Does European Soccer Have A Salary Cap?

By Vince •  Updated: 06/29/22 •  10 min read

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Most sports fans, especially in North America, have heard about the salary cap. That is something that forces general managers to do careful thinking. Which players to keep and trade without exceeding the salary cap? But, it is far more complex than at first it is for the fans. That is because every player tries to get the most out of their talent and hard work. But this article is addressing another question. Does the salary cap exist? If not, then why? Is it even possible?

Does European Soccer Have A Salary Cap?

Long story short, no. Soccer in Europe doesn’t apply a salary cap, although there have been talks of implying it in the past. That idea has not materialized because of the complexities of Europe and the European Union. All this has its reasons, why salary cap is not present in European soccer or what keeps it from happening. I’ll explain the biggest of its drawbacks. What are the reasons behind it, and why the salary cap is a near impossibility? To be brief, it comes down to politics, geography, and the differences between the clubs and their leagues. There are many cases, where the hard wage cap complicates things even further, including UEFA’s position.

Why is there No Salary Cap in European Soccer?

Let’s now go into detail about the main challenges of imposing the salary limits in European soccer.

International Club Competitions

In this case, UEFA is organizing three club competitions. The Champions League (UCL), Europa League (UEL), and the new Conference League (UECL). These competitions have the caveat, however. National leagues and cups have allocated places based on the performances. For bigger clubs, domestic competitions are more of a stepping stone towards their goals. Yet, the results in the UCL determine if the number of allocated places will change or not. Based on that, this applies to every UEFA competition organized. It is a bit more complicated with the UEL and UECL. Regardless, domestic leagues are competing for European club competition places. Trying to put a salary cap on some competitions puts the clubs at a clear disadvantage. That makes competing against the countries without the wage limit a challenging task. Not only because of having a smaller budget for wages but also because talented players, who deserve more, leave. That ends up same clubs winning constantly and the same countries performing better.

Taxation And Currencies Throughout Europe

Unlike North America (read: Canada and USA), Europe has countries, not states. With their taxation systems and currencies. These systems are very different from one another. Thus, making a singular salary cap system across Europe impossible to have. Furthermore, imposing a salary cap on the league would keep better players away. That is because their asking price is way higher than anticipated or hoped. That snowballs into the problem of salary-capped competitions getting weaker. Also, taxes remain, and players take home even less money than they would. Or everyone running to Monaco and making its league full of AS Monacos, since Monaco (as a country) has no income tax.
The second part of the problem are the currencies used. While most of the prominent leagues now operate on euros as their currency. England is the only exception here. English Premier League has a lot of money and uses pounds sterling as its currency. The trouble here is the conversion rate. Putting the salary cap in euros would give a disadvantage to England. That is because the pound sterling is the stronger one. Especially when the United Kingdom is not part of the European Union, which invented the euro. That would make things way more political than it has to and the British elite saying clear NO to the euro.

Relegation And Promotion

Unlike in North America, league systems in Europe operate on a pyramid basis. That means that if the club performs well enough, it will have the right for the spot in a higher league for next season. The club with not-so-great results, if not downright horrific, would get relegated at the end of the season. Here lies the problem with the salary cap. If imposed, higher leagues would have the cap at a higher level than lower ones. That puts relegation teams at risk of exceeding the cap. In turn, that would lead to:

That could even happen to teams like Manchester City, Liverpool, and Real Madrid. Of course, these are extreme examples. The salary cap would increase the chances of the club suffering more than one relegation.

The Governing Bodies

Coming back to sovereignty. Different leagues in various countries are managed by their governing bodies. Therefore, UEFA has no power over domestic competitions. In theory, UEFA could impose the salary cap on its before-mentioned competitions. Yet, this doesn’t extend into domestic leagues. Wealthy teams could then have two world-class rosters. Or at least the choice so deep, where the coach could rest the best players more than usual. That creates hoarding of great players for the richest. At the same time, others won’t have a very appealing selection of players to go after. Meaning it would decrease the competitive spirit between the clubs. That is because one team could rotate the players more often, reducing the risk of injuries. The less wealthy club would have to rely on their core players more, increasing the risk of injuries. Thus, having a salary cap in European soccer could decrease the competition between the clubs.

Freedom Of Movement

This particular point applies to the European Union (EU) and its players. But most of the stronger leagues are in the union. The caveat here is that EU citizens (including soccer players from the EU) have the right to travel freely. Provided the trip stays within European Union. Here comes the soccer part. Leagues within the European Union countries are not allowed to prohibit the signings of players from other EU nations. That is because of the freedom of movement principle in the union. If one domestic league in the EU imposes a salary cap, it presents a disadvantage. No player would choose the league with a salary cap over the one not having the payment limit. As the players from the EU have the moving freedom, they should have no hard time finding a suitable club. Here the EU-wide salary cap can’t help either. Because that weakens the strongest leagues and smaller ones won’t gain much. Thus, finding the middle ground is not an option. That only kills the competitive spirit of European soccer.

