Salary Caps: Why Should They Be Implemented?

The scene: Manchester, England. The time: August 2009.

After purchasing Manchester City Football Club for a whopping $369 million, new owner Mahnsour bin Zayed Al Nahyan has wasted no time in stealing some of the best players from his league rivals. At summer’s end, over $192 million was spent signing big-name players like Emmanuel Adebayor, Gareth Barry and Carlos Tevez. City, who finished 10 out of 20 teams in the English Premier League, has now risen in a matter of months from an average team to one capable of winning it all. Such a leap can be traced exactly to the enormous wallet of Al Nahyan, one of the members of the ruling family in the United Arab Emirates.

Forget the Los Angeles Lakers or New York Yankees; the spending power of these two does not even come close to the new ownership at Manchester City.

How are teams at the bottom of the English Premier League supposed to react? Minnows like Hull City, Stoke City and Wigan Athletic have minimal budgets for signing players in the offseason. And what is different from American sports, the bottom three teams in the league are relegated to The Football League. Think of the New York Yankees finishing last in Major League Baseball and being demoted to the minors.

As repetitive as the league has become, it brings up a good question: should there be salary caps in the world of European soccer?

In terms of increasing the competitive nature of the European game, the obvious answer would have to be. “Yes.” Since 1995, only three teams have won the English Premier League title: Arsenal, Manchester United and Chelsea. Add to that the fact that since 2005, the biggest four clubs in terms of spending power (Arsenal, Chelsea, Liverpool and Manchester United) have finished in the top four every year.

According to former Newcastle United manager Kevin Keegan, “The Big Four's dominance threatens the division. The league is in danger of becoming one of the most boring but great leagues in the world."

Furthermore, after the current economic crisis, there is an increasing trend for clubs to go into financial trouble and face bankruptcy due to poor accounting and financial management. The Union of European Football Associations (UEFA) needs to get involved to provide a continental framework for a salary cap to prevent debts from stockpiling. By using the revenue a club brings in from merchandise, sponsorship, television and ticket sales, a proportional transfer expenditure fund could be created.

The debt-ridden English club Portsmouth needs a payment of $9.5 million in the coming weeks just to stay in operation. Rules like this would certainly help protect against such issues.

The challenge will be creating a network to enforce these policies across Europe. Currently, UEFA has no such standards or ways to enforce these rules. Also it is highly unlikely that the richest clubs will agree to such a system. But if agreed upon, a salary cap would go a long way to securing the stable and more competitive future of European soccer.