Why the salary cap in any European competition is a stupid idea

2023-04-14T14:24:17+00:00 2023-04-14T16:11:21+00:00.

Aris Barkas

14/Apr/23 14:24


The idea of a salary cap at this point in European basketball only cripples the ability of growth

By Aris Barkas/ barkas@eurohoops.net

For many years, European basketball was trying to emulate in many ways the NBA, creating a constant debate between the European sports model and the American idea of a closed sports league, the – pretty much failed in Europe – adoption of the All-Star Game and also the financial aspect of the basketball business.

For a number of reasons, a ton of different taxation systems and policies between countries, some things like a collective bargaining agreement are still too far away, or even inapplicable in Europe. And while the idea of a salary cap makes sense at some point, right now would be the death sentence of any European domestic league.

Simply put, the NBA salary cap is a mechanism that ensures some kind of parity and also a redistribution of income via the luxury tax from the richest to the poorest, while preventing the big spenders to get all the top talent. In theory, it’s a great idea, however it’s totally tied to the league revenues.

As the NBA revenues are skyrocketing, the same applies to the salary cap, giving back to the players what they are worth, making them on average probably the highest-paid athletes in the world.

In Europe, the revenues are not exactly skyrocketing and in some cases in the domestic leagues, they are minimal. So how can you implement a salary cap, when as a league you don’t have the ability to create substantial revenues to help yourself and the clubs grow?

That’s why in the really huge business of European football a salary cap was never examined and the idea of financial balance was introduced via the financial Fairplay, which frankly doesn’t do much to prevent financial inequalities. However, this is the model that seems to be more fitting in Europe and first and foremost, doesn’t really prevent anyone who wants to put money even from his own pocket to invest it, or just spent on sports.

The LNB reportedly will implement a form of a salary cap and also add a form of “luxury tax”, aiming mainly at Monaco. This doesn’t ensure any kind of growth. On the contrary, in this way, the parity of the league will be achieved by pushing down the level of competition and making it harder for teams who want to spend money for whatever reason, to do so.

Even if the intention is noble, the end result will be even more mediocre teams in the league with the administration not really doing any conscious effort to get revenues, but happily accepting the idea of being a sustainable farm league to the NBA, getting very little back even whenever a phenomenon like Wembanyama appears.

The plan of the salary cap might have been more interesting if the LNB had a proven track record of creating revenues. The reality, however, is that French basketball is struggling financially, the league until recently didn’t have a television contract and what’s even more shocking was the reveal that the streaming rights for Wembanyama’s games were sold to the NBA just for 133.000 euros. Yes, that’s right 133.000 euros.

This price is absurd, especially considering the recent announcement from the NBA itself, that Wembanyama was the 8th more watched player on the NBA social media channels.

So the league, that practically gave Wembanyama’s rights for free, without any proven ability to create decent revenues, is making it even harder for anyone to spend money, which ultimately will improve the “product”.

And yes, there must be financial stability and accountability but you have to burn money in order to get out of a slump. And this is exactly where the French league had been in recent years with the basketball audience in France being focused almost exclusively on the NBA.

One very prominent European coach once put it bluntly: “We are not football, we don’t have sponsors lining up to get advertised so why when an owner wants to spend money, money that you will not have from any other source, you want to stop him?”

It’s not a coincidence that the British BBL finally became heard around Europe when this summer they decided to abolish the salary cap, which until last season limited the teams to a 250.000 pounds budget.

Of course, the numbers in France are not expected to be that low, but when the LNB finally achieved getting some EuroLeague stars in their domestic competition like Mikes James, Nando De Colo, and Jordan Loyd, it seems that they are unwanted because the rest of the league can’t keep up.

And it’s funny that this measure comes from France, where PSG became a major football brand all over the world thanks to Qatari money…

As for the EuroLeague teams which compete in France, while this situation will create some issues, there are a lot of ways to sidestep this situation with the most obvious being creating a different roster for the EuroLeague, something that has already happened in the past with Olympiacos.

Of course, the reasons behind the decision of the Greek club were totally different but the end result for the French league will be the same and the LNB will practically shoot their own leg.