Southampton Salary Cap and Financial Fair Play Update

Since I last wrote about the Salary Cap and Financial Fair Play and their effects on Southampton, there have been a few changes.  This post attempts to update my calculations based upon those changes and other things I have learned since then.  The amounts are all in millions of pounds unless otherwise indicated.

Transfer Fees Spent

Dusan Tadic       11.5

Graziano Pelle      9.0

Fraser Forster      10.0

TOTAL                30.5

Incoming Transfer Fees

Luke Shaw          33.0

Adam Lallana     22.0 (reduced from 27.0 to account for payment to Bournemouth)

Dejan Lovren      20.0  (reduced from 22.0 to account for payment to Lyon)

Rickie Lambert     5.0

Calum Chambers 18.0

TOTAL                98.0

I have eliminated the 2 million for Pochettino because it is now clear to me that only Player Trading Profits are relevant to salary cap issues.  This leaves us at plus 67.5 million pounds in player transfer profits.

However, I have been unable to determine whether the 22 million in transfer fees from previous years payable in this season counts against the player trading profits for salary cap purposes.  If I were writing the rules, they would because otherwise there is just too much opportunity to manipulate the rules.  Since the rules were approved by the big teams, manipulating the rules would be a feature not a bug.

On the other hand, there is no reason to assume that all 30.5 we have spent this year is payable this season or that all 98.0 we sold will be received this season.  I see no way an outsider can resolve these questions so I will simply ignore them hoping that the numbers would sort of cancel each other out.  This does mean that, even if the principles of my analysis are correct, there is a degree of uncertainty built into my calculations.  However, this uncertainty, unlike the uncertainty over player salaries, does not really effect the conclusions.

Since my last post, we have signed Fonte to a new contract, bought Forster, signed Taider on loan, and loaned out Osvaldo.  Each of these transactions requires more guesses.

According to FM 2014, Fonte was earning 1.5.  Under the circumstances, I have to assume he received a raise.  I am going to guess he now gets 2.0 million.

Taider was paid 1.0 at Inter.  I assume that the deal for Osvaldo means that we are paying Taider but not Osvaldo.

Forster was making 1.2 at Celtic.  I assume he got a big raise and will go with the 2.6 estimate I was using for new players.

However, I should have used Bertrand’s Chelsea salary of 1.8, not the 2.6 estimate.  And, of course, I have no idea what loan fee, if any, we are paying for him.

So here are my new calculations:

Previously calculated 2013-2014 player salary: 40.0

Salaries for released players (Forte, Fox, Barnard, Guly):  3.0

Salaries of Transferred Players (Lallana, Lambert, Osvaldo, Lovren, Shaw, Chambers): 10.3

Salaries of incoming players (Tadic, Pelle, Taider, Bertrand, Forster): 10.6

Fonte’s raise: 0.5

Unreliably calculated current payroll: 37.8

These calculations appear to indicate that we are not likely to approach the salary cap this year even with several more purchases.  Six more new players for 10 million each who are paid 2.6 million each would use up nearly all of the trading profit, but only increase the payroll to 53.4, well under the base 56 million cap.

How does all the information I do not have affect this analysis?  If our new players are being paid substantially more we could threaten the salary cap if we get in several more new players. If new players are getting an average of 3.6 million our payroll would be at 40.8 and we could only afford to add 4 more players before threatening the salary cap. If they are receiving 5 million each, we are at 45 and could only afford 2 more players.  I think we can safely rule out this last possibility.

If FM 2014 greatly understates what all our players are paid, we could be pushing the salary cap right now, but that would mean a dramatic increase in player salaries from 2012-2013 to 2013-2014 since FM 2013’s salaries are consistent with the figures released by the team.

Does my current analysis invalidate the general thrust of my initial analysis?  No, I still believe that we could not have held onto all of our players because they would have required unaffordable wages to stay which would have left no salary cap room (or money) to buy new players.  (See “Am I Crazy? (Part Two)” for the reasons.)  On the other hand, clearly the board has not engaged in a strategy to increase the available salary cap in subsequent years. I was wrong about that.

Finally, I still maintain that under any plausible set of assumptions selling Chambers was financially unnecessary.