for the losses on player sales and amortisation over the first 3 years after relegation (capped at £80m). It allows the relegated club to offload expensive players at a loss, but prevents them from spending that money on new signings.

[RandomAccessMemory]

For what it's worth, I don't think a wage cap (at least on its own) would be the answer.

I agree parachute payments, or rather the allowed usage of them, is the biggest cause of financial imbalance in this league, I'm sure they were designed to stop clubs falling into money troubles once they got relegated, this is not what they are currently being used for.

What they are now being used for is paying huge amounts in fees and wages on new players and sometimes even contract extensions and the effect of that is making other clubs spend more than they should in an attempt to compete for players that would not be as expensive if it were not for these payments.

When you consider that rightly or wrongly clubs that have been relegated tend to expect to be able to bounce straight back up (in Boro and Gibson's case what was that target in May 2017 again? Was it 'we want to smash the league, we want to go up as champions'? ?) I think that maybe the average wage of players from the clubs that have been in the top 6 of the Championship for the past however many (possibly 3) seasons should be calculated. Then any players that the relegated clubs have on an existing contract (ie. not signed after they have been relegated) with wages over this average, then the difference can be covered by parachute payments, and if they have to sell players at a loss compared to their unamortised value, then it can also cover this loss. Anything else then no, you're now a Championship club, adjust your spending as necessary. This is still very generous, as it allows them to still be able to afford their best players, but if they need to buy any more then they have to also sell, unless they also have a surplus of Premier League money to spend.

[TommyPowell]

1 hour ago, DarkFruitsRam7 said:

But why is he taking it upon himself to ensure that all Championship clubs run sustainably? It seems far more likely that he's doing it to suit our own interests.

Plus, a flat wage cap doesn't sound like it's based on revenue.

The article mentions nothing about the intentions behind it, and it might well be that our role in the proposal has been greatly exaggerated (wouldn't surprise me at all seeing as it's the Daily Mail).

I get what you're saying about why it's the players that should take the hit. But it just seems a bit harsh (not that they're suddenly going to become poor) when the people most at fault for a lack of sustainability are the owners themselves. It's not mandatory to spend big on wages, as the likes of Sheffield United, Brentford, etc, have shown.

I'm not saying the parachute payment system is perfect. Surely the best way to solve the problem is by doing it directly, rather than implementing a salary cap?

personally i cannot agree with parachute payments  why reward a team for failure? even more so why do it for 3 years?

[Tamworthram]

1 hour ago, DarkFruitsRam7 said:

But why is he taking it upon himself to ensure that all Championship clubs run sustainably? It seems far more likely that he's doing it to suit our own interests.

Plus, a flat wage cap doesn't sound like it's based on revenue.

The article mentions nothing about the intentions behind it, and it might well be that our role in the proposal has been greatly exaggerated (wouldn't surprise me at all seeing as it's the Daily Mail).

I get what you're saying about why it's the players that should take the hit. But it just seems a bit harsh (not that they're suddenly going to become poor) when the people most at fault for a lack of sustainability are the owners themselves. It's not mandatory to spend big on wages, as the likes of Sheffield United, Brentford, etc, have shown.

I'm not saying the parachute payment system is perfect. Surely the best way to solve the problem is by doing it directly, rather than implementing a salary cap?

I agree although you could argue that the owners, in some cases, have been taking the hit for years by consistently bridging the gap by continuing to plough their own money in. I don’t think anyone would argue that DCFC hasn’t cost Mel a small fortune already. With regard to players, it’s not so much that they SHOULD take the hit, it’s more a case of there being little alternative. Sheffield United and Brentford would be appear to be good examples of what might be self imposed salary caps. The net result is the same though - players don’t earn so much. Cutting other costs, as is often the case, would only scratch the surface.

[woody01530]

wages 60% (max) of turnover.

Job done ?

[R@M]

1 hour ago, woody01530 said:

wages 60% (max) of turnover.

Job done ?

Price of a pie goes up to £1 million pounds, Mel buys one, in cash, every home game = our turnover goes up by 25 mill.....job done. 

[CWC1983]

10 hours ago, Ghost of Clough said:

That's a bit misleading. In 18/19, QPR made a very modest profit (£117k) thanks to parachute payments of roughly £17m. They spent £18.9m on wages, using 33 different players and naming 9 other players in the matchday squad. The 33 players average at £10,986, but drops to £8,632 if you include all players named in matchday squads. There's still 80 other employees at the club who haven't been accounted for, but are part of the £18.9m wages.

Based on his logic, they could have played 19 extra academy players, taking the average to £7000k and meeting that 'breakeven' point. What he actually means is reduce wages by £6m. A squad of 18 on an average of £13,800 pw would reach this target.

Must admit, I wasn't paying attention to the QPR stuff. It was linked to the chart I copied in to show the average wages per club. 

Good analysis however ?

[Rample]

On 29/02/2020 at 10:20, alexxxxx said:

Only fair way is a real salary cap. 

MLS strategy.

All players owned and paid for by the league with a maximum budget of £3.2m per season to fund between 18-20 players.  Maximum salary for any player is less than £8k per week.

£20m is obviously a much greater pot to play with though and using rough figures boils down to a squad of 20 players on £20k a week! The maximum salary using the same percentages would be about £50k a week on a player.

Of course there are designated players (the likes of Rooney & Zlatan etc) that can be added and funded outside of the standard MLS rules as long as they meet certain woolly criteria, and wages can be 'bought down' ie. If Rooney is on £100k a week and the cap is £50k, you would pay £2.5m (equivalent of £50k per week) to keep the players book wages within the cap.  Would give Gibson a whole new collection of things to complain about.

 

[swanny]

given where we are with the legal challenge around our spending this isnt a coincidence. 

 

anything we say with regard to company finances will be done with a view to shifting perception ahead of the court case. at least thats how it seems to me. 

 

I wonder if Mel is planning a defence (should it come to it) of "we overspent but have now have seen the error of our ways, realised the jeopardy it put us in and have been working hard to ensure greater financial control within the division ever since whilst dramatically reducing our wage bill"