Breakingviews – European soccer will try on American-style pay cap – Reuters


Soccer Football – Champions League – Final – Bayern Munich v Paris St Germain – Estadio da Luz, Lisbon, Portugal – August 23, 2020. Bayern Munich’s Lucas Hernandez celebrates with the trophy after winning the Champions League, as play resumes behind closed doors following the outbreak of the coronavirus disease (COVID-19).

LONDON (Reuters Breakingviews) – In soccer, sudden death occurs when the result comes down to a single penalty kick. Europe’s professional clubs face a similar nail-biting outcome as mostly empty seats leave them facing financial relegation. To return to health, the beautiful game will have to import an idea from American sports.

Vacating stadia due to Covid-19 cost clubs in Europe’s top tier some 3.2 billion euros in collective revenue last season, according to the European Club Association. The loss of an estimated 15% of sales compared with pre-pandemic projections may seem modest compared to other poleaxed industries. But exorbitant player salaries, which already absorbed 60% of total revenue during the 2018/19 season, have pushed even rich clubs such as Manchester United and FC Barcelona into the red.

Even with a vaccine, fans are unlikely to refill arenas soon. The ECA, headed by Italian business magnate and Juventus Chair Andrea Agnelli, reckons grounds will be at just 20% of capacity from the beginning of 2021, resulting in a nasty 3.1 billion euro tackle to this season’s top line. As a result, stars like Paris Saint-Germain’s Brazilian forward Neymar could on average pocket an eye-watering 76 cents of every euro of revenue.

Putting a cap on player largesse would avoid such economic own goals. America’s basketball, ice hockey and football leagues all place a limit on what their stars can earn. In the National Football League, players’ share of revenue stands at 48%.

Fitting a cap won’t be easy. American wages are dictated by collective agreements between heavily unionised players and a single national league. Any attempt at salary control would probably violate European labour laws, meaning the European Commission would have to intervene. Besides, spending limits which fail to address how TV money is divided could entrench national differences. In England’s Premier League, for example, a more equitable division of media income means champions Liverpool collect a smaller share of television cash than Real Madrid does in Spain.

Yet the prospect of mostly empty stadia will push clubs deeper into financial extra time. To avoid future sudden-death outcomes, players will need to tighten their belts.

This is a Breakingviews prediction for 2021. To see more of our predictions, click here.


Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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