Bundesliga contemplate Salary-Cap introduction

Bundesliga contemplate Salary-Cap introduction
Bundesliga contemplate Salary-Cap introduction

The Coronavirus inflicted blow to the financials of Soccer, could lead to major changes in world football. One possibility for restricting cost is the salary cap. 

The German league Bundesliga have discussed it, between few clubs and DFB. But is it feasible to implement that all across the league and then all across different league with very different financial capabilities.

In German football, there is one question: What will happen after the pandemic? Though they led the the football comeback after two horrifying months, but they have stumbled to one main question about sustainability of the game when the financials in transfer-market has skyrocketed.

Bundesliga are first to approach the problem and decided to complete the season. For many clubs, it’s about nothing less than existence.

So that this will no longer be the case in the future, calls for a system change in professional football are becoming louder and louder. The lawlessness of the industry has long been criticized, the corona crisis could now act as a trigger for change.

Can Salary cap be implemented?

The whole point of the system: an upper salary limit that all clubs must adhere to. 

The salary cap system is mainly used in the US sports leagues. But it is also not entirely unknown in Europe and is used for example in the French and English rugby leagues or the KHL in ice hockey. 

But is such a model also practicable in the Bundesliga?

First of all, however, it must be clear that a Europe-wide regulation that is compatible with EU law would be required, otherwise the Bundesliga clubs would no longer be competitive in international competitions. After all, the stars of the top German clubs would not wait long for a change if they made significantly more money in England, Spain, Italy or France. 

Salary Caps: Hard and soft

There are different approaches to the salary cap system. One model is the hard cap, like NFL had a $ 200 million cap for 2020. 

In Bundesliga, the difference in salary paid by top and bottom clubs in the table are extreme. FC Bayern, who sits at the top of the table, pays 315 million euros a year for its players. Borussia Dortmund, the team at second spot, pays around 138 million euros. The bottom of the table SC Paderborn, however, pays eight million euros.

With this inequality, the hard cap would perhaps would be disruptive, to the extent of catastrophic. 

Another option is the soft cap. In this model there is also a number as an upper salary limit, but this may be exceeded. Then a so-called luxury tax to be deducted for differential amount. The league has to make a way to distribute the tax money from bigger clubs to the “poorer” clubs that pay the lowest wages. 

Percentage of Sales – for Salary?

American football league MLS model can be borrowed for this model. It includes – up to three players can be hired outside the salary cap consideration.

However, implementing the same system may not be feasible. Possible: The clubs agree on a percentage. 

For example, the clubs would then only spend 30 percent of their sales on salaries. Thus, the advantage for the larger clubs would be passed on, but not as big as before. It would also ensure financial security for clubs that could no longer take high risks. 

TeamSales%of Sales for Players Salary
Bayern Munich€750 M42%
Schalke 04€275 M35%
SC Paderborn€27 M31%
SC Freiburg€96 M42%

With these numbers, the question arises whether a quota would change a lot at all. In order to bring about a system change, the quota should not be higher than around 30 percent. It is unlikely that the top clubs will support this. 

Rummenigge for Salary Cap

Germany have thought about this Salary cap models. Baern’s CEO Karl-Heinz Rummenigge even campaigned for a salary cap a few years ago.

The only hurdle that Bayern or Dortmund would have, how the model can be implemented across top European leagues as Real Madrid, Barcelona, PSG and top English clubs have very different spending on players.

Barcelona spent 529 million euros a year on player salaries, as compared to 431 million euros for Real Madrid, 337 million euros for PSG, 334 million euros for Manchester United. Bayern Munich who proposed the cap, stand fifth in the list above Manchester City and Liverpool currently.