Sports Legal Blog

EFFECTIVENESS OF SALARY CAPS IN FOOTBALL

Professional sports regards a salary cap /wage cap as an agreement or rule that places a limit on the amount of money that a team can spend on players’ salaries. It exists as a per-player limit or a total limit for the team’s roster, or both to keep overall costs down, and also to maintain […]

August 18, 2021

Josiah Magati

Professional sports regards a salary cap /wage cap as an agreement or rule that places a limit on the amount of money that a team can spend on players’ salaries. It exists as a per-player limit or a total limit for the team’s roster, or both to keep overall costs down, and also to maintain a competitive balance by restricting richer clubs from entrenching
dominance by signing many more top players than their rivals.

The Union of European Football Associations introduced a set of Financial Fair Play Regulations in 2011, which limits football clubs’ spending relative to their income.

Primarily, an effective salary cap prevents wealthy teams from certain destructive behaviors such as signing a multitude of high-paid star players to prevent their rivals from accessing these players, and ensuring victory through superior economic power.

With a salary cap, each club has roughly the same economic power to attract players, which contributes to parity by producing roughly equal playing talent in each team in the league, and in turn brings economic benefits to the league and to its individual teams.


For instance to show the effectiveness of this rule; November, La Liga’s salary cap was reduced by more than €700m (A$1.1b) in a bid to ensure the long-term sustainability of clubs. Barcelona after 21 years bid farewell and confirmed that Messi will not be staying at the club “because of financial and structural obstacles. Now it’s a done deal: free- agent superstar Lionel Messi has joined French side Paris Saint-Germain in the most high-profile player move of the summer in Europe.


Reports state that Messi’s two-year contract with PSG gives him a $41 million annual net salary, including bonuses. The contract also contemplates an option for a third year.

In addition, The Athletic tacks on a near $30-million signing bonus, while Forbes reports that the player will also get a cut of player image rights, including jersey sales, which could potentially bump his annual salary up to the $75 million range.

That’s a big contract for any player, let alone a forward who has already turned 34. PSG will feel that money will be well-spent if Messi can take the club to the promised land: a first-ever UEFA Champions League trophy.