I can’t stand the bloke and it’s fantastic that he’s so agitated by recent events. Seems to generate a lot of publicity and headlines despite the fact nobody gives a **** what his opinion is on anything.
Accrington chairman
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For me, each individual club should be responsible for there own budgets. If 1 or 2 clubs **** up, why should the others be held responsible.
For me all the clubs that have ****ed us over the last 2 years can all go to the wall for me, I was sorry and generally disappointed for bury and the fans when it happened to them but I would give 1 **** for others now
Accrington are entitled to their own salary cap but shouldn't expect other clubs to abide by it.
Be interesting to know what kind of car he drives around in , I bet it’s a Jag , Mercedes , BMW or similar. Bet he lives in a nice big house in a desirable area , because he has the money to do it who can blame him . That’s the way the world works if you can afford the best you are entitled to spend it as you see fit and in the Football world it is no different . The Football Pyramid on his reasoning should all be treated the same so Manchester City’s sheik should only be able to fund up to Accrington’s level to maintain the everyone equal that the Pyramid was designed to do with everyone having the opportunity to progress , his thinking is everyone should stay the same - Absolute Nonsense!
Exactly what I was thinking mate.
Does the prick expect everyone to drive round in Trabants whilst he has a Mercedes etc.?
Fooking prick, the sooner we're out of this shìt league the better.
It's his small minded attitude, this snidy comment shows him for what he is.
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Actually the £500k per match did help, as without it we'd have been in a much worse situation and may have actually gone into administration.
He's pretty much guaranteed that our fans get offended and will have a downer on him and his club going forward. Add in does he not think that offending us isn't likely to cone round and bite him and his club on the arse at some point? From our fans boycotting their ground to being told to piss off if he wants to take one of our players on loan.
especially his team they are as well liked as piles
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Article from The Athletic, if anyone is interested. The bit in bold man, the bloke is so bitter, "I don't want to talk **** about the bigger teams in this league, but I will anyway".
Death, taxes, England cricket batting collapses on Asian pitches, Nick De Marco beating the English Football League in an arbitration hearing. In these uncertain times, it is almost reassuring there are still some things we can count on.
De Marco, a leading sports lawyer, was acting for the Professional Footballers’ Association (PFA) this time and the issue at stake was the EFL’s decision to introduce hard salary caps in Leagues One and Two this season.
Having successfully defended Derby County and Stevenage against EFL charges last year and gained good results for QPR, Sheffield Wednesday and others in recent seasons, it would be fair to describe whichever team De Marco is on as the EFL’s bogey side.
Speaking to The Athletic’s Business of Sport podcast, Accrington Stanley chairman Andy Holt speaks for many club owners when he describes the EFL’s latest loss as a “fiasco” but not a shock.
“The EFL are easy to run rings around, they lose every case,” says Holt, who was particularly annoyed with a tweet De Marco posted following the announcement of the arbitration hearing last Tuesday.
“I was up half the night thinking about his tweet, congratulating himself for beating the EFL,” says Holt. “It’s like me congratulating myself for standing on a worm. The EFL shouldn’t be good at that. It should be good at running the competition and it should be supported by the clubs.”
To continue the cricket theme, Holt charged in off his full run-up for another 15 minutes of chin music for De Marco, PFA boss Gordon Taylor, the EFL’s ineffectual attempts to control spending and “unscrupulous owners” who have bankrupted clubs. His frustration is shared by many, even those who disagreed with the decision to impose caps.
“Collectively, we have wasted a lot of time and money on this only to get taken to court by the PFA and lose,” says Ryan Sparks, chief executive of Bradford City, one of two clubs in League Two to vote against hard caps when the EFL board recommended them in August.
“It’s pretty embarrassing, really. Instead of looking at other sports with salary caps to see how they have worked and sat down with the PFA to come up with a workable solution, we rushed something through and we’re back to where we started.”
That starting point is the Salary Cap Management Protocol (SCMP), a cost-control mechanism linked to turnover that has been in place in League Two since 2003 and League One since 2011, but SCMP is not where anyone wants to be.
“It couldn’t prevent the demise of Bury and Macclesfield,” Sparks tells The Athletic, while Holt describes it as “a licence for people to spend whatever they like”.
Lincoln City chairman Clive Nates agrees.
“SCMP is just not fit for purpose,” says Nates. “How can it be when it effectively provides no cap on the amount of money which an owner can inject into a club by way of equity, donations or loans?
“By definition, there is no limit on the amount of losses. There is a League One club that had a turnover of £5.5 million in their last accounts but incurred losses of £6 million and has loans from its owner’s companies in excess of £17 million.”
The Athletic has heard similar examples from other club bosses. But we have also heard universal support for the principle of cost control, which, let’s be honest, boils down to one thing: restraining players’ wages. Football clubs do not waste much money on paper clips.
The PFA would never put it quite like that, of course, but even the union acknowledged the need for “reasonable and proportionate cost-control measures for the future” in the statement that announced its arbitration victory.
So, what’s the plan?
Well, there are several — Holt says “there are a million ways to do it”. Even The Athletic does not have the stomach to explore that many but we can set out the most likely options, starting with the one that has just been knocked back.
Fixed salary caps
Before we address the issue of whether hard caps could come back, we should explain the rules that have been in place for most of this season and the grounds on which they have been scrapped.
Under pressure from clubs already hurting from the curtailment of last season in Leagues One and Two and terrified at the prospect of being asked to start again without fans, the EFL agreed to “do something”.
