Wage cap explained

[DmanDmythDledge]

http://www.eircomloi.ie:82/news-centre/news/news-141/index.xml

[Poor Student]

It sounds quite reasonable and well thought out from that article. The 65% is definied as players' wages only. Income considered as turnover does not include grants marked for specific expenditure (e.g. CPO grant or stadium grant) and only the profit aspect of a bar's business can be counted (note St. Pat's;)). Investors can put money in towards wages provided the funds are non-refundable, not in the form of an equity investment (Cork;)) and the fund can be distributed as the club's management wishes. Projected income can amended in the middle of the season if there's reasonable evidence to back an upward revision. There seems to be a lot of checks in place to monitor the situation and as a club passes the 55% mark there's further processes in place to keep a club from breaching 65%. They also make an attempt to justify the cap with some comparative figures.

I have to say I'm impressed that they've bothered to put out a public explanation of the cap and that they seem to have considered some of the possible pitfalls. I'm definitely for the cap reading this explanation.

[Mr A]

Holy crap! Well done the FAI- they seem to be handling a very difficult issue very well indeed. Here's the bit that jumped out at me:


3 – Number of clubs spending more than 100% of revenue on salary costs.

That's just mental.

[Mr A]

On the first reading this looks to me like one of the best ever developments for domestic football. Provided they can make it work this could well represent a huge step forward for the league.

[Pablo]

It sounds quite reasonable and well thought out from that article. The 65% is definied as players' wages only. Income considered as turnover does not include grants marked for specific expenditure (e.g. CPO grant or stadium grant) and only the profit aspect of a bar's business can be counted (note St. Pat's;)). Investors can put money in towards wages provided the funds are non-refundable, not in the form of an equity investment (Cork;)) and the fund can be distributed as the club's management wishes. Projected income can amended in the middle of the season if there's reasonable evidence to back an upward revision. There seems to be a lot of checks in place to monitor the situation and as a club passes the 55% mark there's further processes in place to keep a club from breaching 65%. They also make an attempt to justify the cap with some comparative figures.

I have to say I'm impressed that they've bothered to put out a public explanation of the cap and that they seem to have considered some of the possible pitfalls. I'm definitely for the cap reading this explanation.

How do you know what form of investment there is in CCFC? Ignorence is bliss eh

[Poor Student]

How do you know what form of investment there is in CCFC? Ignorence is bliss eh

Relax there. I was only mentioning Cork in jest but you do have to wonder why Arkaga are apparently the ones championing the fight against the wage cap and also why the information makes specific mention of equity investment.

[pineapple stu]

Holy crap! Well done the FAI- they seem to be handling a very difficult issue very well indeed. Here's the bit that jumped out at me:

3 – Number of clubs spending more than 100% of revenue on salary costs.

That's just mental.
Yeah; that's not that many at all!

Some interesting snippets in there though. For example, the clubs made a combined loss of E4.6m in 2006, but a wage cap would only have saved E3.5m, so there's still scope for running up losses.

I wonder is the 54% average wage level calculated just on a combined wages/turnover figure of clubs, or is it the average % by club? If the former, it's a fairly useless figure as the large clubs (who make profits and spend large amounts on player transfers) would be skewing the figures.

Directors' investments appear to now have to be in the form of buying a jersey for a couple of mill, with no shares or loans allowed.

Curious little snippet at the end -

This FAQ for the fans of eircom League of Ireland clubs now ensures that all key stakeholders in the game have been advised of the new criteria and understand how it will operate.

All in all, though, sounds impressive, although so did UEFA Licencing when it came out. Can see why the big clubs want out of the new league though.

[Celdrog]

Wonder if appearance money, bonuses etc etc count.

As per Stu below - just read the release

[pineapple stu]

On the basis that I can read... ;)


This includes gross basic salary, any bonuses or appearance fees, agent fees, pension contributions, relocations costs, benefits in kind, expenses, loans (unless repaid in full during the year) and social taxes & charges.

[pete]

The fact that Directors loans cannot be included is interesting move. Enforcement should be very interesting.

[paudie]

Clubs certainly can't say they weren't warned are didn't get enough details on the cap.

Interesting times ahead

[blackholesun]

Interesting stuff, the way to go I think. Clubs burning money and shooting eachother in the foot paying players over the odds is not sustainable in the long run, just ask Shels!

bhs

[pete]

UCD to win league in 2008 after everyone else gets points deductions :p

[pineapple stu]

Us and what squad?! :p

Makes you see why the G6 want out anyways. Cut E3m out of the Premier Division wage budget and you get a very different league indeed.

[micls]

Cut E3m out of the Premier Division wage budget and you get a very different league indeed.

True but isn't this supposed to be starting this season? Anyone seeing this very different league so far?

I still see the same teams with big squads rumoured to be on huge wages...

[pineapple stu]

Oh God yeah. Hence my point about Licencing being a good idea too.

Wonder when clubs were made aware of this? Certainly far too late now to be telling them, though it seems they've known for a while now going by the last sentence.

[micls]

Oh God yeah. Hence my point about Licencing being a good idea too.

Wonder when clubs were made aware of this? Certainly far too late now to be telling them, though it seems they've known for a while now going by the last sentence.

I dunno.

A while back Arkaga were saying that offering players lower basic wages and good performance based bonuses would be a way around the wage cap.

From reading the above that is clearly not the case.

I see no reason Arkaga would lie about it given the criteria would obviously be made public so I assume they weren't certain of the details.

That was in December

[Poor Student]

Wonder when clubs were made aware of this? Certainly far too late now to be telling them, though it seems they've known for a while now going by the last sentence.

