UEFA want to implement a salary cap, according to reports. It’s a move that will likely put Liverpool at a disadvantage.
The Times reports that UEFA will announce plans to bring in a salary cap for teams competing in European competition. It could happen as soon as next year, replacing Financial Fair Play.
The new regulations would mean clubs can’t pay more than around 70% of their revenue on wages. Anyone who breaches those rules would have to pay a ‘luxury tax’.
Going into the luxury tax means you’re paying your players over that 70% mark. You then need to pay a fee that increases the more you go over, with increased tax for repeated offenders.
That tax is then split among competing teams as a way of balancing things.
On the face of it, this would stop teams being able to blow others out of the water financially. Clubs wouldn’t be able to hoard expensive talent without consequence.
It won’t work that way.
UEFA have salary cap plans
This is essentially the exact same system the NBA uses. They even call it luxury tax, which tells us that this is where UEFA got the idea from.
But there are a lot of reasons why this won’t work as intended. Firstly, wages in football work completely differently from wages in the NBA.
There are an unbelievable amount of rules about payment in the NBA. For instance, there’s actually a limit on how much an individual player can earn.
And consider trades. You can’t just buy players and offer them new contracts. The Minnesota Timberwolves can’t suddenly come into money and then buy Luka Doncic from the Dallas Mavericks, offering him a huge wage.
Teams have to trade for players’ contracts by matching the same amount in their own contracts. In other words, if you want to trade for a player who earns $100m, you have to hand over your own players that combine for $100m in salary.
It’s slightly more technical than that but this is the crux of it.
This all makes building a super team far more difficult than it is in football, where you can just buy whoever you want. The only real way to do it in the NBA is by offering big contracts to free agents and your own stars.
And that’s exactly what certain teams do. They’ll push themselves over the salary cap and into luxury tax by doing it.
The Golden State Warriors, for instance, had a luxury tax bill of $147m last season. But they’re relatively okay with that. Why? Because their owner will foot it.
The Brooklyn Nets, one of the favourites to win it all in 2022, say they’re ‘married to luxury tax’. Their billionaire owner is willing to cover the costs in order to win.
And here’s the problem Liverpool face.
Liverpool and FSG will stay within those rules. There is absolutely no doubt whatsoever as the Reds are supposed to be self-sustaining.
But I can think of at least two clubs competing for trophies who won’t bat an eye at paying huge luxury tax in order to have a massive competitive advantage.
One of them just broke the British transfer record. The other has assembled the most expensive wage bill in history. Both are still operating in the same world where a pandemic crippled everyone’s finances. Both are backed by gulf states.
Clubs who want to operate within their means will be capped. Clubs who have super-rich owners who are willing to pay luxury tax, however, will foot the bill in order to win.
The NBA proves this and they operate in an environment where there are far more restrictions when it comes to building a superteam.
We struggle to see how UEFA’s plan will fix competitiveness. It might actually make it worse.