Nick Bendel
Sorry Money Bill- the cap fits
August 2nd 2008 02:53
Are they fair? Are they effective? Are they legal?
The question of legality is a hazy one. Gazing upon salary caps with laymen’s eyes, they would appear to be unlawful. After all, the idea of a cartel (the clubs) imposing a restraint of trade on its employees (by limiting the size of their pay-packets) seems to run counter to the rules of the market economy that operates in Australia.
Yet in the eyes of experts- or at least some of them- a cap can be legitimate. While the informed opinions to have appeared in our newspapers have not been unanimous, several have asserted that an artificial wage ceiling could hold up in court, provided that it was shown to be in the players’ long term interests. In other words, if the court was convinced that the restraint of trade was an enlightened measure, rather than an unscrupulous one, it might be deemed legal.
But talk of courts and cartels is best left for the lawyers. The question that most concerns fans is not whether a cap is legal, but whether it is effective, and, to a lesser extent, whether it is fair. A general perception seems to exist that elite athletes are overpaid and over-indulged, so most supporters would probably think it reasonable that a limit should be placed on their wages. For all Anthony Mundine’s talk of how “brother” Sonny Bill had been victimised, and of how he should be left to count his Euros in peace, it would be astonishing if most armchair observers did not regard Williams as the latest in a long line of genetically-gifted brats. “They already get too much money,” many of these punters would surely grumble. “They should count their lucky stars that they don’t have to work in a factory, or down a mine. If they don’t like the salary cap, I’ll gladly swap places with the bludgers.”
If we assume that salary caps are both legal and fair, we then get to the heart of the matter: do they work? Like all things in life, they are imperfect creations, containing a blend of good and bad. The main point to be made on the debit side is the way in which they reward mediocrity. A dynamic club that promotes its sport, enthuses its market and provides high-quality service to its fans will generate more revenue than a lacklustre organisation- yet it will not be able to spend even a cent more on recruitment. In a free market, there is a great incentive to be dynamic- profits that can be spent as the fancy takes- but that incentive is greatly diminished in wage-regulated competitions. Of course, it is still better to make more money than less- you can devote greater resources to coaches and facilities; you can put some aside for a rainy day- but because the return on investment is reduced, so is the incentive to invest. Why put all that energy into devising a clever promotion, why take all that risk in constructing a new grandstand, when the extra money you might make will give you precious little advantage over your less resourceful rivals? You don’t need to be a student of economics to appreciate that salary caps stifle initiative.
The main point to be made on the credit side is the way in which salary caps level the playing field. Given that people watch sport to be entertained, and given that close contests are more dramatic than mismatches, any device that can even out a competition makes it more appealing. One of the reasons that the AFL and A-League are so fascinating is the knowledge that all fans have a genuine opportunity, within a reasonable timeframe, to celebrate a grand final win. This is largely due to the salary cap.
For it is important to understand that the cliché of sporting success being cyclical is no longer as applicable as it once was. Today, our leagues are national and professional, well removed from their suburban roots. Back in the good old days, revenue streams did not flow nearly as freely, and recruitment was a far more localised affair. If a club had not been blessed with the most talented of juniors, there was precious little it could do about it, other than count down the days until a more gifted bunch passed through the door. When that day came, they would rise, their highflying rivals would fall, and so the cycle would continue its virtuous spin.
But in the 21st century, where revenue comes not in dribs and drabs from chook raffles, but in the millions from media moguls, there is something clubs could do to rapidly climb the table. They could buy a better team. If no restraints were placed on the sporting marketplace, there is the real danger that a different kind of cycle could become institutionalised- a cycle in which success begets success and failure begets failure. Given that more successful clubs generate more revenue (through television deals, sponsorships, merchandising, match day attendances and the like), they would be able to spend more money on recruitment than their poorer rivals, thereby cementing their place at the top of the ladder, and thereby generating more revenue.
For proof, we need only look at the English Premier League. The Big Four of Manchester United, Chelsea, Arsenal and Liverpool use their financial muscle to recruit the best players, which allows them to challenge for trophies, which provides them with the money and cache to recruit the best players. Meanwhile, their weaker rivals have no choice but to stock up on weaker players, which inhibits them from challenging for trophies, which prevents them from acquiring the money and cache to recruit the sort of players that the Big Four possess. Although it must be acknowledged that the Big Four are dynamic- they are constantly upgrading stadiums, travelling on promotional tours, and investing in their sporting schemes- this dynamism comes at the EPL’s expense. It is an indictment of the competition that even supporters of famous clubs such as Tottenham and Aston Villa cannot reasonably hope, within the near future, to celebrate a title. Hence Kevin Keegan’s insightful observation: “This league is in danger of becoming one of the most boring but great leagues in the world.”
Where Australian sport is concerned, the negatives of salary caps are outweighed by the positives. Do we want to see a NRL in which Brisbane inevitably lifts the trophy every year? Or would we prefer our competitions to be governed along the lines of the A-League, in which a David such as the Central Coast Mariners can triumph over a Goliath like Sydney FC? If the sporting market was to be stripped of regulation, stars like Sonny Bill Williams would be more generously rewarded for their talent, and clubs like Collingwood would be more generously rewarded for their dynamism, but who would care? If the stars always headed to the big clubs and if the big clubs always won, what would be the point? The cost of a salary cap may be to lose the Williams’s of this world, but it is surely a price worth paying.
| 89 |
| Vote |
subscribe to this blog