When is enough, enough?

Posted: December 2, 2010 by mcdonaldtaf in Business, Finance, Liverpool FC
Tags: , , , ,

I’m sure there are plenty of posts like the following scattered throughout the Internet. However, with news relatively quiet on the Liverpool front I thought I’d turn my attention to a broader issue. Once I’ve settled in fully at Bristol I will take the time to run some proper calculations on the following post, but in the meantime I think there is enough ‘meat on the bone’ for you to get the gist.

When you consider the founding aspirations of football were about creating social cohesion, gamesmanship and (dare I say it) simply sport you realise how far we’ve come; possibly fallen. Fast forward to the ‘modern game’ and you have to wonder if it has ever been in such disarray. Yes ‘el classico’ delivered in a football sense, total football if you like, but at what cost? Surely this summer will see the usual stories about how both the top Spanish clubs are struggling to manage their finances.

Much can be said the same for the English Premiership. As has been demonstrated by the likes of Portsmouth and Leeds United. Paying top wages may push you nearer to success, but at what cost? Ironically, while the executives of these top clubs take the majority of the blame, when the financial wheels fall off, no one ever questions those employees who take a major percentage of any team’s revenues.

I’ve always been one for saying that you shouldn’t cap anyone’s income. But in recent times player’s wages have become so grotesquely large, while their clubs struggle to balance the books you have to question whether the time is fast approaching for wages to be capped.

The wages are now becoming so excessive (for top players) that the old chestnut of short career blah, blah doesn’t hold up anymore. As governments all over the world implement their austerity measures and clubs continue to struggle balancing the books while remaining competitive, has there ever been a better time to reflect on footballer’s wages.

Take me as an example. I’m hard working, educated and experienced. Yet realistically at the peak of my career I expect I’ll earn a maximum of £70,000 a year. I guess if I get really lucky and drive really hard I may just scrape to the £100,000 a year. Out of that, and with my partner working, I’ll enjoy a comfortable life style. No, I’ll never get that Porsche or mansion, but life should be extremely comfortable.

So, how much will I earn in a lifetime to enjoy a comfortable lifestyle? Well let’s be generous and say I earned £20k per annum in my twenties, £40k in my thirties, £70k forties and £100k in my fifties; before quietly retiring and dedicating my life to writing. If I achieve the maximum of my earnings (and not looking at breaks in employment like I’m suffering from at the moment), I’ll earn a total of £2.6m in my lifetime.

Maybe other people have different ideas of a comfortable lifestyle. So double my lifetime earnings to £5.2m. Does it not strike any of us as wrong that some players earn more than that in a single year? So while clubs are under pressure financially; as is the entire UK economy who’s funding it all? Me and you! So why do football players, and more importantly their agents, feel the need to push clubs to pay more and more?

I suppose some may point at the fat cats of the corporate world and how much CEO’s earn. Take Tony Hayward then who was, until recently CEO of BP. Earlier this year he had to deal with some pretty intense pressures from all angles. He even had to ‘battle’ with the President of America. Now that’s real pressure. Yet for all that pressure his total pay was less than that of Fernando Torres or Steven Gerrard. In fact his basic pay was less than Ryan Babel’s. Has the world gone mad?

Somewhere along the way football clubs have lost their way. In the fight to succeed and the inevitable fighting (financially) for top players they themselves, as an industry, have pushed up players wages; while the fans foot the bill. Long gone are the thoughts of social cohesion or any sense of prudent financial measures.

Imagine if tomorrow a cap of £50,000 per week is put on players wages. They can still earn what they want from Sponsorship etc. But wages from the clubs are capped. If this happened then it is possible to imagine our club saving at least 25% on it’s annual wage bill, which equates to a not insubstantial £22.5m. I say at least, because there would be downward pressure on all wages. If a top player can only earn £50,000 then other players wages would naturally drop.

So an additional twenty million pounds plus to invest in facilities or youth development. It won’t happen though. Although it seems very simple any such move would no doubt be very complicated from a legal perspective. The are other considerations as well.

