‘Hybrid’ Euroleague Basketball financial rules backed to create ‘circular system’

The move, which Euroleague Basketball claims is a first in European sports, was announced this week under the newly ratified Competitive Balance Standards (CBS) that will sit alongside the existing Financial Stability & Fair Play Regulations that were first deployed in the 2014-15 season.

Puyada told Global Sustainable Sport that the model is a “hybrid” between Euroleague Basketball’s existing regulations and those applied in established US major leagues, with a “flexible salary cap” allowing clubs to surpass thresholds if they pay compensation that is then distributed to other clubs.

“We’re not starting from scratch; we’re carrying over some dynamics from the past that need to be changed step by step,” Puyada said.

“Clubs will have the option to exceed salary levels, similar to what happens in the NBA. In other words, in all cases, it will be a flexible salary cap, as clubs will always have the option to surpass it.

“In that case, clubs that do so will have to pay compensation. And that compensation will be fully distributed among all the clubs participating in the EuroLeague that season and have kept their salaries within the limits. This way, we create a circular system.”

Under the CBS regulations, which will be launched fully in the 2027-28 campaign after a transition period, there will be minimum and maximum player remuneration levels based on average licensed club revenues over a two-year period.

The minimum spend on player wages of 32% of revenues will strengthen “the partnership with the players whose contribution to revenue growth will directly impact their remuneration levels,” Euroleague Basketball said.

However, clubs will pay financial penalties if they exceed salary limits.

One such cap will be a ‘Base Remuneration Level’ (BRL) of 40% of revenues that will be the maximum clubs can spend on all registered player salaries. There will be several exceptions to the total, including long-term injured players, under-23 players and so-called ‘anchor players’, who have the two highest salaries in a squad.

An additional ‘High Remuneration Level’ (HRL) will cap salaries at 60% of revenues without exceptions for anchor players.

If a club is found to have contravened both the base and high remuneration levels, only the most expensive breach will be penalised.

The penalties start at €0.50 per €1 over the BRL and HRL and become progressively more severe. For exceeding the thresholds by between 90-110%, for example, the penalty would be €4 for every €1 above the BRL and €4.50 for every €1 above the HRL.

The regulations only apply to the teams that are A-licence holders – currently 12 of the 18 in the EuroLeague competition, which is organised by Euroleague Basketball.

“For several years, we have been analysing the different realities of the markets for the various teams,” Puyada added. “The aim of the new regulations, in addition to seeking a sustainable model for the league and its clubs, is also focused on improving the competitive balance of the league, trying to level the playing field between the teams.”

Clubs in numerous sports have been grappling with the challenge of worsening wages-to-turnover ratios in recent times, raising fears of their long-term financial sustainability.

In the 2022-23 season of football’s English Premier League, for example, the average wage-to-turnover ratio was an eye-watering 73.5%, according to research by Deloitte. Only one of the 20 clubs had wages that accounted for less than 50% of total revenue.

Euroleague Basketball’s new Competitive Balance Standards have been developed over the last two seasons following a collaborative process with a committee of clubs and has been discussed and agreed to by the EuroLeague Players Association.

“One of the main goals of this framework is to involve all stakeholders,” Puyada added. “On one hand, the clubs, as spending will be directly tied to their ability to generate revenue. On the other hand, the players, since the more they contribute to the business, the more it will be reflected in their salaries.

“Additionally, the league itself and its various financial control bodies will be involved, as we internally assume greater day-to-day monitoring by evaluating audited accounts standardised with common criteria.

“Financial control, and particularly the limitation of owners’ contributions, has always been a sensitive issue. We have been negotiating these measures and a common framework for years.

“Obviously, the goal is to maximise the value of the league and the clubs by generating more commercial revenue. We believe that, step by step, we will achieve a model where spending is aligned with what is generated.”

Image: Euroleague Basketball