A cap of £2.5 million was proposed for League One, £1.5 million for League Two. These caps, which came into force immediately, included all basic salaries, agents’ fees, image-rights payments, taxes, accommodation/relocation costs and bonuses, except those related to cup runs or promotions. They applied only to players in first-team squads and the wages of players under the age of 21 were exempt.
Transition arrangements were made for relegated clubs and for players on contracts signed before August 8. In both of these situations, the contracts were capped at the divisional average — a compromise that gave relegated clubs and those brave enough to hand out contracts before the cut-off date a considerable advantage.
Anyone breaching the cap would have been subject to an “overrun” policy, similar to the luxury taxes that exist in North American sport. Clubs would have paid £1 into a central pot for every £1 they went over the cap. That money would then have been redistributed among law-abiding clubs. But if they went more than 5 per cent over the cap, they would have faced disciplinary action and a range of sanctions.
Depending on who you talk to, the EFL either sounded out the PFA, got nowhere and decided to press ahead, or it assumed it would get nowhere and pressed ahead. Having spent some time talking to working groups of clubs about what the caps should be, the decision to bring them in or not was put to a vote in each division, with a two-thirds majority required for their introduction.
As mentioned, the vote in League Two was straightforward, 22-2 in favour of the £1.5 million cap. But it was much closer in League One, with the minimum number of clubs, 16, backing it. A proposed cap of £18 million for the Championship was never tested at the ballot box, such is the wide range of opinions and revenues in that division.
The Athletic has previously reported on the strength of opinion among League One’s bigger clubs against the cap, with Portsmouth chief executive Mark Catlin memorably describing it as “communism”, “a disgrace” and “a show of disrespect” to players.
The PFA, no doubt, agreed with him but its case against the caps was actually very simple and unemotional.
Speaking to the same podcast as Holt (we kept them apart in the virtual waiting room), De Marco explains that the forum for discussing issues relating to the players’ terms and conditions of employment is called the Professional Football Negotiating and Consultative Committee (PFNCC).
Set up in 1978, it is the product of a collective bargaining agreement between employers (the clubs) and their employees (the players). The EFL, Football Association, Premier League and PFA are party to it and decisions must be unanimous.
“The case was essentially about whether this was a matter that should go through the PFNCC or not,” says De Marco. “The PFA said it was, the EFL said it wasn’t and the PFA won. In that sense, it’s quite a narrow issue.
“Football is a very peculiar business: it’s one of the only ones where neither side, clubs or players, can just terminate the agreement. A player can’t just walk out and join another club. So, there’s all sorts of restraints on trade but one of the justifications for those restraints is they are subject to collective bargaining.
“But when you take that collective bargaining away and say ‘we’re just going to impose a wage cap but we’re not going to speak to you about it’, well, that’s why the PFA brought the claim.”
Like his client, De Marco agrees that something should be done to rein in spending in the EFL, where almost all clubs are losing money, even without COVID-19 shutting their stadiums. But he does not believe hard caps are the way to go.
For him, and many others, hard caps are incompatible with European sport’s pyramid structure, where clubs are meant to move up and down the ladder, unlike in North America’s closed leagues. This movement will always pose difficulties for clubs when they go up and have to compete with richer rivals, or when they go down and must dramatically cut costs to fit in with their new surroundings.
As clubs and players like the security of contracts that last more than one season, these rapid changes in circumstance are hard to accommodate. So, a transition arrangement is needed, which practically guarantees the concept of yo-yo clubs.
Furthermore, competition in European football is not just vertical within borders, it is international. Premier League clubs, some of whom earn 100 times what clubs in League One bring in every year, are competing for players and prizes with the top sides in France Germany, Italy and Spain. They are not going to hamstring themselves with a hard cap.
De Marco also argues that caps block fresh investment, a point several others have made to The Athletic.
“Yes, you need some salary-control mechanisms but they need to have some relationship with a club’s income and their investors’ ability to invest,” he explains.
Bradford’s Sparks used to work in English rugby league, a sport that has used salary caps for more than 20 years, as has rugby union. He believes the EFL should have asked both rugby codes what impact caps have had on the quality of the product and, therefore, public interest. For him, there are pros and cons, and limiting how much money a wealthy new investor can pump into the sport is a clear downside.
This was essentially the point Portsmouth’s Catlin made last year, too. And it is widely shared by the Championship’s richer owners and, unsurprisingly, players’ agents.
But the counterargument is that professional sport’s history is littered with examples of new investors who either were not as wealthy as they said they were or who decided chasing glory was simply too expensive and they would rather stay wealthy. And by the time one of those two eventualities had been reached, everybody else had committed to spending more than they could afford just to keep up.
This is why many club owners have told The Athletic that salary caps protect owners from themselves and it explains why 38 out of 48 clubs in the EFL’s bottom two divisions backed them only six months ago.
“A well thought through salary cap is the best answer even without the higher divisions implementing one but it is even more necessary in the Championship,” says Nates, whose Lincoln City side are currently top of League One and looking good for promotion.
Lincoln chairman Nates (right) with his manager Michael Appleton
Necessary, perhaps, but not going to happen, which brings us to the next option: the status quo.
Salary Cap Management Protocol
When new EFL chief executive Trevor Birch briefed the clubs on the league’s salary cap setback last week, there were some on the video-conference calls who could not believe they were hearing the EFL try to pretend a return to SCMP was any kind of consolation.
