Final part of a three part article
The final part of our look at Salary Cost Management Protocol.
Are any player wages not included in the final calculation of how much you spend on player wages overall? Only some players are taken into account when we put the list together. If you come down from the Championship, and you have players with a contract of three years or more, then you don't include them. The other category is the ‘Home Grown’ player. To qualify as ‘Home Grown’ the player needs to have been registered to his club, or any other English or Welsh club, for either three full seasons or for 36 months prior to his 21st birthday. That is a bid to try and encourage us all to develop our younger players. Every time a new player comes into Carlisle United our secretary Sarah [McKnight] is told whether or not he fits into the ‘Home Grown’ category. At the moment we have Potts, Todd, Beck, Lynch and Symington in that section, and Sean McGinty was also included when he spent a bit of time with us earlier in the season.
So the remainder of your players make up the total amount of player wages in the calculation you make? Yes, and they are placed under the ‘Contract Players’ section of the SCMP form. As part of the submission you have to include their contract start and end date, salary, signing on fee, forecasted appearance fees, associated bonus payments and any relocation fees they receive. Other player sections to be considered as part of the overall calculation are non-contract players, loan players and players on month-to-month contracts.
What happens if you are paying League One wages but find yourself relegated to League Two? There is no allowance for that at all. Bury, Scunthorpe, Hartlepool and Portsmouth will have to make their forecast as a League Two club in June even if all of their players are contracted for another season at their current wage level. They may find that puts them above the 55% allowed level, but they can then go to the Football League and explain why that has become the case. That’s why the Football League advise clubs to have clauses in player contracts to protect ourselves if we do get relegated. These clauses would then trigger a reduction of salary.
What happens if crowds are up, you’re involved in all cup competitions and shop sales are higher than usual come Christmas time. Can you spend the increased revenue despite having submitted a cautious initial forecast? Yes, you can use all of the extra revenue as you see fit. When it comes to your mid-season forecast you can increase the figures to reflect the facts, if you are enjoying a good season, and that will allow you to do more work during the January transfer window. The first half of this season is a good example of that. Our gate receipts from the Tottenham game, plus the fact we were at home in the JPT and the FA Cup, meant we went into the transfer window with a bigger pot of money than we’d forecast.
You mentioned alarm bells ringing at the Football League. How exactly does that happen? Once you get within 5% of your forecast you find that you are on an automatic transfer stop, imposed by the Football League. That doesn’t mean they will completely stop the transfer from happening, but you have to provide assurance that any business you do will not take you over the 65% mark. We had to do that with Sean O’Hanlon because the reduction in attendance figures took us very close to our 65% level this time round. We were able to offset that with the Football League because both Paddy Madden and Alessio Bugno had moved on. They were still on our forecast but they had actually left the club. If you do go over the 65% level then you are hit with a complete and immediate transfer embargo. That happened at Swindon and the only way they could get back below the level was to sell a player without the manager knowing about it. That ultimately led to him leaving the club, as we all witnessed. The only time you wouldn't get an embargo would be if it was a 'one in-one out' situation. Even then you would have to prove that you had less than 24 players in your squad when the business was transacted and that the salary of the player coming in was going to be less than 75% of the salary of the player going out. It’s all very complicated and it has to be handled sensitively to make sure you stay within the rules.
Do you see SCMP as a positive thing going forward? Yes, it is a positive step. It should start to bring us all onto a more level playing field. We have to be honest and say that it hurt us this year because we had such a drop in attendances. There was a big difference between our forecasts and the actual crowd numbers who came to the games, and that meant our hands were tied when it came to submitting our second set of figures half way through the season. The Football League produced a benchmark document to show where we are compared to others and there were some frightening figures on there. There are clubs who are starting the year in excess of the 65% level and it will take a lot of remedial work for them to pull it back.
Does it change as you go up into the Championship? We have no choice but to adhere to this at League One and League Two level. Financial Fair Play comes into play at the next levels up, and that’s an attempt to bring that division into line with the Premier League and the attempts we are seeing from UEFA to regulate their spending. The top level clubs can’t continue to make huge losses and that’s why so many of them have needed to have someone pumping money in to keep the thing running. Manchester City did it by selling their stadium naming rights, and we have recently seen that clubs like Charlton, Norwich and Southampton have achieved success on the back of spending a lot of money. It’s good when it works, but we’ve all seen what happens to those other clubs who have gambled and failed. In some cases they have almost dropped out of sight.
What can we expect from this system in the future? I think it will evolve and come in line with business standard quarterly accounts. Clubs will end up with an average salary they pay and that will be taken from one or two big earners, four or five smaller earners and a larger group which sits somewhere between the two. I can see that we will have to make these forecasts more frequently, particularly with the loan windows being open for as long as they are. The nature of the business now means it is much more likely for us to bring in a player from a bigger club who is on decent wages during a loan window, than it is for us to sign someone for a lot of money during the same transfer window. The key is for us to find players who fit into the structure and who will enhance the club. That’s why it is important for us to maximise all of our revenue streams, whether that’s attendances, shop sales, merchandise or whatever. The simple fact is that the more turnover we achieve, the more we can do in the transfer market and to improve the infrastructure of the club as a whole.
for part one of this interview
for part two of this interview