The transfer market It is one of the great attractions in the world of football every summer. Paradoxically, the end of the competition begins a hectic few months of activity, rumors and doubts about what each team will sign, but in recent years we have been faced with a kind of “Grinch” who is checking the cap on the spending budget, which is what the Development inhibits teams and reduces opportunities within the market. This is the famous salary limit that regulates the registrations and salaries of each team.
Why was the salary cap introduced in the league?
The league has been one of the major market activators in the past, Clubs like Real Madrid and FC Barcelona have been the big competitors for world football stars for decades, alongside the big Europeans from England, Germany and Italy. Clubs like Atlético de Madrid, Valencia, Deportivo or Betis etc. too They fought in the 90s and early 2000s for including the best footballers in the world in their squads, but in many cases without any control, which has led them into a precarious economic situation today.
As a cost control measure and to ensure more equal competition, the well-known salary cap was introduced in 2013, which is still a comprehensive control of each club’s accounts to ensure their sustainability and therefore that of the league itself. This initiative was proposed by Javier Tebas when he entered the league, since at that time many clubs in the first and second divisions were in debt or even in danger of disappearing. National football has not been immune to crises or the bursting of some bubbles and moments of crisis where administrative relegations and defaults have been the order of the day in our football without any retaliation. In order to avoid such a collapse and ensure the sustainability of clubs in professional football, it was decided to apply this system, which is already common in all European leagues. or even in UEFA with the so-called Financial Fair Play.
This Salary limits – actually they monitor how much a club can spend between the transfer price and salary in any market or when the owners inject money uncontrollably, resulting in this The salary cap is the “tailgate” of every summer. Because there are clubs that still exceed this salary limit and are forced by the league not to be able to carry out certain operations, as happened in 2021 with the renewal of Messi by FCB, which ended with the Argentine star at PSG.
What exactly is the salary cap?
We all understand that, as the name suggests, The salary limit is a cap on the club’s spending. This not only includes transfer costs and transfer salaries, However, it includes all expenses incurred by a club during a season. According to the league itself, the salary limit includes “fixed and variable salaries, social security, collective bargaining bonuses agreed in the contracts, the costs of acquiring footballers, commissions for agents and amortization.” The amortization is the amount paid as the purchase price of the footballer, This is divided into the contract years that you sign for the player. This is an important fact as many clubs take advantage of this and sign long contracts to avoid increasing their annual limit. Although the salary limit is an audit of clubs’ accounts by LaLiga, It is the teams themselves who propose this cap to the league according to the budget they approved this season.
In addition, there are clubs that do not fully utilize this salary limit. A notable case is Real Madrid, that while it’s par for the course when it comes to galactic signings, Typically, you never reach or exceed this spending limit. If you do not exceed the limit, you can also carry out operations (signings, sales or contract terminations) that fall within the same financial year before June 30th of each season. This means you have money free for the following year.
How is the salary limit calculated?
The league creates a balance between a club’s income and expenses within each season. In terms of profits, the league counts revenue from image rights, television rights, sponsorship deals, what each club earns per season in season tickets and membership cards, the advertising they generate, sales of first team players, etc. and the salary they release. On the other hand, there are the company’s operating costs. And the expenses include expenses for transfers, transfer depreciation (if you pay 100 million over a 5 year contract you have to pay 20), the staff that is part of the club. and in general all club expenses as if it were a company.
Nevertheless, the league contains two different headings in its statutes that distinguish between its designations “Registerable sports team” and “Non-registration.” In the first case it includes the first team personnel, the coach or the salary of the coaching staff, while in the second case it includes the expenses incurred in the subsidiary or the employees of the club (managers, props, employees in various areas) of the club ).
How can my club increase payroll?
This is the main question for the clubs whose market is limited for reaching or exceeding the salary limit. The spending limit can be increased from year to year, but some of these conditions meet:
Income from the sale of first team players
Apply the 1×4 rule (to register new players, the club cannot exceed 25% of the reduction in squad costs, which was changed in 2023)
Increase in TV and advertising rights
Increasing the number of members and subscribers
Capital increases by owners