As Holt puts it in the podcast: “When the tide is out, you see everyone’s arse. We’re seeing it now, we’re all exposed for what we are. We’re all heavily reliant on the crowds we get.
“The vast majority of clubs are overspending because the game’s prize mechanism encourages us to do so. We had to put some limits on it (this season) otherwise somebody could have taken advantage of Covid and bought up all the talent when everybody else is struggling.
“SCMP never worked, it’s a joke. There’s a box you can tick to say I agree to this until I don’t.
“We talk about Financial Fair Play (in the Championship) but it allows clubs to lose up to £39 million over three years. How are you going to measure that this year? The losses are going to be high and you have players with three-year contracts.”
To understand his point about SCMP’s limitations, we must first explain how it works, or doesn’t work, depending on your view, and it would be fair to say that Holt would seem to be in the majority among owners.
Under SCMP, “player-related expenditure” in League Two cannot exceed 50 per cent of a club’s turnover (broadcasting income, gate receipts, food and beverage sales, merchandising and sponsorships), plus 100 per cent of its “football fortune income” (profits on player-trading and prize money from cup runs). Wages for players under 21 are exempt and any additional money to “support turnover must be injected upfront”.
To put this in context, average turnover in League Two in the 2018/19 season — the last year for which we have a full set of numbers — was about £4 million, so half of that is £2 million. The average wage bill, however, was just over £3 million, which gives a wage-to-turnover ratio of 78 per cent.
This means owners were typically claiming another £1 million in “football fortune income”, an unlikely annual windfall for a League Two club, or just pumping the shortfall in direct from their wallets. And just to be clear, this is only the amount they are putting in to cover the first-team wage bill.
In League One, clubs can spend 60 per cent of their turnover on wages (relegated clubs can go up to 75 per cent) and 100 per cent of their football fortunes. Average turnover in 2018/19 was £8 million, although this was skewed by Sunderland’s relegation while still receiving Premier League parachute payments. The average wage bill was just over £6 million, to give an 80 per cent wage-to-turnover ratio.
When you consider UEFA believes anything higher than 70 per cent is unsustainable, it is easy to see why very few clubs in Leagues One and Two were covering their costs even with fans coming through the turnstiles. The situation in the Championship, by the way, was even worse, with clubs spending £1.07 of every £1 they earned on wages.
“Dealing with SCMP is a lot of hard work for our accountants and we haven’t had to do it this year,” says Holt. “But there’s a tick-box at the bottom that lets the owners spend what they want as long as they’re putting it in. But then you wonder why you’ve got clubs with mountains of debt.”
New and improved SCMP
So, not the same old SCMP, then.
The consensus from owners is that the regime must be more immediate, more grounded in actual income and less vulnerable to the arguments of clever lawyers and the whims of independent disciplinary panels.
“The problem with SCMP is it works retrospectively, so you calculate it after the event and you end up fining a club years later,” says Holt.
“It’s wrong. If you have a salary cap, you put in exactly the same figure every month and it should match your revenue. The EFL would then be able to see, on a month-by-month basis, if you’re stepped outside your cap.
“If you do, the EFL should be able to act at the time you do it. They could dock points or fine you but it should be automatic, not something that lawyers like Nick De Marco can get involved in.
“The EFL have all the information in front of them, they just don’t know what the cap is because the cap is based on a projection. Nobody knows the future. The EFL could take an average of the last three years’ turnover and say to each club ‘that’s your cap and we’re going to measure it each month’.
“Or they could set three different caps for each league: band A, band B or band C. They could say ‘you’re band C because you’re a little club; Portsmouth, you’re band A because you’re a big club’. There’s loads of ways to manage it but it’s got to be contemporaneous.”
Portsmouth have a large budget but still were defeated in the play-offs by Oxford
Stevenage owner Phil Wallace agrees with Holt that the SCMP the EFL has returned to is not good enough but he thinks it can be made to work.
“There’s no doubt that even well-run clubs like mine are in probably the worst financial state they’ve ever been in and something has to give,” says Wallace. “With player wages the highest cost for us all — and with that cost fixed to a large extent — clubs need something resilient in place to control costs.
“The salary cap did that. The SCMP also does it, to a lesser extent, but if it’s tweaked and strengthened there’s no reason it shouldn’t be able to get the same result, which is ensure club sustainability.”
One obvious fix would be to make owners put their money where their mouths are by requiring them to cover the full cost of a player’s contract.
“Club owners should be allowed to invest in football if they can afford to but you need to hold owners to that investment,” says De Marco. “So, if they raise salaries to a certain level, you must make sure they can afford to keep putting that money in, whether that’s by financial checks or by putting money into deposit accounts.”
Nates, though, speaks for many when he says that will discourage investors.
“Asking owners to put money in escrow would not be something I would support,” says Nates. “I would not be involved if that was the case.”
Barnsley co-owner Paul Conway sees a different flaw in the idea that the EFL could operate a more sophisticated system based on turnover: it simply lacks the expertise and resources to do so.
“Until the EFL hires more ‘cops’ to enforce regulations, it’s all irrelevant, as many teams will still cheat to get around new rules,” says Conway. “I don’t see the Championship setting up any material restrictions and it doesn’t matter anyway without proper enforcement.”
This belief that the EFL keeps bringing knives to gunfights with those determined to push boundaries has repeatedly come up in conversations The Athletic has had with owners. Of course, they all claim they would never bend the rules and it is always some other club with the suspicious sponsorships, soft loans and avant-garde accounting practices.