It’s a Global Game

To make a change would require agreement around the world of football. Should the Premier League and La Liga impose such a cap, while Italy don’t, where do you think the top players will end up? Very quickly top leagues in the world will no longer be so. In the same way that top club’s won’t apply their own caps, as it restricts competitive advantage, neither will the leagues.

Given regulation of leagues can be determined as poor (just look at the financial state clubs end up in) you have to wonder how any consensus would ever be agreed anyway.

Location, location, location

If money is the same no matter where you play then other factors are going to drive where players end up. As one example the thought of a cup tie in the cold rain against Grimsby is not going to be as appealing if you can earn the same in the sunshine.

This would be a major problem for the Premier League and a mass exodus of top players, along with some dross, is likely.

This may be good news in one way though as clubs may again return their focus to home grown talent. It has been too long since top clubs churned out top English players with any consistency. Yet working with homegrown talent once produced Fowler, McManaman, Gerrard, Carragher and Owen at Anfield alone.

Expectation

Expectation will keep the pressure on clubs, which will in turn continue the upward pressure on player wages. As long as fans keep pushing at the bottom the rise at the top will continue. Yes at times fans will complain about how grotesque players wages are, but the truth is our own expectations determine that we’re stuck with it.

Football has lost it’s way and the original raison d’être has been eroded to such an extent that sometimes football as a sport is unrecognisable. But there is no desire to change and so I guess for football players enough, well it will never be enough!

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Comments
  1. 2yyiam says:

    Good artilce with some prudent points. At the end of the day the millions, even billions earned by the PL from TV deals, sponsorships etc also contributes to the players salary. The money is out and so someone has to receive it.

    If it’s not the players, then the money will go to the Executives and Directors etc – do you really think people will have the goodwill to invest in youth, facilities etc?? Everyone is greedy.

    The fans have the biggest role, stop going to games, stop subscribing to SkySports and then the clubs and PL will have to take notice. Forget uniformity across the leagues, the fans can have the biggest impact – but it’s not going to happen.

  2. Sam Wanjere says:

    What do I like most about this article? Prudence, financial or otherwise, will always create a more mature person, capable of appreciating the good with the bad. When you pamper young people with the mega riches they’re paid, does it turn them into more humane, fan-respecting individuals?

    With exceptions like Gerrard, Carra, Del Piero, Giggs and Scholes, most of the others are rudderless ships wallowing in wealth that’s clearly drowning them. Without mentorship and respect for club traditions – of which the fans are a major part – I think it’s a recipe for disaster overall.

    Two other things, chief of which is sustainability of this model of making such payments, and the paying fan (read tax payer). The latter might not need much elaboration as there SHOULD be a cap; but for the latter, I believe the fat cats (who include players) should be even more humble today than in yester years. Without the struggling, sacrificing fan, the player would never be famous and receive his comeuppance. I fully believe that the best respect to fans is to treat them well, listen to them even when they vent their frustrations, and to look at their beloved clubs with a longer-term view in mind.

    Ultimately, all of us must earn something for our toil, but it should be reasonable and within decency. Some of those figures, say £ 250,000 a week, should also come with heightened expectations. After all, employment would have dictated fully earning such amounts or even better, exceeding the same.

    Reasonableness please, and a return to the older way of more engagement of the fans who pay you.

  3. Ed Margerum says:

    Forty years ago most sports throughout the world were paying the majority of their players a bit more than a skilled workman. The economics of sport changed through television and sponsorships. There was a Canadian ice hockey player, Phil Esposito, who had been playing hockey for an average living wage in the ‘60s who suddenly found himself earning millions of dollars. Phil said that he wondered what he’d do with a million dollars. He admitted that when he got millions he wanted more millions. Wealth, particularly for those who have grown up in modest circumstances, leads to greed.
    Salary caps are difficult. I might prefer playing in the rain in Grimsby to living in London on a similar salary and a player might consult a tax advisor to shop for the best country.
    These are hard times and probably will be for some time. Declining revenues should be expected. Prudent and intelligent management will be necessary to mount a competitive team without falling into unmanageable debt. Fans expect a contender. Management’s dilemma is how to build a team meeting fans’ expectations without operating at a deficit. That may be a Herculean task.

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