The Bayern Problem

There isn’t a day that passes by without fellow friends who follow the Premier League and the La Liga asking the million dollar question to worshipers and well wishers of German football alike – “When will anyone other than Bayern Munich ever win the league?”.

It is only natural for them to ask a question like that. The men from Säbener Straße have won 8 of the last 12 Bundesliga campaigns and four of those eight titles have arrived at the Allianz Arena in successive fashion in the last 4 years, which is why it is a valid question to ponder upon for fans of German football and although it sort of pisses them off when they hear the same question time and again, it is a question that fans have asked themselves and to fellow mates, more often than once.

The Bavarians have outgrown their Bundesliga counterparts financially as well as in terms of success on pitch. While it is not the success of Bayern Munich that can be directly blamed, since they of course, have broken sweat and burned the midnight oil to arrive at the indomitable status that they hold in German football presently, it is no mystery that Bayern have employed clever methods which may although seem evil to fellow German clubs, in order to maintain themselves at the very top of the food chain, ever since they have cemented their place in the list of the German elite. But however unfair this may seem to others, one cannot hold Bayern responsible as long as what they are doing is not illegal on the grounds of law. Besides, one could argue that its a well thought policy of weakening one’s immediate title rivals and strengthening oneself at the same time that not just Bayern, but equivalents in Italy in the form of Juventus( whose latest transfers from immediate title contenders Roma and Napoli include Pjanic and Higuain respectively) have also made use of in recent years. So is there any possibility to halt this raging Bavarian machine only so much so that it does not hinder the progress of other clubs in Germany?

Salary Cap – A Possible Solution

One of the most suggested solutions to this mind boggling problem of competitive balance is the concept of salary caps. Salary caps, when simply described, is the limit on the amount of money that a team spends on its player’s salaries. It exists either as a per player limit or a total limit for the team’s roster. A salary cap proves helpful in :

Keeping the overall spending costs down for football clubs, thereby regularly assessing their level of financial stability and preventing bankruptcies of varying magnitudes due to high cost player contracts.

Forces the superiors in the board room to think for the good of the club in the long run and not rush promptly to sign expensive players for short term successes.

Prevents destructive behavior of wealthy teams such as signing multiple high paid star players in order to prevent access to such players for their rivals.

Salary cap makes all the clubs equally appealing to players(on the financial scale) as much as possible, thus giving each club a fair share of equally talented players, thereby bringing better competition in the league and for individual teams. More excitement in the league would attract more attendance in match-days, which has proved to be valuable source of revenue to clubs in the Bundesliga, a league well known for its fan friendly atmosphere.

The exciting nature of the league at the top of the table(not taking away, the high level of entertainment offered by the relegation battles, the up and down movement of teams in the middle of the table and the frequent change of faces qualifying for European Competitions each year) could draw attention of followers of the game towards German football, thereby helping in harnessing more revenue for the league from broadcasts of league games abroad. In short words, the football clubs end up earning much more in the presence of a salary cap. If such measures to bring in competitive and financial balance in the league are not implemented, the sporting product will continue to lose its value, the DFB will lose profit and the financial stability of weak teams like Mainz 05, Werder Bremen and co. will continue to be threatened. Sport fans tend to support a team for life and they tend to seek a stability in the teams they choose to follow. If the teams and the league cannot offer them such stability, they will turn to another sport or a different league in the same sport which can do so.

Types of Salary Caps

Salary caps can be classified into two main types: Hard and Soft cap.

A hard salary cap does not allow any club or team to exceed the permissible limit for any reason whatsoever. A team which violates the limit will be subjected to sanctions, including voiding of the violating contracts and stripping of the championships won.

League systems like NFL(The National Football League) and NHL( National Hockey league) utilizes hard salary caps. Its no coincidence that the NFL has the highest average attendance (67,591) of any professional sports league in the world and is the most popular sports league in the United States. When the league introduced the cap in 1994, it was set at $34 million. By 2014, the cap had soared to $133 million, a $10 million increase over 2013, due to the inflation one can observe in the global economy with time. The NFL has seen as many as ten teams qualify more than 5 times for the annual Superbowl that succeeds the regular league season. No franchise has won the Superbowl 3 times in a row and as many as seven franchises hold the record for most consecutive Superbowl wins(2). Since New England Patriots won the Superbowl twice in a row back in 2004 and 2005, the NFL has always seen a different winner each season. Since the inception of the Superbowl in 1967, Pittsburgh Steelers have won the championships for a record six times with 4 of them coming before the introduction of the salary cap in 1994.

Teams are allowed to fudge the cap a little bit, however. A provision introduced in the 2011 CBA(Collective Bargaining Agreement made between the league and the players’ union) allows teams to bank money from one season to the next like rollover cell phone minutes in the NFL. Teams have been allowed to take unused cap space and apply it to the following season provided they announce the amount before the end of the regular season in progress. For example, The Jaguars carried nearly over $21.8 million to the 2015 salary cap because they spent so little in 2014, which gives them a league-leading $168.5 million adjusted cap figure to with. This could allow teams with low wage budgets like Eintracht Frankfurt and SC Freiburg to spend much more in the upcoming years on back of a successful season in order to strengthen their teams, while at the same time, facing minimum threat from bigger clubs.

