This article has printed in “Tejarat_e_Farda” magazine, Dated: Saturday, August 10, 2024.

https://www.tejaratefarda.com/fa/tiny/news-47443

What factors influence the determination of football players’ salaries?

Feet Rights!

Vahid Namazi, Journalist and Football Researcher

Football is the most popular sport in the world and a billion-dollar market. It’s only natural that players in this market, benefiting from this immense opportunity, have achieved unparalleled incomes. Although the global sports economy includes a massive, unique, and over $80 billion professional sports market in North America, with disciplines like rugby, baseball, ice hockey, and basketball, which vastly outpaces other global professional sports markets, football’s distinctiveness lies in its salary structures, which are significantly unique due to the wide range of football-related revenues. The global attention football commands and the potential for massive investments in it—through television broadcast rights, advertising, matchday revenues for clubs, and other sources we’ve previously discussed—have made this lucrative industry grow larger and more complex every day. In this context, football players with millions of followers and lucrative sponsorship deals have essentially become valuable commodities, playing a significant role in generating wealth for this fascinating business. It is entirely logical that the main drivers of this wealth should significantly benefit from the value they create. But what is the ceiling for this benefit, or the “players’ salaries,” and how is their direct income from this multi-billion-dollar football industry determined?

What factors determine salaries in football?
The base salary a professional footballer receives from their club, as their primary source of income, depends on their ability, experience, marketability, and the financial stability of the club employing them. In addition to their base salary, players typically receive incentives based on team and individual performance. For example, there may be financial rewards for winning specific trophies at national, regional, or continental levels. If a player consistently delivers standout performances leading to goals, assists, or clean sheets, their final earnings could be significantly higher. Moreover, many players boost their income beyond their on-field performance through commercial partnerships. Large businesses, recognizing the vast reach and influence of football players, compete to sign contracts with them. Sportswear, equipment endorsements, and even deals with non-sport-related companies are examples of such agreements. Players who are more likely to be sold or transferred to other clubs can also increase their income through such contracts. This is why it’s common for players to put in maximum effort to maintain a “strong hand” in their transfer options to new clubs. Let’s explore the components that determine a footballer’s salary:

1. On-field Performance: A football player’s value is directly tied to their contribution on the pitch, and clubs seek to invest in players who can change the course of a game and secure victories. It’s not just adrenaline-filled moments after scoring that matter to clubs; defensive actions and teamwork are also highly valuable and contribute to a player’s overall salary package. Naturally, a player’s ability during matches is a key determinant of their income. Metrics like goals, assists, and their overall impact on the team’s points are measurable criteria that clubs and sponsors carefully evaluate. The more consistently a player delivers exceptional performances and sustains their form throughout a season, the more lucrative contract offers and reward structures they will receive.
2. Market Demand: A star’s appeal can significantly increase their market value. Clubs pay premium salaries for players who can attract fans, sell jerseys, and elevate the team’s brand. Demand for such players often creates a competitive environment where multiple clubs may fiercely compete to sign a charismatic star. Factors like a player’s popularity, the team’s current needs, and the broader economic climate all influence market demand. For instance, a club desperately needing a striker may be willing to pay a premium to secure a clinical finisher.
3. Commercial Agreements: Beyond their club salaries, football players can significantly boost their income through commercial partnerships. Brand endorsements can be as lucrative as, or even exceed, a player’s club contract. Highly marketable players benefit the most from such deals, as their public image can influence consumer behavior. Personal branding, social media presence, and stellar technical performance enhance a player’s appeal to brands, creating a synergy between on-field success and off-field marketability that generates a powerful income stream for the player (and the brands they partner with).
4. Club Wealth: Wealthier clubs have more resources to offer higher salaries, attract top talent, and maintain a competitive edge. This financial capability stems from revenue sources like ticket sales, merchandise, and lucrative broadcasting deals. Given the profitability of major football leagues worldwide, these clubs can generate even more revenue by signing and retaining star players. Clubs like Real Madrid, Barcelona, Manchester United, Bayern Munich, Paris Saint-Germain, and Manchester City lead the pack due to their financial strength, paying the highest average salaries to players.
5. Experience and Age: Veteran players typically earn higher salaries due to their proven track record and leadership qualities. However, age can be a double-edged sword. While experience can lead to a more established position, higher salaries, and greater attention, it also signals the approach of the end of a player’s peak performance years. As a result, players in the later stages of their careers often face salary reductions as clubs gradually shift investments toward younger, talented players. Thus, a delicate balance exists between a player’s age and experience, playing a crucial role in salary negotiations.
6. Agent’s Role: In the high-stakes world of football, an agent’s role in negotiating and securing the best contracts is critical. Agents are the architects of deals, leveraging their expertise and networks to negotiate contract terms. Their role is particularly vital in navigating complex salary cap structures and bonus systems. Agents typically receive a percentage of the player’s contract (3% or more), which varies by league and country. Therefore, it’s essential for players to choose an agent whose track record aligns with their personal and professional goals. A good agent can significantly impact a player’s career trajectory and overall income, serving as a professional advisor who influences both their work and personal life.
7. Contract Duration and Bonuses: The length of a player’s contract can significantly affect their income over time. Longer contracts may provide security but could mean smaller annual salary increases compared to shorter contracts. Contract negotiations often include complex bonus structures, typically tied to achieving a certain number of goals, maintaining high physical fitness levels, or helping the team win titles in various competitions, all of which boost a player’s income. Understanding the nuances of contract terms and bonuses, in collaboration with agents and advisors, is key to maximizing earnings.

