round thoughts | on the beautiful game

P$G

The Financial Fair Play might not work and clubs like Chelsea and Paris St-Germain are counting on it. And if it works, it does nothing to close the gaps between the haves and the have nots.

So, here is an idea: Transfer Cap + Luxury Tax.

What does it mean?

It means that if a club spends, let’s say, more than €50m Euros on transfers or / and pays its players more than, let’s say, €180m, it must pay luxury tax. Which means that for every euro a team spends above the tax threshold, they must also pay to the teams in their leagues.

The purpose of this “tax” is to prevent teams in major markets with high incomes from signing almost all of the more talented players and hence destroying the competitive balance necessary for a sport to maintain fan interest.

The money derived from the “tax” is either divided among the teams that play in the smaller markets or is going into a solidarity pool.

This system is used in the USA to discourage teams from greatly exceeding the tax threshold.

A luxury tax system does not have a limit on how much money can be spent on player salaries, it does mean that clubs who are responsible for creating huge gaps between the rich and the poor will be responsible for closing them.