In contrast to such competitive balance, the Bundesliga does have a long way to go. But hey, where there is a will, there is a way. Clearly, the hard salary cap’s effectiveness has had a hand in boosting NFL’s revenue and appeal across the USA and the globe. German football can take a leaf out of their book to make some progress towards becoming a better league in terms of excitement and quality.

A soft salary cap on the other hand, allows teams to exceed the permissible limit in certain circumstances only. Such circumstances result in fines, taxes and penalties. One such tax which is levied on teams in such situations is known as the luxury tax. Money needs to be paid to the authorities of the league for exceeding a predetermined level made for spending on salaries of the players. The money derived from the tax is used for predefined purposes of the league,such as conducting tourneys or distributing the taxed cash among smaller clubs.

The MLB/ Major League Baseball is known to employ only a luxury tax system, while the NBA/ National Basketball Association utilizes a soft salary cap as well as the luxury tax. Soft caps are used in order to retain players who were already on the team for a long time and hence, are on a high cost contract. The Larry Bird Exception in the NBA allows teams to retain players, who saw their contracts out at the concerned club before joining a club they desire as a free agent, by re-signing them at an amount up to a maximum salary.Such an exception has to be used by the player’s current club within 3 days after he signs the offer sheet with an another team.

Such a free agent is known as a restricted free agent, because despite whatever club he chooses to join after running down his contract , the club he left can retain him by matching the best offer available to the player.To make up for such a restriction, a player is given an early termination option in his contract, according to which he can leave the team even before the contract has been completed. The player also has an option to extend his stay at a club for a year beyond his contract. In order to encourage players to stay in the same team, a free agent who resigns with his current team is given an annual increase of 7.5% of the money he earns on his first year of his new contract, compared to the 4.5% annual increase in income offered if he joins another team on a similar contract. Such a player is known as a designated player. Designated players are not subject to a salary cap.

All teams are limited to having a maximum of two Designated Players contracted on their roster at any time (one which they have created from one of their own rookie contracts, and one which they have acquired from another team). Also, a newly signed contract as a free agent(known as the “maximum contract”) with the concerned player’s previous team runs for 5 years in contrast to the 4 year span of a contract with another team. Had such measures existed in the Bundesliga, Borussia Dortmund and TSG Hoffenheim could have very well avoided losing Robert Lewandowski and Sebastian Rudy respectively.

A player who completes his maximum contract after resigning and opts for a second maximum contract will be paid 105% of the salary he received in the last year of his previous contract, instead of starting with a percentage of the salary cap, because chances are there that the salary cap won’t change and the player might end up earning much less than his previous year at the club.

The luxury tax system in the NBA is designed as per the following table:

Amount over tax threshold Standard tax per excess dollar Repeat offender tax per excess dollar $5 million or less $1.50 $2.50 $5 million to $10 million $1.75 $2.75 $10 million to $15 million $2.50 $3.50 $15 million to $25 million $3.25 $4.25 Each additional $5 million $3.25 + $0.50 per $5 million $4.25 + $0.50 per $5 million

A salary floor is a minimum amount that must be spent on the team as a whole, and this is separate from the minimum player salary that is agreed to by the league. Some leagues, in particular the NFL, have a hard salary floor that requires teams to meet the salary floor every year, which helps prevent teams from using the salary cap to minimize costs.Each team is required to spend a minimum of 88.8% of the cap in cash on player compensation,and 90% in future years. However, the floor in NFL is based on total cash spent over each of two four-year periods, the first running from 2013–2016 and the second from 2017–2020. The salary floor helps in ensuring that teams do not desperately cling on to the “selling club” status and fall well below the salary cap. Instead, try to contribute positively to the competitiveness in the league by engaging in transfer of players with good potential.

A team can be under the floor in one or more seasons in a cycle without violating the CBA, as long as its total spending during the four-year period reaches the required percentage of the cap. This regulates the cap space that the clubs could take advantage of and allows for unforeseen circumstances such as career ending injuries or unexpected player retirements leading to immediate penalty. As a result, teams are not forced to immediately take on a replacement for missing players which allows them to use more carefully planned approaches. In transitions, if a player retires, is traded, or is cut before June 1, all remaining bonuses to be paid to the player is instead applied to the salary cap for the current season. If the payroll change occurs after June 1, the current season’s bonus proration is unchanged, and the next year’s cap must absorb the entire remaining bonus.

Several such rules and exceptions exist in the NBA rule-book and while one cannot list all of them out here(it would take an entire book to do so), it can be clearly seen that there are lots of ways to improve the competitiveness in a sports league in general. But the question remains: is it really feasible enough to implement such rules that helps in providing a cutthroat competition, in Germany? Will Bayern Munich finally be forced to fight their nearest rivals on the pitch to win the title, rather than using a double edge sword that cuts off any chance of some other team having a realistic chance to lift the Meisterschale? We will see about that in the sequel to this article.