randy lerner at villa park

The Little Known New Premier League Soft Wage Cap

 

It’s not widespread knowledge that the Premier League’s latest handbook includes a significant cost control provision which could provide any prospective owner of Aston Villa with a difficult challenge when it comes to funding the drastically needed squad improvements given the struggles on and off the pitch in recent seasons. In many ways, the cost control provision acts as a form of soft wage cap and could check spending or sizeable warchests for the Villa manager under the new regime.

Short Term Cost Control

Rule E.18 states:

“If in any of Contract Years 2013/14, 2014/15 and 2015/16 a Club’s aggregated Player Services Costs and Image Contract Payments:

E.18.1. exceed £52m, £56m, or £60m respectively; and

E.18.2. have increased by more than £4m when compared with the previous Contract Year or by more than £4m, £8m or £12m respectively when compared with Season 2012/13;

then the Club must satisfy the Board that such excess increase as is referred to in E.18.2 arises as a result of contractual commitments entered into on or before 31 January 2013, and/or that it has been funded only by Club Own Revenue Uplift and/or profit from player trading as disclosed in the Club’s Annual Accounts for that Contract Year.

A.1.32: Club Own Revenue Uplift” means any increase in a Club’s revenue in a Contract Year (1st July-30th June following year) when compared with its revenue in Contract Year 2012/13 (excluding Central Funds…)”

N.B. Central Funds include PL distributed monies such as UK and overseas broadcasting payments

The following table summarises the outlined amounts before the Club must justify any excess increases to the PL board of directors.

 

Season

Amount total PL wage bill must not exceed

Extra amount of PL Central Funds club is permitted each year to fund player wage costs (cumulative)

2013/2014

£52m

£4m

2014/2015

£56m

£8m

2015/2016

£60m

£12m

 

The effect of this is that a Premier League club’s yearly wage bill can only increase by a maximum of £4m. Should it exceed this amount the excess must be met by increased commercial revenues that the club has made in the same season.

Using Aston Villa as an example, if their wage bill for the 2012/2013 season was £100m and for the 2013/2014 season it was £104.5m, the club would have spent £500k more than was permitted under Rule E.18. Villa would then have to show the PL board that, in the same season, the additional £500k had arisen from either:

  •  Contracts entered into on or before 31 January 2013.
  •   Club Own Revenue Uplift in the same season
  •   Profit from player transfers.

New owners always dream big as they look to stamp their authority on a club by providing funds for new signings to please supporters. The introduction of Rule E.18 will provide a headache for Villa’s next owner who wants to give his manager license to buy the best players available to the club at whatever cost to kick-start the club’s revival.

With no extra revenue, such as that from European competitions, the potential new owner and manager will again find themselves working profusely to manage the wage bill as they look at different ways to boost their club revenue. Villa’s PL rivals competing in European competition should benefit given the extra commercial revenue. This makes the task of bringing European football back to Villa Park and collecting domestic honours more difficult.

Bleak Conclusion

E.18 will keep those clubs who struggle to raise club revenue, excluding PL distribution monies, facing a battle to remain as competitive. For the Champions League clubs the extra commercial revenue should maintain the status quo causing further division between the top four to six clubs and the rest of the pack.

For the next owner of Aston Villa the already formidable task of returning the club to the upper echelons of the Premier League has become even more difficult.

Follow Matt Rogers on Twitter

 

 

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8 COMMENTS

  1. Have to disagree here is text taken directly from the PL website.

    “Premier League clubs are restricted in terms the amount of increased PL Central Funds that can be used to increase current player wage costs to the tune of:

    2013/14: £4m
    2014/14: £8m
    2015/16: £12m

    The Short Term Cost Control measure applies only to clubs with a player wage bill in excess of £52m in 2013/14, £56m in 2014/15 and £60m in 2015/16.”

    These rules state that clubs with a wage budget over 52 million a year are limited to only increasing that figure by a maximum of 4 million a year.

    This means that the top clubs are going to have to be very very specific about the players they bring in and can no longer simply just stockpile players for the sake of having squad depth.

