I’m probably going to get slated for this, but I found the discussion about spending the floor being a false economy interesting, so I did some research.
A study of the economics behind ‘designated player’ signings in America showed that major signings have a limited impact on attendance and merchandise. There is often an initial spike in both associated with the arrival of big names (like Beckham at LA), but their appeal rapidly declines, most likely due to the fact that their appeal suffers from now playing for a lesser club. So Cahill or Kewell may have initially drawn larger crowds everywhere they went (I seem to remember a decent crowd for Kewell’s first game at Gosford on a Wednesday night) and improved home attendances, but they became less of a drawcard because they only play for Melbourne Victory/City. Their impact on playing success was also found to be very limited (though the methodology for this seems tricky), so I think that confirms that marquees aren’t going to work outside of very specific circumstances.
The question of whether investing in the entire squad would be better is trickier, but I can’t find any evidence to suggest that spending more of the cap would provide a return for the club. That is, the improved performance to be expected from the extra investment probably wouldn’t provide an equal return. I’m not sure if anyone is familiar with Paul Tomkins’ writing in England, but he’s shown that the league table in most leagues around the world is closely linked to revenue. There will be outlying seasons, but there’s an incredibly strong correlation between revenue and results at the end of the season. Teams can spend a larger proportion of revenue on their playing squad (EG, Blackburn when they won the league spent something like 70% of their revenue on salaries) in an attempt to improve performance, but improvement isn’t guaranteed and is invariably temporary. At best you get a couple of great seasons followed by a sharp decline, and at worst the club collapses. Closer to home, we won our title by spending beyond our means, then suffered a rapid and humiliating decline and almost lost the club.
In the early years of the A-League the salary cap ensured it was one of the few exceptions to the revenue-results pattern, but the FFA has increasingly watered down the salary cap restrictions to create a soft cap, while clubs have come up with creative new ways to work within the rules. This means that the same pattern that exists in non-salary capped leagues is becoming increasingly clear here. Us and Wellington seem have the lowest revenue, so unless something changes we can expect to finish ninth or tenth most seasons. We could spend a larger percentage of our revenue on the squad, but it wouldn’t guarantee better results, it most likely wouldn’t increase revenue equal to the additional expenditure, and it could put the existence of the club at risk.
So spending within our means doesn’t seem to be a false economy. The only way to improve the squad in a sustainable way is to increase our revenue. So finishing the Centre of Excellence, getting management rights for the stadium to provide a share of food and beverage income, selling more and higher tiers of memberships, and convincing the FFA to give a TV rights grant that covers the entire cap are the best things the club can do, which is exactly what they have been doing. Allowing transfer fees between Australian clubs could potentially help, and the club could potentially try to invest or develop things beyond the COE (like developing apartments in Gosford or something), though I’m not sure that would be particularly popular. For the moment though, we need to make better use of the money available. That could mean resigning guys who aren’t really up to A-League standard like Bingham and Berry, as well as risky prospects like Wales and Kekeris, so that we have a shallower squad with more squad players on minimum wage, allowing us to spend more on first team players. That could mean releasing both Powell and Asdrubal for example, replacing them with one striker on a much higher salary, and accepting having Bingham and Appiah as the back up options. It means we’re screwed if there’s injuries, terrible FFA scheduling, or the new striker underperforms, but it would allow us to improve the quality of the top fourteen or so players. Until our revenue improves, it looks like the only way we can improve performance and results without risking the club’s existence. The other option is what we’re currently doing, which is targeting undervalued players along with a handful of quality signings down the spine.
