Lower league football needs democratic ownership, not a salary cap

It is only through fundamental reform of how clubs are owned, bought, and sold that we can begin to return football to the fans argues Jonty Leibowitz

August 12, 2020 · 7 min read

Last week, football clubs in the third and fourth tier of the English game (League One and League Two) took the seemingly unprecedented step of agreeing a Squad Salary Cap for the coming season. The first of its kind in the English modern professional game, this new cap will see clubs agree that total wages to players and agents will not exceed £2.5 million and £1.5 million respectively for the two divisions, with harsh fines to be paid out if clubs are found to breach these terms.

The spiralling cost of player wages has long been an issue at the bottom end of the professional game, with a spate of clubs in recent years unable to pay their players and staff on time. From Macclesfield to Bury, it has often been the thorny issue of player wages that has tipped clubs into the abyss of insolvency, debt and sometimes even expulsion from the league altogether.

In this context – with the majority of football league clubs existing in a constant state of economic precarity – it is unsurprising that the loss of revenue from Covid-19 has forced clubs to address the issue. Before the salary cap, the leagues were bound by a complicated system called the ‘Salary Cost Management Protocol’ (SCMP), in which player wage costs were restricted to 60 per cent of income in League 1 (L1)  and 50 per cent in League 2 (L2). This system was simply not fit for purpose, with unscrupulous club owners using all means of financial trickery to circumvent these rules. With the number of clubs unable to pay their bills rising, change was long overdue.

Mixed support

The cap has been supported by a broad coalition, including the owners and fans of smaller clubs; football finance-watchers; and the Football Supporters Association, the national fan advocacy group for England and Wales. All argued that a salary cap is a necessary first step to making the game more sustainable. Opposition has come from the Professional Footballers Association and some of the largest clubs in the Football League, who worry this cap will leave their clubs unable to compete if they achieve promotion to the next level of the football pyramid.

For Leagues 1 and 2, there is certainly a worry that a salary cap might make the division even more vulnerable to the whims of the Premier League giants, who have expressed an interest in gutting lower league football by effectively replacing it with a ‘PL2’ academy system, as operated in the Spanish leagues. Large clubs have already inaugurated part of this silent revolution through the introduction of the Elite Player Performance Plan, which has made it easier for large clubs to hoover up young talents from L1 and L2 sides.

The debate around salary caps is important, as it opens up opportunities to address the financial insecurities at the heart of the game. Yet for those of us interested in ensuring that football is returned to the fans and communities that are its lifeblood, we should not restrict our field of vision to this narrow debate. By solely focusing on the remuneration of players and agents, we are missing the more important target; the ownership and governance structures that allow clubs to be captured and run by dodgy owners and the forces of corporate greed. It is here; in the minutiae of corporate governance, rather than the accountancy of player wages, that lower league football’s dark heart is exposed.

A league below

The story of how British football clubs have been taken over by corporate oligarchs is well known, with figures such as Mike Ashley at Newcastle, Roland Duchatelet / ESI at Charlton and the Venkys at Blackburn. All of whom have become bywords for corporate greed, excess, and wealth extraction. There is a temptation that this affliction only matters higher up the football pyramid, and doesn’t touch L1 or L2. But there are countless examples to the contrary. For clubs lower down, owners were able to buy the clubs on the cheap, load the asset with debt and then leverage this against the club when it all went wrong. The upside of which is that owners can all too often socialise the losses but privatise the gains. For instance, they can sell the grounds and stadia on which these institutions are built if the club enters administration, and subsequently walk away with a tidy profit.

This brings us to the sleight of hand at play in the salary cap debate. The wages paid to footballers at all levels of the professional game are exorbitant; a product of the game’s hyperinflation and debt-fuelled arms race. But the transaction between club and player is not the root of wealth extraction here. Instead, it is the way in which owners can buy, sell, asset strip and disabuse their clubs with no concern for the fans, the local communities or the long term health of the clubs themselves.

Players are a useful distraction. Consider last week, when Arsenal made 55 staff members redundant. The media immediately poured scorn on players, many of whom are on exorbitant salaries. Yet less attention was paid to the fact that Arsenal owner, American sports tycoon Stan Kroenke, has a net worth of $8.3 billion. Whether in the Premier League or League 2, it is the Stan Kroenkes, not the Mesut Ozils that are the true villains of this piece.

Democratising ownership

The Salary Cap debate is therefore a good start, but if left alone it is a poor substitute for a proper debate about democratising the ownership and governance structures at all levels of the game. In a recent paper, the Centre for Local Economic Strategies and Common Wealth set out a roadmap for taking back control of football in the interests of ordinary fans and communities. In Democratising Football, we argue that club ownership structures need to be reformed in order to make supporters groups the majority shareholders.

As it is in football, so too in the wider economy. Any good analysis of the deep problems in Britain’s economy would treat high pay for CEOs as a symptom of dysfunction, rather than the cause itself. Remuneration matters, but only in the context of ownership in which businesses operate. It is only through fundamental reform of how clubs are owned, bought, and sold that we can begin to return football to the fans and communities to whom it should belong. The Salary Cap is the start of that journey, not the destination.

Jonty Leibowitz is a researcher and writer

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