But the fact remains: there is a shortage of confidence in the EFL’s ability to police anything too complicated. That is a shame as perhaps the best answer does require a few more accountants.
Bespoke caps
“There’s a simple solution: clubs should only spend what they can afford, based on actual revenue,” says Sparks. “The EFL could come in, audit our accounts and then tell us what we can spend. I would have no problem with that.”
It does sound simple, doesn’t it? And it is what Spanish football has been doing in its top two divisions for the last five years or so.
There, every club must submit its accounts to La Liga’s finance department, which then works out a club-specific salary cap before the summer window. It is a system that reflects the different sizes of clubs and their respective ambitions, but also one that moves with the times.
Most Spanish fans have not even noticed this was happening until this season when Barcelona and Real Madrid were handed huge salary-cap cuts, particularly Barcelona. A critic could point out that the system has failed to stop Barcelona running up more than £1 billion in debts but all the numbers get a bit giddy at the pointy end of the pyramid and elite clubs have more ways out of a bind than League Two sides do.
More than one EFL club boss has told The Athletic that the blunt instrument of a hard cap has been a disincentive to grow their revenues this year, as their income comfortably covered the amount they were allowed to spend. They said one-size-fits-all caps make clubs lazy, as they will not strive to find new sponsors or find ways to boost attendances.
A cap linked to turnover is clearly a better option for those who feel this way but, they say, it still does not reflect the fundamental differences between clubs that have worked hard, over many years, to grow and those who haven’t.
“Do you know who wants salary caps?” says one EFL club chief executive. “Owners who like driving their Bentleys to games, having a nice meal and watching from the director’s box, but don’t want to put their money in anymore.”
Holt is not buying that, though. He has worked hard to grow Accrington’s income over the years, recently investing in a new away stand, food and drink outlets and a club shop but the League One side is still losing money, despite spending less on player wages than the League Two cap.
“I’m philosophical,” he says. “Over the next 50 years, Accrington will get promoted and relegated. We’re hoping for promotion this year, by the way, but the EFL should get to a place where you can go up and down without going bust.
“I don’t want to hold Sunderland or Portsmouth up, they’re great clubs, but it’s not my fault they’re playing Accrington on a wet Tuesday night. They’ve done that to themselves and they’ve lost hundreds of millions over the years.
“For me, wanting no controls on spending, we’ve done that, we’ve bought the T-shirt and half the clubs have been in administration. We don’t want that anymore.”
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Death, taxes, England cricket batting collapses on Asian pitches, Nick De Marco beating the English Football League in an arbitration hearing. In these uncertain times, it is almost reassuring there are still some things we can count on.
De Marco, a leading sports lawyer, was acting for the Professional Footballers’ Association (PFA) this time and the issue at stake was the EFL’s decision to introduce hard salary caps in Leagues One and Two this season.
Having successfully defended Derby County and Stevenage against EFL charges last year and gained good results for QPR, Sheffield Wednesday and others in recent seasons, it would be fair to describe whichever team De Marco is on as the EFL’s bogey side.
Speaking to The Athletic’s Business of Sport podcast, Accrington Stanley chairman Andy Holt speaks for many club owners when he describes the EFL’s latest loss as a “fiasco” but not a shock.
“The EFL are easy to run rings around, they lose every case,” says Holt, who was particularly annoyed with a tweet De Marco posted following the announcement of the arbitration hearing last Tuesday.
“I was up half the night thinking about his tweet, congratulating himself for beating the EFL,” says Holt. “It’s like me congratulating myself for standing on a worm. The EFL shouldn’t be good at that. It should be good at running the competition and it should be supported by the clubs.”
To continue the cricket theme, Holt charged in off his full run-up for another 15 minutes of chin music for De Marco, PFA boss Gordon Taylor, the EFL’s ineffectual attempts to control spending and “unscrupulous owners” who have bankrupted clubs. His frustration is shared by many, even those who disagreed with the decision to impose caps.
“Collectively, we have wasted a lot of time and money on this only to get taken to court by the PFA and lose,” says Ryan Sparks, chief executive of Bradford City, one of two clubs in League Two to vote against hard caps when the EFL board recommended them in August.
“It’s pretty embarrassing, really. Instead of looking at other sports with salary caps to see how they have worked and sat down with the PFA to come up with a workable solution, we rushed something through and we’re back to where we started.”
That starting point is the Salary Cap Management Protocol (SCMP), a cost-control mechanism linked to turnover that has been in place in League Two since 2003 and League One since 2011, but SCMP is not where anyone wants to be.
“It couldn’t prevent the demise of Bury and Macclesfield,” Sparks tells The Athletic, while Holt describes it as “a licence for people to spend whatever they like”.
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Lincoln City chairman Clive Nates agrees.
“SCMP is just not fit for purpose,” says Nates. “How can it be when it effectively provides no cap on the amount of money which an owner can inject into a club by way of equity, donations or loans?
“By definition, there is no limit on the amount of losses. There is a League One club that had a turnover of £5.5 million in their last accounts but incurred losses of £6 million and has loans from its owner’s companies in excess of £17 million.”
The Athletic has heard similar examples from other club bosses. But we have also heard universal support for the principle of cost control, which, let’s be honest, boils down to one thing: restraining players’ wages. Football clubs do not waste much money on paper clips.