To summarize my thoughts, implying a salary cap in European soccer is too complicated without having any positive effect. Furthermore, almost every scenario would create a reverse situation in most cases. The more established teams would get better and lesser teams weaker. That leads to soccer matches more often ending in a rout scores like 5-1, 6-0, or 7-2. No one wants that trashing happening more often than it is today.

FAQ

What Is A Salary Cap In Soccer?

By default, the salary cap has the same meaning in soccer as in other sports. The teams have limited how much they can spend on the salaries. It has two forms – the total amount for the roster or per player limit. The idea is to avoid forming superteams. It also serves as a shield for the clubs to manage themselves successfully and avoid bankruptcy. On paper, it is a win-win situation. Fans enjoy the competitive leagues. Teams keep expenses in check and gain bonuses based on sporting merit rather than having wealthy owners. Despite Europe not having a salary cap, it does exist in Major League Soccer and A-League (Australia).

How Salaries In European Soccer Are Checked?

The closest thing to a salary cap in Europe is the Financial Fair Play, being the frame of club management. These rules mean to regulate the clubs’ spending relative to their earnings. Furthermore, it combats the problem of soccer clubs losing money as a trend. The reason behind losing money was outbidding most wanted players on the market. The idea for the Financial Fair Play is to keep European soccer clubs from spending more than they earn, limiting expenses relative to their income. Although these rules might sound good, it does have problems.

What Are The Problems With Financial Fair Play?

Slow Implementation And Massive Debts

The first is slow implementation. Initially, the rules were to be applied from 2012 but were postponed to 2015. I could be conspiratory here and claim that Michel Platini, UEFA’s president at the time, had something shady to do with it. Delay also gave more time for larger clubs to spend too much on the transfer market and players’ salaries. So, digging themselves deeper into a debt hole. In hindsight, that was one reason for the massive debts. Especially for the Spanish clubs Barcelona and Real Madrid, with the latter’s president Florentino Perez trying to wage war against the soccer itself. That is the story for another time, however.

Relative Spending Allowance

The second problem here is allowing spending relative to earnings. Rather than imposing a hard cap on clubs on how much they can spend, they can spend almost as much as they seem fit. Provided soccer-related spending does not exceed 70% of total income. Such limit favors big clubs with wealthy owners. It also does nothing to stop forming superteams and dominating domestic leagues. The best example here is Bayern Munich in Germany and PSG in France. The soft salary cap is unlikely to improve competitiveness but could have the reverse effect. That is because bigger clubs have an easier time finding large partnerships and increasing their income.

Reputation Of The Clubs

The third problem is the unfair treatment of the clubs. UEFA has almost no control over the bigger clubs and it shows. At the same time, UEFA is allegedly fine with punishing smaller teams. That is where pointing at each other becomes inevitable and evolves into bullying. Smaller clubs point at the big ones because the latter gets leniency from UEFA. Rich clubs bully small ones by holding UEFA hostage and mentioning that a hard salary cap is unfair. Since it curbs their right to be an ambitious team, that can be explained by Manchester City’s case. UEFA initially banned the club from international competitions managed by the organization. But, City appealed the decision to the Court of Arbitration for Sport (CAS). That was because they felt their ambitions were cut short. CAS agreed with Manchester City, though the club still had to pay 10 million USD in fines. That is a way lighter punishment than a 30 million USD fine and a two-year ban from UEFA competitions. That proves that UEFA is quite incapable of actually controlling the clubs. Even if they try to, they are too slow in doing so.

Final thoughts

In conclusion, the salary cap in European soccer does not exist. There is not a glimpse of light at the end of the tunnel, giving hope of that happening. There are way too many problems to overcome. Furthermore, clubs picking fights outside the pitch also does not help. It makes finding the consensus more difficult. The key is UEFA having a president without corruptive tendencies like Michel Platini was because the dark deeds damaged the reputation. But the clubs see these UEFA competitions as their goal of ultimate glory. That is something that the organization could use to its advantage. Super League got crushed, proving that UEFA has some power in its hands. Regardless, the salary cap is a long way off. It is unknown if European soccer will see this one day. Until then, money walks and talks.

Vince

I'm a qualified soccer coach, who has been involved with the sport for most of my life. I started Woodland Soccer to talk about the game I love.