CFA issues further details on 2019 salary cap

The Chinese Football Association (CFA) on Thursday announced a set of financial restraints to be imposed on clubs in the Chinese Super League (CSL) and lower professional leagues from 2019.

The measures come as transfer fees and salaries have skyrocketed in China in recent years, with the CFA aiming to curb overspending to promote a more sustainable development agenda. The regulations will apply to the CSL, China League One, and China League Two.

The Chinese Football Association announced to impose salary cap to domestic players and limitations on clubs' spending in November but didn't release details on the amount. [Photo: VCG]

Under the new regulations, domestic players' salaries will be capped at 10 million RMB (about 1.45 million U.S. dollars) per annum, minus game bonuses. Players called up for the China national team for the 2019 Asian Cup or the qualifiers for the 2022 FIFA World Cup will be eligible for a 20 percent increase over the salary cap.

The plan will also reduce the salaries-to-expenses ratio of a CSL club to 65 percent in the 2019 season, 60 percent in 2020 and 55 percent in 2021. Salaries include expenses paid to all players in the first team and reserve team squads.

The salary cap will only apply to domestic players who signed a new contract recorded by the CFA from January 1, 2019. Those players will sign new contracts under the salary cap when their existing contracts expire, according to He Xi, director of the CFA's club licensing department.

The new rules will set limits on the amount of financial expense and deficit for each professional club over the coming three years. The total permitted expense for a top-flight club amounts to around 174 million U.S. dollars in 2019, and will decrease year by year to 130.5 million U.S. dollars in 2021. In the 2019 CSL season, the deficit cap will be set at 46.4 million U.S. dollars. Expenses related to youth development will be excluded from the club's total amount.

The new regulations also stipulate caps on cash injections from team owners, in order to reduce dependence on a parent company or a single shareholder. Every CSL club will be allowed to receive 94.2 million U.S. dollars in cash injections in 2019, with that amount decreasing year-on-year over the next three years.

The leagues will also introduce a cap on win bonuses in 2019, which will vary depending on whether the clubs are competing in the CSL or the Asian Champions League (ACL).

"Clubs that exceed the new caps will be subject to potential punishments, such as a restriction on the number of new transfers and points deductions," He Xi said.

In order to avoid the possibility of clubs circumventing the new restrictions, the CFA will also step up its crackdown on dual contracts and tax evasion, as well as closely monitoring lucrative endorsement deals. Clubs will not be allowed to pay their coaches and players through third-parties or in cash.

If a coach or player was found to have dual contracts, the club would face a points deduction or disqualification from the CSL. The coaches or players in question would be suspended from working in Chinese football for between one and three years.

Foreign players are unaffected by the new regulations, and there are no changes with regards to the transfer tax, with all foreign players costing more than 45 million RMB (7 million U.S. dollars) subject to a 100 percent levy charge to be paid into a grassroots development fund.