The PFA would never put it quite like that, of course, but even the union acknowledged the need for “reasonable and proportionate cost-control measures for the future” in the statement that announced its arbitration victory.
So, what’s the plan?
Well, there are several — Holt says “there are a million ways to do it”. Even The Athletic does not have the stomach to explore that many but we can set out the most likely options, starting with the one that has just been knocked back.
Fixed salary caps
Before we address the issue of whether hard caps could come back, we should explain the rules that have been in place for most of this season and the grounds on which they have been scrapped.
Under pressure from clubs already hurting from the curtailment of last season in Leagues One and Two and terrified at the prospect of being asked to start again without fans, the EFL agreed to “do something”.
A cap of £2.5 million was proposed for League One, £1.5 million for League Two. These caps, which came into force immediately, included all basic salaries, agents’ fees, image-rights payments, taxes, accommodation/relocation costs and bonuses, except those related to cup runs or promotions. They applied only to players in first-team squads and the wages of players under the age of 21 were exempt.
Transition arrangements were made for relegated clubs and for players on contracts signed before August 8. In both of these situations, the contracts were capped at the divisional average — a compromise that gave relegated clubs and those brave enough to hand out contracts before the cut-off date a considerable advantage.
Anyone breaching the cap would have been subject to an “overrun” policy, similar to the luxury taxes that exist in North American sport. Clubs would have paid £1 into a central pot for every £1 they went over the cap. That money would then have been redistributed among law-abiding clubs. But if they went more than 5 per cent over the cap, they would have faced disciplinary action and a range of sanctions.
Depending on who you talk to, the EFL either sounded out the PFA, got nowhere and decided to press ahead, or it assumed it would get nowhere and pressed ahead. Having spent some time talking to working groups of clubs about what the caps should be, the decision to bring them in or not was put to a vote in each division, with a two-thirds majority required for their introduction.
As mentioned, the vote in League Two was straightforward, 22-2 in favour of the £1.5 million cap. But it was much closer in League One, with the minimum number of clubs, 16, backing it. A proposed cap of £18 million for the Championship was never tested at the ballot box, such is the wide range of opinions and revenues in that division.
The Athletic has previously reported on the strength of opinion among League One’s bigger clubs against the cap, with Portsmouth chief executive Mark Catlin memorably describing it as “communism”, “a disgrace” and “a show of disrespect” to players.
The PFA, no doubt, agreed with him but its case against the caps was actually very simple and unemotional.
Speaking to the same podcast as Holt (we kept them apart in the virtual waiting room), De Marco explains that the forum for discussing issues relating to the players’ terms and conditions of employment is called the Professional Football Negotiating and Consultative Committee (PFNCC).
Set up in 1978, it is the product of a collective bargaining agreement between employers (the clubs) and their employees (the players). The EFL, Football Association, Premier League and PFA are party to it and decisions must be unanimous.
“The case was essentially about whether this was a matter that should go through the PFNCC or not,” says De Marco. “The PFA said it was, the EFL said it wasn’t and the PFA won. In that sense, it’s quite a narrow issue.
“Football is a very peculiar business: it’s one of the only ones where neither side, clubs or players, can just terminate the agreement. A player can’t just walk out and join another club. So, there’s all sorts of restraints on trade but one of the justifications for those restraints is they are subject to collective bargaining.
“But when you take that collective bargaining away and say ‘we’re just going to impose a wage cap but we’re not going to speak to you about it’, well, that’s why the PFA brought the claim.”
Like his client, De Marco agrees that something should be done to rein in spending in the EFL, where almost all clubs are losing money, even without COVID-19 shutting their stadiums. But he does not believe hard caps are the way to go.
For him, and many others, hard caps are incompatible with European sport’s pyramid structure, where clubs are meant to move up and down the ladder, unlike in North America’s closed leagues. This movement will always pose difficulties for clubs when they go up and have to compete with richer rivals, or when they go down and must dramatically cut costs to fit in with their new surroundings.
As clubs and players like the security of contracts that last more than one season, these rapid changes in circumstance are hard to accommodate. So, a transition arrangement is needed, which practically guarantees the concept of yo-yo clubs.
Furthermore, competition in European football is not just vertical within borders, it is international. Premier League clubs, some of whom earn 100 times what clubs in League One bring in every year, are competing for players and prizes with the top sides in France Germany, Italy and Spain. They are not going to hamstring themselves with a hard cap.
De Marco also argues that caps block fresh investment, a point several others have made to The Athletic.
“Yes, you need some salary-control mechanisms but they need to have some relationship with a club’s income and their investors’ ability to invest,” he explains.
Bradford’s Sparks used to work in English rugby league, a sport that has used salary caps for more than 20 years, as has rugby union. He believes the EFL should have asked both rugby codes what impact caps have had on the quality of the product and, therefore, public interest. For him, there are pros and cons, and limiting how much money a wealthy new investor can pump into the sport is a clear downside.
This was essentially the point Portsmouth’s Catlin made last year, too. And it is widely shared by the Championship’s richer owners and, unsurprisingly, players’ agents.
But the counterargument is that professional sport’s history is littered with examples of new investors who either were not as wealthy as they said they were or who decided chasing glory was simply too expensive and they would rather stay wealthy. And by the time one of those two eventualities had been reached, everybody else had committed to spending more than they could afford just to keep up.
This is why many club owners have told The Athletic that salary caps protect owners from themselves and it explains why 38 out of 48 clubs in the EFL’s bottom two divisions backed them only six months ago.
