The Salary Cap; Friend or Foe? 🇬🇧

Following the close of the transfer window, La Liga have released the salary caps for each of the teams across La Liga and the Segunda. Real Mallorca have the lowest limit at just short of €30m, whilst Barcelona have the highest at €671m. This has raised questions over how fair La Liga actually is, with others citing examples of the death of Bury Football Club in the UK and CF Reus in Spain as the reason it should stay. In today’s Wednesday words I ask, The Salary Cap; Friend or Foe?

What does it include?

The salary cap includes wages of the playing staff, coaching staff and some spending on the academy at the club. In order to calculate it, La Liga will look at the total income and running costs of the club. Therefore, any club that can maximise their income is going to have a higher salary cap and be allowed higher levels of spending on player wages.

What isn’t factored greatly into this is the personal wealth of the owners of the club. At Mallorca, the American ownership group have the wealth behind them to bankroll the club to a greater extent than they are currently allowed to under salary cap rules. Within those rules the club is reliant on generating income from other sources. The main sources of income are player sales, television money, ticket sales, sponsorship and merchandise.

TV Money Inequality

Television money is increasingly becoming a huge proportion of the income of a football club, never more so in Spain than now. As such, the impact that it has on each individual team’s salary cap is large, especially when you consider that match to match attendances for some La Liga sides are not always as high as in other country’s top divisions. Eibar averaged under 5,000 supporters per game in the 2018-19 season, whilst in the Premier league the lowest average attendance last season was Bournemouth with more than double that amount. As a result, TV money is king for many La Liga clubs.

Historically in La Liga clubs could make their own individual television deals, leading to huge inequalities between clubs within the same division. The spending power of the giants, Barcelona, Atleti and Real Madrid, remains but in recent years legislation has meant that the television income is more evenly shared.

How is the TV Money Shared?

In a recent twitter thread, football finance analyst @SwissRamble revealed how European football shared it’s TV wealth. In La Liga, 50% of the TV income is split equally amongst the clubs, 25% is based on performance over the last 5 years and 25% popularity (1/3 for average match day income, 2/3 for number of TV viewers).

Whilst this system is more of a level playing field than before, 50% of the income is still loaded towards the more successful and popular clubs. This helps to perpetuate the success of the big clubs and make it more difficult for other clubs to break the stranglehold that those sides have on La Liga. For Real Mallorca, their performance over the last 5 years, despite back to back promotions, will be a measure on which they do particularly poorly. Of the last 5 years, four have been in the Segunda with one in the Segunda B, meaning that they will have the lowest of all La Liga clubs for this measure.

Match day income is something that will be significantly up and a positive performance factor for Mallorca with the club selling 16,125 season tickets, the maximum allowed in the current stadium within La Liga rules. Under these rules they must leave 20% of the stadium for game to game sales, sponsors and away fans.

Salary Cap: Friend or Foe?

Some would argue that the salary cap is a restriction of trade, stopping clubs like Real Mallorca from spending what they wish in order to compete. Making the safe transition from the Segunda is challenging enough without having your hands tied with financial constraints when you have the owners who are willing to foot the bill.

However, it only takes a quick flick through the back pages of any recent newspaper to see that football is a business which is struggling to stay in the black. In the UK there are the high profile cases of now dissolved Bury Football Club and the ongoing troubles of Bolton Wanderers. Fans of both of these clubs might suggest that a salary cap may have helped them in reining in their rogue owners.

Despite the salary cap, Spanish clubs are not immune to financial problems. Controversially, CF Reus were expelled from the Segunda division half way through last season for financial problems and a failure to pay their players. As an intermediate measure, clubs such as Granada, Las Palmas and Malaga have been handed temporary transfer bans. In the case of Malaga, the situation is even more stark, with Shinji Okazaki signing for the club and then not being registered due to not meeting the salary cap.

This all begs the question, just who is the salary cap there to serve? Is it there to protect the clubs from rogue or poor ownership? If so then you could argue that it has not been successful. Or is it in place to maintain the status quo and give the big clubs a competitive advantage over the others? With the salary cap in place in the Premier League would we have seen Leicester City crowned champions of England?

Lowest Salary Cap in La Liga – Can Mallorca survive?

For Mallorca the question this season is one of survival and the Leicester city dream can wait. With the lowest wage budget in the league, what hopes can they possibly have of finishing 17th or above? Step forward Real Valladolid, the team with the lowest wage budget in 2018-19. They managed to defy the odds with a budget €7m smaller than that of Real Mallorca this season and they must be the example that Mallorca aspire to this season. With the budgetary constraints, much will rely on the quality of the Summer acquisitions by Mr Molango and his team.

The Future

The main measure that under the control of Mallorca is their performance over 5 years. With each year that passes where they remain in La Liga they will strike off a year at the Segunda division level. Income from transfer fees will swell the coffers if the recruitment team can continue to recruit quality players at reduced prices; buy low sell high.

Maintaining the Status Quo

So, with a TV deal still skewed towards the established sides and promoted clubs penalised for their previous lower status, it is harder than ever for the new boys to make an impact. Last season though 2 out of 3 of the promoted sides stayed up and the side with the lowest budget also survived. As the side with the lowest salary cap in La Liga this season, Mallorca will hope that they can defy the odds. Mr Molango and his recruitment team worked hard across the Summer, let’s hope that they have found some diamonds in the rough.


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