Understanding Salary Caps
In professional football, the “salary cap” is a critical element that players and team agents skillfully navigate. Understanding the intricacies of salary caps is essential for maximizing a player’s income while adhering to regulations. A salary cap is a predefined limit on the amount a team can spend on player salaries to maintain competitive balance in leagues. Salary caps fluctuate based on league revenues, which depend on factors like broadcasting rights and ticket sales. Teams that exceed the cap may face penalties, but clever contract structuring and mastery of salary cap details allow players and their agents to secure deals that optimize income while complying with league rules.

And the Mess Called Iranian Football…
It’s evident that Iranian football, as part of the global football community (albeit isolated and disconnected from the world), cannot have vastly different processes for determining player salaries. However, despite the influence of all the factors mentioned above, the “lack of accountability,” the absence of legal governance, and, worst of all, the “entirely state-controlled” nature of Iranian football create the greatest disparities compared to the progressive global football landscape. Football regulations in Iran are deeply outdated, easily circumvented, and written based on complete government control over the sport. Additionally, the lack of typical global revenue streams like broadcasting rights, equitable advertising contracts, fan merchandise sales, jersey sales, and matchday revenues means that the capital flowing into the sport primarily comes from government budgets allocated for “social responsibilities” through the Ministry of Sports and other state entities, with no effective oversight or regulatory mechanisms.

Iranian club football resembles a massive pit of fire into which the government periodically pours heaps of money to prevent it from erupting. Interestingly, many owners of state-run clubs in Iran, including industrial clubs tied to large factories or wealthy mining industries, not only agree to increase their teams’ annual budgets but also face no accountability for the exorbitant salaries paid to players. Beyond these industry-backed teams, the situation with Persepolis and Esteghlal is clear: they are the government’s darlings. For years, the Ministry of Sports has poured vast sums of money into them, merely spending without oversight. Even now, as they’ve been ostensibly transferred to banking and petrochemical industries, they easily fall under the same “social responsibility” expenditures, continuing to bypass weak regulations and following the same misguided path they’ve always taken.

How Are Salaries Distributed in Iranian Football?
In one glaring example of this lawlessness, it’s said that a player linked to a private, lower-table club for around 6 billion tomans for one season suddenly signed with one of the capital’s red or blue giants for a contract worth nearly 60 billion tomans for two seasons (excluding bonuses and other incentives)! When a player was willing to play for a lower-table provincial team for 6 or 7 billion tomans a year, how does their contract value quadruple in a single year, and how is this increase distributed? Given the typical 5% commission rates for agents, what machinations led to this player’s contract being inflated by about 20 billion tomans above their actual market value? This is the core issue and the primary driver of corruption in Iranian football. Football “fixers” have created such an octopus-like network that they easily collude with major clubs to link players with lower nominal values to these clubs, splitting the inflated contract sums among themselves, the player, their agent, and (unfortunately) high-ranking club officials! Of course, Iran’s league isn’t limited to a few wealthy, top-table clubs; there are also average, private, and less privileged teams. The situation has reached a point where mediocre players with very low standards demand 17 to 20 billion tomans from less privileged teams, driving up the cost of football. As one manager of a top-tier league team told Tasnim News, “A player whose team was relegated offered us 17 billion tomans, or a defender who was a benchwarmer for most of the second half of last season is now asking for 20 billion tomans.” This is how Iranian football becomes more expensive and, frankly, less valuable each year. Unofficial statistics suggest that the upcoming season of Iranian football will be 40% more expensive than the previous one, with total costs reaching around 7,000 billion tomans: 5,000 billion for player, coach, and staff salaries, and 2,000 billion for team management expenses, including training camps, renting training grounds and stadiums, flights, hotels, uniforms, training equipment, staff salaries, and more. Yet, the overall value of Iranian football remains far lower than other prominent regional leagues, like Saudi Arabia’s. The non-commercial nature of Iranian football, coupled with the near-impossibility of generating revenue and its management based on outdated needs from five decades ago, clearly illustrates the current state. This 7,000 billion toman sum (approximately $120 million), equivalent to the contract of a single European star with a major Champions League club, is frankly excessive for Iran’s non-commercial league!