“A well thought through salary cap is the best answer even without the higher divisions implementing one but it is even more necessary in the Championship,” says Nates, whose Lincoln City side are currently top of League One and looking good for promotion.
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Lincoln chairman Nates (right) with his manager Michael Appleton
Necessary, perhaps, but not going to happen, which brings us to the next option: the status quo.
Salary Cap Management Protocol
When new EFL chief executive Trevor Birch briefed the clubs on the league’s salary cap setback last week, there were some on the video-conference calls who could not believe they were hearing the EFL try to pretend a return to SCMP was any kind of consolation.
As Holt puts it in the podcast: “When the tide is out, you see everyone’s arse. We’re seeing it now, we’re all exposed for what we are. We’re all heavily reliant on the crowds we get.
“The vast majority of clubs are overspending because the game’s prize mechanism encourages us to do so. We had to put some limits on it (this season) otherwise somebody could have taken advantage of Covid and bought up all the talent when everybody else is struggling.
“SCMP never worked, it’s a joke. There’s a box you can tick to say I agree to this until I don’t.
“We talk about Financial Fair Play (in the Championship) but it allows clubs to lose up to £39 million over three years. How are you going to measure that this year? The losses are going to be high and you have players with three-year contracts.”
To understand his point about SCMP’s limitations, we must first explain how it works, or doesn’t work, depending on your view, and it would be fair to say that Holt would seem to be in the majority among owners.
Under SCMP, “player-related expenditure” in League Two cannot exceed 50 per cent of a club’s turnover (broadcasting income, gate receipts, food and beverage sales, merchandising and sponsorships), plus 100 per cent of its “football fortune income” (profits on player-trading and prize money from cup runs). Wages for players under 21 are exempt and any additional money to “support turnover must be injected upfront”.
To put this in context, average turnover in League Two in the 2018/19 season — the last year for which we have a full set of numbers — was about £4 million, so half of that is £2 million. The average wage bill, however, was just over £3 million, which gives a wage-to-turnover ratio of 78 per cent.
This means owners were typically claiming another £1 million in “football fortune income”, an unlikely annual windfall for a League Two club, or just pumping the shortfall in direct from their wallets. And just to be clear, this is only the amount they are putting in to cover the first-team wage bill.
In League One, clubs can spend 60 per cent of their turnover on wages (relegated clubs can go up to 75 per cent) and 100 per cent of their football fortunes. Average turnover in 2018/19 was £8 million, although this was skewed by Sunderland’s relegation while still receiving Premier League parachute payments. The average wage bill was just over £6 million, to give an 80 per cent wage-to-turnover ratio.
When you consider UEFA believes anything higher than 70 per cent is unsustainable, it is easy to see why very few clubs in Leagues One and Two were covering their costs even with fans coming through the turnstiles. The situation in the Championship, by the way, was even worse, with clubs spending £1.07 of every £1 they earned on wages.
“Dealing with SCMP is a lot of hard work for our accountants and we haven’t had to do it this year,” says Holt. “But there’s a tick-box at the bottom that lets the owners spend what they want as long as they’re putting it in. But then you wonder why you’ve got clubs with mountains of debt.”
New and improved SCMP
So, not the same old SCMP, then.
The consensus from owners is that the regime must be more immediate, more grounded in actual income and less vulnerable to the arguments of clever lawyers and the whims of independent disciplinary panels.
“The problem with SCMP is it works retrospectively, so you calculate it after the event and you end up fining a club years later,” says Holt.
“It’s wrong. If you have a salary cap, you put in exactly the same figure every month and it should match your revenue. The EFL would then be able to see, on a month-by-month basis, if you’re stepped outside your cap.
“If you do, the EFL should be able to act at the time you do it. They could dock points or fine you but it should be automatic, not something that lawyers like Nick De Marco can get involved in.
“The EFL have all the information in front of them, they just don’t know what the cap is because the cap is based on a projection. Nobody knows the future. The EFL could take an average of the last three years’ turnover and say to each club ‘that’s your cap and we’re going to measure it each month’.
“Or they could set three different caps for each league: band A, band B or band C. They could say ‘you’re band C because you’re a little club; Portsmouth, you’re band A because you’re a big club’. There’s loads of ways to manage it but it’s got to be contemporaneous.”
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Portsmouth have a large budget but still were defeated in the play-offs by Oxford
Stevenage owner Phil Wallace agrees with Holt that the SCMP the EFL has returned to is not good enough but he thinks it can be made to work.
“There’s no doubt that even well-run clubs like mine are in probably the worst financial state they’ve ever been in and something has to give,” says Wallace. “With player wages the highest cost for us all — and with that cost fixed to a large extent — clubs need something resilient in place to control costs.
“The salary cap did that. The SCMP also does it, to a lesser extent, but if it’s tweaked and strengthened there’s no reason it shouldn’t be able to get the same result, which is ensure club sustainability.”
One obvious fix would be to make owners put their money where their mouths are by requiring them to cover the full cost of a player’s contract.
“Club owners should be allowed to invest in football if they can afford to but you need to hold owners to that investment,” says De Marco. “So, if they raise salaries to a certain level, you must make sure they can afford to keep putting that money in, whether that’s by financial checks or by putting money into deposit accounts.”
Nates, though, speaks for many when he says that will discourage investors.
“Asking owners to put money in escrow would not be something I would support,” says Nates. “I would not be involved if that was the case.”