    Aston Villa on the other hand most certainly dont have a wage budget of over 52 million a year if we do some maths.

    52 million a year =
    1 million per week =
    20 players paid 50k per week.

    Which im sure we can all agree that with the exception of maybe 2 or 3 players Villa dont even come close to that kind of speding.

    I think it gives any prospective owner plenty of leway to bring in new players before villa hit that 52 million limit.

  2. the big clubs will always have the wriggle room, which is why the G18 is so dangerous. But most clubs will never be in the G18, so the numbers are with them. Villa are not going to have the resources to fight regulations behind the scenes, we have more pressing matters to deal with.

    The regulations will stay in place till challenged, and whatever pressure AVST AND MOMS and other groups can bring to bear should be applied, though it is not a big issue and not one I raised.

    But divide and rule is on the agenda, no question. As UB40 once sang, forget the cost, we’ve got to choose
    we’re running in a face we can only lose.

    Is that the future? Scotland in England with everyone else with nothing to look forward to?

    Trevor Fisher

  3. in response to mug handle, one club cannot protect itself, and fans can’t do it anyway at the club level, its a national issue. The only way forward is through clubs and fans working together and this means working through supporters direct, Football Fans Federation and so on. THe trust should have a handle on how to do this

    trevor fisher.

    • I’ll have to disagree as I think one club or more will be able to protect itself against allegations of financial infractions by arguing it in tribunals or courts until the punishment becomes meaningless. Barca have already pushed out their transfer embargo, Man City only have 23ish internationals to choose from for the Champions League, waiting to see what will happen to QPR if anything.

      In the PL, they would have similar sanctioning powers, possibly point deductions, but still who cares if your team can beat anyone. The regulation though shortsighted and deeply flawed doesn’t affect us currently and will in most likelihood be challenged at a later date. AVST has bigger issues than this in my opinion as a member.

  4. Good informative post, thank you. Agree with others in that I can’t see it hurting Villa too much as we are, Paul Faulkner I guess has a much more limiting remit than the EPL’s. And I would expect some movement in the squad if a new owner came in. Would ask if today there aren’t clubs already in breach of it, could AVFC sue a club in breach? Furthermore isn’t Paul on the PL or FA commission, would hazard he was aware of these regs and would have made a stir if he thought AVFC was compromised in any way.

    How are they calculating and defining “aggregated player services costs”? Once that is known it seems to me the smart thing is to create creative payment schemes that aren’t based on the EPL and fall outside of their control. How about a nice fat bonus for appearing at a charity event, or making player’s club ambassadors? A multi company structure to pay them for a second job? Contracts thru feeder clubs? Million pound watches? Short term non football related contracts to family members?

    From what I have seen with FFP, financial regulation is essentially toothless for the smart clubs. Man City, PSG, and Barca basically ignored them, will be interesting to see how much it ends up hurting the clubs. Instead of worrying and moaning about these regulations especially on how it effects others, it’s more effective to figure out how to protect AFVC and how to profit from them.

    Funny pic in my head of Abramovich, Sheikh Mahmoud, and Ed Woodward all scratching their head over rule E18, saying “Poor Aston Villa”.

  5. Who dreams this shit up.Thats what the league needs eh,concentrating more power in the top six,as if they dont have a big enough advantage anyway.
    I say we boycott the top six until the PL come up with a means to make it a fairer,more competetive comp

  6. I agree with what Trevor is saying about it protecting the clubs with CL monies . But I do wonder if it will affect Villa as much as some claim . But that will depend on how much investment money will be coming in from such sources as AVFC.HK & the various offshoots from that

  7. something for the AVST and the Fan bodies at national level to take onto the national level. Cannot be dealt with by one club.

    The need to ensure that the champion’s league clubs do not get a permanent boost is made greater. This should have a real impact not just on the PL clubs but those in the championship coming up or planning to come up. If this has an impact on clubs like Leicester and Burnley who had no chance of getting into the CL then the injustice is outrageous

    trevor fisher

Comments are closed.