I get the feeling making this public is a response to the G6 to put forward the wage cap as a logical and sensible way forward. Now the fans and media have a fair idea of what's entailed. Before there was a lot of debates on ifs and but and maybes.

[Saint MacDara]

So basically owners' contributions can be included in "relevant income" once it's not for an equity share or loan.Special K may continue pumping money into Pat's.

How will the deposits Liam Carroll made to Bohs be treated?

[pineapple stu]

Special K may continue pumping money into Pat's.
It'll have an effect on his tax liability when he sells the shares on though. If he sells his stake for E1m, say, the criteria would mean a difference between purchase price being E100 (or whatever he paid at the start) and E1m (i.e. the amount he's paid to acquire shares to date). That may make people think twice about pouring money in.

Bohs' ground sale is an interesting one. You'd imagine it'd have to be the same as pub income - i.e. the profit on the sale, not the total turnover, would be the starting point. Otherwise they'd have a load of money and not be able to spend it.

[sullanefc]

Directors' investments appear to now have to be in the form of buying a jersey for a couple of mill, with no shares or loans allowed.

They don't even have to buy a jersey. Investmets are allowed so long as they don't have to be paid back and can be spent however the club want.
So you are wrong.

I don't see much in this that the big clubs should be afraid of. Its clear there are a lot of UCD fans concerned by this judging by the number of posts.:rolleyes:
It's quite sad that it seems the UCD fans' sole purpose is to drag the rest of the clubs down to their level. Be it wage caps or AIL leagues, they have to fault anything that is progressive.

[Bald Student]

Be it wage caps or AIL leagues, they have to fault anything that is progressive.

If you look a little bit closer you'll notice that all the UCD fans so far are in favour, we like to think of it as dragging you up to our level.

[pete]

UCD could have trouble justifying their revenue i.e. grants from college not included?

I think you can get around this with offering bonuses to players as they only paid out if successfully & usually success means increased revenue. If bonus = 65% of extra revenue (e.g. prize money) then all ok?

[DmanDmythDledge]

UCD could have trouble justifying their revenue i.e. grants from college not included?
We don't get grants from the college, although you already knew that.

[Poor Student]

UCD could have trouble justifying their revenue i.e. grants from college not included?


How? Grants that are ringfenced against specific expenditure don't count and we only spend grants on the things they're actually intended for. If the college does want to add money to the club budget they'll do so without looking for it being paid back or as an equity investment and thew club's management would be free to spend it. So, how does this affect us exactly?

I think we do get an annual stipend from then college but it amounts to less than 10% of our budget but then again they do own the club and can put money into it if they wish.

[KevB76]

Directors' investments appear to now have to be in the form of buying a jersey for a couple of mill, with no shares or loans allowed.


They don't even have to buy a jersey. Investmets are allowed so long as they don't have to be paid back and can be spent however the club want.

I would imagine investments such as shares and loans are still allowed, its just that they dont count as income when calculating the wage cap.

[Schumi]

I would imagine investments such as shares and loans are still allowed, its just that they dont count as income when calculating the wage cap.Sure but increasing the wage budget is the usual reason why people invest money into football clubs.

[OneRedArmy]

The rules only become relevant if all payments and revenue going through clubs are booked and declared.

I have zero confidence that this is the case, which if true, would make the rules about as watertight as a sieve.

[pineapple stu]

The rules only become relevant if all payments and revenue going through clubs are booked and declared.
True, although given the fact that Revenue last year audited pretty much every club in the league for that exact reason, clubs will probably be a lot more wary about pulling that trick. Not saying it won't happen, but it's some deterrent anyways.


A while back Arkaga were saying that offering players lower basic wages and good performance based bonuses would be a way around the wage cap.
No, that'd work. Pay the players more if the club earns more (e.g. by getting past a round in Europe or winning the league). Makes sense.

[Bald Student]

UCD could have trouble justifying their revenue i.e. grants from college not included?That's probably depend on whether non eL football counts towards the other 35%. There's plenty of soccer played in UCDD.

[SÓC]

What about loans already outstanding and the lack of interest being paid on such loans?

[sullanefc]

we like to think of it as dragging you up to our level.

haha, don't make me laugh. :D UCD are rooted firmly to the bottom of the eL food chain. There are no clubs below ye that need to be dragged up to your level. With the exception of Kilkenny maybe.

[The Man Himself]

they should have done this years ago and shels wouldnt be in the shyte they are.

[pól-dcfc]

they should have done this years ago and shels wouldnt be in the shyte they are.

But sure wasn't it sorta fun watching them implode?

[Saint MacDara]

But it wasnt fun watching them win the league!

[pól-dcfc]

Very true. :(

[John83]

haha, don't make me laugh. :D UCD are rooted firmly to the bottom of the eL food chain. There are no clubs below ye that need to be dragged up to your level. With the exception of Kilkenny maybe.
10, 6, 9, 12, 10, 6, 7, 10, 4, 6 are the places we finished in the 22 over the last ten years. Bottom my hole.

[Bald Student]

Bottom my hole.Does this count as a pun?

[pineapple stu]

Wait... - am I for this or against it? sullanefc's insightful comments have me confused all of a sudden...

[sullanefc]

10, 6, 9, 12, 10, 6, 7, 10, 4, 6 are the places we finished in the 22 over the last ten years. Bottom my hole.

I'm not talking about league placings ;)

[bigmac]

I'm not talking about league placings ;)

ground at lowest altitude maybe? :confused:

Is it a pun on UCD moving to the bowl...

[pineapple stu]

Nope, just sullane trolling. Nothing remotely intelligent in it at all.