Barnsley co-owner Paul Conway sees a different flaw in the idea that the EFL could operate a more sophisticated system based on turnover: it simply lacks the expertise and resources to do so.
“Until the EFL hires more ‘cops’ to enforce regulations, it’s all irrelevant, as many teams will still cheat to get around new rules,” says Conway. “I don’t see the Championship setting up any material restrictions and it doesn’t matter anyway without proper enforcement.”
This belief that the EFL keeps bringing knives to gunfights with those determined to push boundaries has repeatedly come up in conversations The Athletic has had with owners. Of course, they all claim they would never bend the rules and it is always some other club with the suspicious sponsorships, soft loans and avant-garde accounting practices.
But the fact remains: there is a shortage of confidence in the EFL’s ability to police anything too complicated. That is a shame as perhaps the best answer does require a few more accountants.
Bespoke caps
“There’s a simple solution: clubs should only spend what they can afford, based on actual revenue,” says Sparks. “The EFL could come in, audit our accounts and then tell us what we can spend. I would have no problem with that.”
It does sound simple, doesn’t it? And it is what Spanish football has been doing in its top two divisions for the last five years or so.
There, every club must submit its accounts to La Liga’s finance department, which then works out a club-specific salary cap before the summer window. It is a system that reflects the different sizes of clubs and their respective ambitions, but also one that moves with the times.
Most Spanish fans have not even noticed this was happening until this season when Barcelona and Real Madrid were handed huge salary-cap cuts, particularly Barcelona. A critic could point out that the system has failed to stop Barcelona running up more than £1 billion in debts but all the numbers get a bit giddy at the pointy end of the pyramid and elite clubs have more ways out of a bind than League Two sides do.
More than one EFL club boss has told The Athletic that the blunt instrument of a hard cap has been a disincentive to grow their revenues this year, as their income comfortably covered the amount they were allowed to spend. They said one-size-fits-all caps make clubs lazy, as they will not strive to find new sponsors or find ways to boost attendances.
A cap linked to turnover is clearly a better option for those who feel this way but, they say, it still does not reflect the fundamental differences between clubs that have worked hard, over many years, to grow and those who haven’t.
“Do you know who wants salary caps?” says one EFL club chief executive. “Owners who like driving their Bentleys to games, having a nice meal and watching from the director’s box, but don’t want to put their money in anymore.”
Holt is not buying that, though. He has worked hard to grow Accrington’s income over the years, recently investing in a new away stand, food and drink outlets and a club shop but the League One side is still losing money, despite spending less on player wages than the League Two cap.
“I’m philosophical,” he says. “Over the next 50 years, Accrington will get promoted and relegated. We’re hoping for promotion this year, by the way, but the EFL should get to a place where you can go up and down without going bust.
“I don’t want to hold Sunderland or Portsmouth up, they’re great clubs, but it’s not my fault they’re playing Accrington on a wet Tuesday night. They’ve done that to themselves and they’ve lost hundreds of millions over the years.
“For me, wanting no controls on spending, we’ve done that, we’ve bought the T-shirt and half the clubs have been in administration. We don’t want that anymore.”
Spot on mate, he is a bitter little gobshite. His team is basically a non league team, from a town the size of Seaham stuck half way between Burnley and Blackburn thats got no history other than going bust 60 years ago and resigning from the league and a milk advert 30 odd years ago. But being snidy about us and Portsmouth isn't going to help him in the long run, though I bet he enjoys rubbing shoulders with KLD and his family when we play them.
I’m fully convinced he just wants to fill his own pockets in this league from us on the off chance he gets to the championship. There’s less chance he can do that if we can spend more money.
Stole from our fans when the game was abandoned last season and offered no option of a refund.
And cried like a baby to the EFL to stop us doing a beam back for our fans who couldn't get to the re arranged match. Then he spouted some crap on the radio when the facts came out but it was too late for us to resort it
This is the calibre of individual we have to deal with down in this league. The sooner we’re our the better.
The whole context of his comment is centered on this phrase. Specifically the words 'hold up' - does he mean hold up as an example or does he mean hold up as in delay.
The only way to know what he meant is to press him for an explanation and the reporter doesn't do this or hasn't included it in the article.
I would be inclined to take it as meaning delay, but then I was brought up in the North West region and am used to people saying 'hold up, old son' when they mean 'wait for me'.
For me Andy Holt is an old fashioned football chairman. I don't mean that in a derogatory fashion. I mean he's a local businessman, with deep roots in their community and not someone from elsewhere who has bought the club. He has freely admitted that he didn't want to take over Accrington Stanley when it was facing bankruptcy, but did so out of moral obligation to the area where the club meant so much to people.
Perhaps, because I am older, I am more used to clubs having to watch every penny, but there are two reasons for acting like that. There is the 'cut spending short term to make the club viable enough for me to sell on and make a quick profit' and then there is the 'we are a club where we are, with very limited resources to call upon so we can only do so much and have to fight for every penny to make sure we are still here in ten years time' - it is this latter case where Holt is coming from.
We can't blame him for being small minded if his whole ethos is to rescue a small club that he loved, for the community that he loved and to make sure that club can survive in an industry plagued with short termism.
Andy Holt does what he thinks he has to do for the good of the club he loves and for the community that he loves.
You couldn't ask more from any club owner. Given his club's fan base and financial limitations then he has the club overachieving and so been a far better club servant than Donald has been for us.
