Coronavirus has hit football very hard. Games can no longer be played and there is a lot of uncertainty over whether leagues can finish their season. All leagues and clubs in Europe face similar financial challenges. The English Premier League claims there is – for this season only – a potential loss of £1.14bn. Most clubs in Europe are asking all staff (including players) to accept a substantial wage reduction. Some non-playing staff have been put on furlough. For players there are several reasons why such wage reductions are not acceptable.
One reason is the principle of contractual stability. This is one of the essential foundations of modern football and ensures that contracts are respected by both parties to the fullest extent possible. This principle of contractual stability separates the situation of a football player from that of any other worker.
A “regular” worker is able to leave his or her employer in exchange for limited compensation or a notice period. Also the employer can terminate the relationship with the worker at any time by respecting a period of notice or paying compensation. If clubs sign a player they take a risk by paying a transfer or signing-on fee and by paying substantial wages. In exchange for this risk, players cannot leave the club before the end of the contract except when all involved parties agree otherwise. Players also know that during the contractual term they can be sure the club will pay their salary.
Clubs now asking to reduce player salaries undermine this principle of contractual stability. If clubs insist on a wage reduction, players should be put in the same situation as any regular worker. Clubs reducing their players’ wages should accept that the players can terminate their employment for free and these clubs should no longer be able to ask a transfer fee if the player would like to leave.
You would expect that owners of well-run businesses would always maintain a financial buffer to survive a period with less revenue. A lot of clubs do not have such a financial cushion and face stress at the moment because they tend to (over)invest in players in the transfer market. At the beginning of every season a lot of clubs willingly spend more money than they have in the hope of being able to stay in the league (and get TV money) and in the hope of selling some players at a profit.
In order to be competitive, clubs and owners are willing to use and risk all their resources and have no financial buffer. If all this risk-taking is rewarded and the clubs make a profit, none of the staff members or players will see a part of this profit. Let us not forget that in the 2017-18 season the English Premier League clubs made a joint profit of around £285m before tax. None of the players got a part of these profits. It is therefore not fair to ask the staff and players to sacrifice their wages when now things turn out to be financially difficult for clubs.
There is also a perverse effect of a wage reduction for players. As soon as things have returned to normal and games are being played and broadcast, players who accepted reduced wages will have facilitated their club’s purchase of new players and allowed them to bring in competitors for their position. A wage reduction could be accepted only if clubs commit to reimburse the wages before paying a transfer fee to bring in new players.
A wage cut also has important tax consequences for the different governments and this at a time when governments will need all the money available. By way of example, English Premier League clubs are asking players to reduce their salaries by around £570m. The tax loss for the English government would be more than £200m. Within the context of a health crisis it seems to be very selfish behaviour from the clubs to put their financial interests before the interests of the general public. Instead of reducing salaries, it would be wiser for clubs and players to donate part of their wages to hospitals and healthcare institutions.
In conclusion, clubs should not ask for wage reductions from their players unless it is essential for their survival. If clubs are really afraid that they may not survive, it means that these clubs have not been careful and that they should put the players on furlough. If this is the case, the players should be able to terminate their contract against limited compensation like regular employees. If players nevertheless decide to financially support the clubs through a salary reduction, the reduction should be subject to certain conditions such as no transfer fees being paid until the wage reductions for all involved players have been compensated.
