David Conn: Troubled clubs offered hope by League's shrewd plans

Football League clubs plot a sensible way forward: shock, astonishment, hold the back page. This is a development foreign to the crisis and rancour which have enveloped the League in recent times but the overwhelming vote by clubs, 61-5, at Oxford United on Thursday, for the principle of restraining the amount they pay to players, could, just, signal the beginning of the end of the financial mismanagement which has blighted football's last decade.

The proposal, that clubs should be allowed to spend no more than 60 per cent of their income on players' wages from next season, reducing to 50 per cent the following season, is accompanied by a frank acknowledgement that clubs will wriggle to get round the rules and that tough enforcement, backed by fines or even relegation, is essential if any "salary cap" is to work.

"We have to stop looking at the floor and worrying that it's all too difficult to introduce financial controls," the League's spokesman, John Nagle, said. "The clubs have shown a real will to grasp the mettle of wages so that we can manage affairs more sensibly for the future."

There are, however, several major hurdles for the fledgling proposals to overcome if they are to be implemented at all, let alone, as planned, by the start of next season, 2003-2004. Thursday's vote constituted only an agreement for the seven-person Best Practice Working Party, chaired by the Queen's Park Rangers chief executive, David Davies, which produced the proposals, to work further on the details. In particular, how individual clubs will be affected, how clubs relegated from the Premier League will be treated, and how the rules will be enforced. The initial aim, to have formal regulations for clubs to vote on by January, may prove too tight.

Most important, and potentially difficult, will be to secure the agreement of the players' union, the Professional Footballers' Association. This is crucial not only for good relations between clubs and players but because without it any agreed wage restrictions could be be ruled illegal by the European Commission. And Gordon Taylor, the PFA's chief executive, has been in his job for too long to be seduced by seat-of-their-pants football club chairmen claiming to have seen the error of their ways.

"It's like bankrupts promising they honestly won't go bankrupt again," he sighed. "Salary caps have tended not to work in other sports, here and abroad, because clubs find other ways to pay players, outside their contracts. There are also major questions over how any salary cap will be monitored. But I don't want to be too dog-in-a-manger about it: we are prepared to talk about sensible proposals."

This underwhelmed response leaves the League clear, at least, about the scale of its task when it meets the PFA next Wednesday. The European Commission has already expressed a preliminary view on salary caps when, a fortnight ago, the G14 grouping of 18 major European clubs, including Liverpool, Manchester United, Arsenal, Real Madrid, Bayern Munich and Juventus, announced a proposal to limit wages to 70 per cent of turnover.

Almost certainly, any such agreement by a confined group makes them a cartel, contrary to Article 81 of the European Union's Treaty of Rome. Amelia Torres, the spokeswoman for the EC's competition commissioner Mario Monti, said that in informal discussions the EC had stressed to G14 the importance of securing agreement with players' unions: "Contraventions of Article 81 can be exempted if there are wider benefits to the consumer or other affected groups. Clearly, these proposals affect the players and so would probably have a better chance of succeeding if the players' representatives agree."

G14's spokeswoman, Genevieve Berti, acknowledged that the proposals could fall foul of the EU's anti-trust laws, and said they are planning to speak to players unions first. G14's "cost control" measures, which include, centrally, an intended move towards performance related pay, are voluntary. But, down to earth in the Football League's three divisions, there is no illusion that clubs will abide by the restrictions unless they are watertight and backed by penalties for rule-benders.

The document presented by David Davies on Thursday was impressive not just for its statement of 60 per-cent intent, but in the detail too, which revealed an acknowledgement of the widespread failures in management which have dragged so many League clubs into swamps of debt. Many of the document's eight pages are devoted to defining what constitutes income and what must be included in the definition of players' pay packages. This might seem obvious, but such clarity is vital if the rules are to have any chance of working. The document explicitly includes as "player-related expenditure": match and loyalty bonuses, medical insurance, long term loans, signing-on fees, accommodation, holiday and relocation payments, pension contributions, personal expenses, payments for 'image rights' and 'other benefits' including cars and hotels."

That may provide a glimpse of the range of perks which can line the modern footballer's pay packet, but it is included in order to address Gordon Taylor's most fundamental concern: to prevent the clubs circumventing a restriction on salary by lumping big payments into other areas. The League is demonstrating its seriousness by trying to catch all payments.

Equally, the definition of a club's income runs to 19 different sections, from TV money and gate receipts to the treatment of bad debts. The recommendation which perhaps most reveals how encouragingly perceptive this response is to the League's economic crisis, is that "soft loans", paid to clubs from directors, should not be included as income. In plain English, this could signal an end to the sugar daddy, white knight approach, by which clubs become reliant on a single businessman. This proposal in effect acknowledges that that standard scenario has for all too many clubs commonly ended in tears.

"The effect of including soft loans from directors," the document says, "creates a situation whereby an individual club becomes solely reliant upon those individuals and any withdrawal of that support would devastate the club's finances."

So for the first time, the League's clubs are collectively acknowledging not only the madness of the wage bills which have put so many on the fast track to administration, but also that clubs should not rely on a motley assortment of businessmen-saviours, but be self-financing institutions, living within their means.

Most revealing of all in the document is a short passage dealing quite explicitly with tricks clubs can be expected to pull to get round the restriction on wages expenditure: declaring out-of-favour players unfit, loading the "manager" element of a player-manager's pay package, and there are measures included to deal with them.

The proposed procedure is that League clubs will file a certificate before a season setting out their anticipated income and expenditure, and one at the end of the season confirming what they actually earned and spent. Fines will be imposed on clubs which fail to file the certificates. Clubs found to have breached the salary cap level will be fined, from £1 for every £1 spent in excess of the restriction for a first offence, rising to £8 per pound on a fourth offence, and more if the club continues to overspend.

"For the avoidance of doubt," the document says further sanctions should be available, including "deduction of points and relegation of clubs".

Of the League's 72 clubs, 34, just under half, provided current figures for their income and expenditure. Unnamed in the document, 24, 70 per cent, had wage bills which exceeded 60 per cent of turnover. Many were not far in excess, but six clubs, two from each division, were paying over 100 per cent – in other words paying more than their total income – on wages alone. That is the recipe for financial mayhem which has become standard over the past decade, as Football League clubs have overspent, chasing entry to the breakaway, soaraway, Premier League. That has only been exacerbated by this year's collapse of ITV Digital. Now, at last, the League has produced some shrewd, constructive thinking, and proposals for sensible management, which could work to save these much loved, historic clubs, and the League itself, from disaster.

If their representatives can continue their good work and secure the agreements they need, club chairmen might even find themselves looking up from their continual crises, and realise they've had a boom on their hands, all along.

davidconn@independent.co.uk