Yes, his interests are at odds with those of SAFC, but I feel we shouldn't despise him for that.
Given the vote for the salary cap at the start of the season there are more Accringtons in this division than Sunderlands so they are going to work to make things more suitable for the smaller clubs.
I reserve my hatred for the EFL, the ones who steer the whole game until such time as we get into the Premiership. They were the ones who represent football itself and should have studied how the Salary Cap is used in the sport around Europe and in other comparable sporting systems. They are the ones that should have consulted and secured agreement with the players' negotiating body.
Personally I like the sound of the Spanish salary cap system, but I don't think the EFL are currently professional enough to run it.
Anything which takes account of the differences in clubs and owner's financial standing, that offers near real-time control is miles better than what we currently have.
But ha'way the takeover and lets get out of bloody League One!
We'll have to agree to disagree on some of your points, mate. The statement you highlighted is holding us up as an example when you read it whole, it doesn't make sense as in delaying us. Delaying us from what?
I don't disagree that he's an old fashioned club chairman, or that it's not a bad thing. We had one for over 20 years ourselves in Bob Murray, or that he's trying to do the best for his club and the local area. It's the way he's conducting himself while doing it that's wrong to me. Commenting about other clubs is wrong, we know why we're down here but if trying to do the best for our club goes against what he thinks is best for his club, why is he commenting on us? Maybe he's playing up to the image of the blunt, down to earth Lancastrian, but he should know to keep his nose out of commenting on other clubs, particularly as he lashes out a lot when people disagree with him. Sooner or later it'll come round to bite him and his club on the arse. I've been looking at his twitter feed over the last few days and he's regularly having goes at other clubs, their supporters and the PFA. Here's an example..
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It might seem nothing, but why do it? Taking the micky out of Hull for complaining about the changing rooms, far better to say nothing or comment that you're working on upgrading them. It's stuff like that that'll wind up supporters of other clubs and his stubborn "my view on the salary cap is right and anyone who disagrees is wrong" attitude only makes him look petty, small minded and bitter.
I do agree with you about the Spanish model for a salary cap. Something that takes into consideration a clubs revenue and turnover is much better than a flat rate cap based on league averages. It can be tailored to match a clubs current situation season by season and is more likely to allow a club to grow revenue and invest that in better quality players and overall squad. As it is the flat rate salary cap was almost a reintroduction of the old maximum wage, but not applied through out the league.
I also agree that the EFL should cop the bulk of the blame and anger, due to their incompetence. The way it was done makes you feel that any club below the championship is a second class citizen and doesn't count. But the way he behaves deserves criticism. If Accrington get promoted, will he behave the same in the Championship, particularly as their ground isn't up to league standard, let alone Championship?
But anyway, I respect your opinions and I hope you respect mine, even if we're not fully in agreement on some things. And hopefully once the takeover is done we can move on and forget about this league snd the EFL.
Of course I respect your views, after all we each view the same landscape from a slightly different location.
Yes, Holt deserves criticism for being a gobshite on twitter, but at least he honestly represents himself. You are right about things like the dressing room twitter incident, he should be more circumspect and respectful of other clubs. Mind, can you imagine what Brian Clough would have been making similar comments in Holt's position?!
At the end of the day I just feel sorry for the Andy Holts of the lower divisions. We can remember past glory and realisticly dream of regaining top tier football, wheras they are left in a continual battle for survival.
Finally, the hold up/delay? Holding up our development, our return to higher tier football.
So refreshing seeing pleasant debates going on, rather than constant wumming for reactions.
I agree with Holt about the dressing room thing tbf. I'd be embarrassed if we complained about a dressing room. Yes, it's ****, but it's Accrington in league one and in the middle of a pandemic (not sure if that affected it but I know a lot of changing room arrangements have had to be changed because of it) so I'm not sure what they were expecting. Just get changed and play football man, get back up and you might not have to play them again.
He's a pain in the arse about the salary cap thing though. It's blatantly ridiculous to expect a club with safc's recurring revenue to be forced to spend the same as Accrington. It doesn't promote sustainability at all. Instead you're setting a cap that suits the lowest turnover club in the league and dragging everyone down to that level. Except the championship clubs who would be allowed a lot more. Might as well just pull the drawbridge up at that point.
We do need sustainability, especially when owners are spending but creating debts owed to themselves at the same time, but it's so obvious that a tailored approach is needed so that fans aren't at risk of losing their clubs, but are still able to spend money supporting their club that gets spent on improving it. Otherwise we'd have loads of excess income and all it would do is make the directors a **** load in dividends rather than it going to the players who actually have to risk injury and perform to win matches.
He's a pain in the arse about the salary cap thing though. It's blatantly ridiculous to expect a club with safc's recurring revenue to be forced to spend the same as Accrington. It doesn't promote sustainability at all. Instead you're setting a cap that suits the lowest turnover club in the league and dragging everyone down to that level. Except the championship clubs who would be allowed a lot more. Might as well just pull the drawbridge up at that point.
We do need sustainability, especially when owners are spending but creating debts owed to themselves at the same time, but it's so obvious that a tailored approach is needed so that fans aren't at risk of losing their clubs, but are still able to spend money supporting their club that gets spent on improving it. Otherwise we'd have loads of excess income and all it would do is make the directors a **** load in dividends rather than it going to the players who actually have to risk injury and perform to win matches.
I’ve just read his recent ramblings on Twitter. I’m still not sure why he’s mentioned us or what his point is.
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