Sports Law Blog
All things legal relating
to the sports world...
Monday, March 30, 2009
Salary cap for soccer teams in Europe?

Nowadays the financial crisis also seems to be hitting the European sports sector. Sport clubs, associations and politicians come up with different proposals to solve the crisis or at least prevent clubs to fall into bankruptcy. One of the topics in the world of European soccer is the introduction of a salary cap which should improve the financial situation of the clubs. The Union of European Football Associations (UEFA) is currently (re-)considering the idea of limiting clubs' expenditure on salary and transfer fees to a particular proportion of their direct and indirect sporting revenues.

Revenue would be defined as money received only from ticket sales, sponsorship, merchandise and television income. It would not include any financial investment by owners or major shareholders. Apart from creating tools to battle the financial crisis, the introduction of a salary cap tries to limit the increasing importance of (mostly) foreign investors which seem to destabilize competition. According to UEFA these foreign investors are responsible for immoral wages and transfer fees.

The UEFA is of the opinion that the United States sports system and regulators could be an example of how to maintain a competitive balance between sporting measures and regulations to ensure the clubs are properly managed. The main arguments of the critics however are the following:

- The introduction of a salary cap must be introduced at international level. If one or more national leagues refuse to introduce the salary cap, this could result into a competitive gap between capped and uncapped leagues.

- The richest (and most powerful) clubs in Europe will resist on the introduction of the salary cap as it could undermine their competitive advantage.

- There is no such thing as a European accounting, financial or auditing standard which could safeguard that the salary cap will equally applied in the different countries. The introduction of a salary cap would need to be accompanied by the introduction of (strict) financial/accountancy rules for all clubs.

There is no doubt that measures need to be taken to improve the financial situation of the European soccer teams. The financial crisis could be the ideal stimulus for the European authorities to come up with initiatives to introduce a global framework with coherent financial, auditing and accounting standards which the different teams have to respect. A salary cap could be one of those standards, but will have little effect without a global framework.


Salary caps in sports are for people who are trying to mask their inability to judge players's skills or manage their own budget.

If you really need it, you don't need restrictions on players—you need better management.

Blogger Ken Houghton -- 3/30/2009 8:06 AM  

This is a very interesting development. I am not sure that the UEFA could actually implement salary cap without at least some risk of violating Article 81 of the EC Treaty (similar to Section 1 of the Sherman Act).

Does anyone know the UEFA legal argument? Non-statutory labor exemption? 81(3) block exemption? Public policy exception?

If any of European readers have either case precedent or a law review article on this topic, I would be most interested to see.

Blogger Marc Edelman -- 3/30/2009 8:57 AM  

Without going too much into detail: the UEFA always brings up the argument that free economic competition as provided by the EC treaty cannot be applied to soccer without taking the specificity of soccer into account. The European Parliament has in its white paper on sport recognised this specificity but this without really explaining in depth how this specificity could or should be interpreted.

I am not aware of any legal writing which goes into detail on a possible violation of the EC treaty by the introduction of a salary cap. If you are interested, I am always prepared to do some research on this. Just send me an e-mail if you want further information.

Blogger Stijn Francis -- 3/30/2009 9:31 AM  


I would never ask you to do research on my behalf, however, if you decide to delve into this issue, I would be delighted to share your learning. I am a professor of sports law at Rutgers School of Law. My emails are and

Also, just out of curiosity, do you know if the particular European Parliament white paper that you are referencing mentions other sports beyond soccer.

I have a paper coming out soon in the Northwestern Journal of International Law & Business that will address competition law concerns under articles 39 and 81 surrounding an NBA/NFL expansion into Europe. Therefore, this is all very relevant to me, even if there are few others in the States that have considered these issues.

Blogger Marc Edelman -- 3/30/2009 11:24 AM  

Very topical subject at the moment. Salary caps have been on the agenda for a while but I believe it will be a tough ask before UEFA can enforce it without some very stern challenge. There are obvious competitive restraints here and I don't think European Courts are going to accept broad notions of procompetitiveness or the specificity of sport.

The fact remains that caps on their own may be disproportionate, because they simply do not address basic governance issues (the real problem here). Why should we restrict club spending and pontential earning power if all that is truly required to attain economic survival is good principles of corporate governance and the necessary supervision that should go with it?

In addition, it is akward that everyone keeps bringing back the american example. The european model is a far cry from the american model and caps in the US are part of a much larger and developed framework. One of the most striking features is that american sports have lots of rules in place to ensure a greater level of revenue sharing. This means that clubs have comparable spending ability and consequently caps are not a feature that brings further imbalance to the gap between "rich and poor". In Europe, revenue sharing is still a proposition (rather than an achievement) and caps will most certainly have the same economic effect of bosman: concentrate richness in the more skilful players (something that UEFA also wants to curb down...).

The one model UEFA should actually analyse is the salary cap in the English rugby premiership (similar sporting structure). But still, will caps stand on their own and pass the proportionality test?

I personally doubt it.

Blogger LCN -- 3/30/2009 11:46 AM  


I very much agree with your point of view. In my opinion, within a couple of years the EU and UEFA will have to face the following dilemma: either accepting that European soccer (and sports in general) at a professional level is subject to all EU regulations or recognizing that European soccer does not at all fall within the scope of the EU regulations because of its specifity. Perhaps case law could give us soon a first indication of the direction we will be going to.

Blogger Stijn Francis -- 3/30/2009 12:45 PM  


This is a little off the current topic, but what about the FIFA 6+5 rule and the EC Treaty? I don't know much about how the labor laws in the EU work, so what is the legal impact of the 6+5 rule when it comes to labor rights?

Interestingly, the USA league, Major League Soccer, has a limit on the number of international players that are permitted to be on the club's roster, but given the U.S. laws regarding sports leagues, the limit on international players never seemed to be really questioned form a legal standpoint.

Does Michel Platini support the 6+5 rule and what is UEFA's argument in favor of that restriction?

Blogger Matt Johnston -- 4/06/2009 1:50 PM  

Salary cap? Have you seen the salary range for these players, it's ridiculous. They should be ashamed.

Anonymous soccer coach salary -- 4/20/2009 7:23 PM  

With all due respect Ken you argument lacks appreciation of the peculiar economics of pro team sport; and LCN, it is more than a corporate governance issue.

Competitive imbalance - the lack of a reasonable hope that a fan's team might enjoy a level of success is due to all of poor manaegment, poor governnace and the underlying economic structure of the disparity in earning capacity between large-revenue and small-revenue teams. Ken, your argument is just too simplistic and LCN, you're missing half the point

Anonymous Rob -- 7/13/2009 1:10 AM  

Post a Comment