The Euroleague is slowly getting closer to the NBA model. Not as much as Dimitris Itoudis would like, but the top European league has just announced its financial fair play rules, inspired by the American league.
And the ECA, the body that manages the Euroleague, presented the implementation of “Competitive Balance Standards”with the main new feature being the introduction of a “luxury tax”, which will penalize clubs that spend too much money to build their squad, and return the funds to the most financially stable teams.
The Euroleague thus explains that it is aiming for four major objectives: :
– align the objectives of the stakeholders by setting the minimum and maximum remuneration levels collectively, thus strengthening the commercial partnership between them
– promote sustainability and competitive balance by establishing equal player spending ranges for all teams in the competition based on the revenues collectively generated by the clubs
– prevent inappropriate practices by monitoring each club’s compliance with pre-established levels before registering players each season
– develop transparency among participating teams
Complex calculations and many exceptions
As in the NBA, there will be a salary floor and a ceiling, with taxes for clubs that exceed it. Thus, if it is exceeded by 0 to 10%, the club will be taxed €0.5 for each euro too much. We go to €0.75 for each euro too much between 10 and 30% then €1 for each euro too much between 30 and 50%. And it continues to swell since between 130 and 150%, we are then talking about €6 of tax for each euro too much…
How much will this system change the landscape of the Euroleague, whose financial landscape is heterogeneous, between the 13 million euros of Zalgiris Kaunas and the 42 million of Real Madrid? That remains to be seen because, unlike the NBA, the European league brings together teams from multiple countries, taxed in very, very different ways.
The calculations are therefore likely to be particularly complex, especially since the regulations provide for quite a few exceptions, with the possibility of excluding from the calculation the salary of two players in the team, but also the salaries of players under 23, as well as 25% of the salary of players who have been in the team for more than three years or the salary of injured players. A “mid-level exception” will also be created, outside the calculation.
