Wage cap explained

**DmanDmythDledge** · 15/01/2008, 4:55 PM

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

**Poor Student** · 15/01/2008, 5:08 PM

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** · 15/01/2008, 5:43 PM

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** · 15/01/2008, 5:46 PM

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** · 15/01/2008, 5:49 PM

Originally Posted by 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.

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

**Poor Student** · 15/01/2008, 6:39 PM

Originally Posted by Pablo

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** · 15/01/2008, 7:14 PM

Originally Posted by 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.

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** · 15/01/2008, 7:51 PM

Wonder if appearance money, bonuses etc etc count.

As per Stu below - just read the release

**pineapple stu** · 15/01/2008, 7:54 PM

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** · 15/01/2008, 9:08 PM

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

**paudie** · 15/01/2008, 9:26 PM

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

Interesting times ahead

**blackholesun** · 15/01/2008, 9:29 PM

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** · 15/01/2008, 9:38 PM

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

**pineapple stu** · 15/01/2008, 9:46 PM

Us and what squad?!

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** · 15/01/2008, 9:48 PM

Originally Posted by pineapple stu

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** · 15/01/2008, 9:54 PM

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** · 15/01/2008, 9:56 PM

Originally Posted by 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.

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** · 15/01/2008, 9:57 PM

Originally Posted by pineapple stu

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** · 15/01/2008, 10:16 PM

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** · 15/01/2008, 10:20 PM

Originally Posted by Saint MacDara

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.