It looks like the 25-man roster limitation may well have some unexpected side-effects. With a total of 38 players under contract, Manchester City are sitting on a thirteen man surplus under the new rules, and many thought that they would be forced to sell a host of quality players in order not to fall afoul of Premier League regulations. Instead, they keep buying and buying and buying... without the corresponding player sales. So what gives?
The appearance of Welshman Craig Bellamy at Cardiff should be a hint. Instead of selling Bellamy to a rival Premier League team, City have simply farmed a player out to the lower leagues where he can't possibly come back to haunt them. Their closest rivals are not impressed, pointing out (correctly) that City would hardly loan Bellamy to, say, Tottenham Hotspur or Everton.
On the other side of the coin Manchester City pay such high wages for players that they're often unwilling to have their contract nullified in a transfer, making loan moves the only feasible solution to their roster issue. When a player is transferred between clubs, the contract doesn't come with them - the transfer fee is more accurately the money paid to a club to tear up the contract already in place. But they can't do that unilaterally: the player has to agree to the move as well. This is why transfers hinge on 'personal terms;' a player has to want to have his contract replaced, and a team has to receive enough money to agree to nullify the original.See the problem? While City might want to get rid of the players, the players don't want to leave their absurd weekly salaries behind, so they can't be transferred. Instead, City has to loan them out, and that's defeating the entire purpose of the loan system.
The gulf in quality between the reserve team and the first team for Premier League clubs is vast. Not only are the players significantly more skilled, they also have far more experience and the games actually matter. Most reserve team players except the very best are unable to jump straight into the league - they need a stepping stone. Enter the ability to loan players.
As far as I can tell, loans involve the receiving club paying a fee (typically, but not always covering the player's wages) in exchange for a player's services for a certain time period. The lower divisions are often crawling with Premier League prospects, and players are even loaned to other, lesser teams in the same league - to use a Chelsea example, Michael Mancienne has been loaned to Wolverhampton for three years straight now in order to facilitate his development.
Loans, then are used to develop players. It's hard to see this as anything but a good thing. The parent club gets to give their prospects playing time without weakening their squad, the 'farm' club gets a player that can genuinely help them without paying a transfer fee, and the player gets experience in real games against a level of competition that will push him. This is essentially the equivalent of having a minor league system, for the baseball fans out there.
But what happens when you loan out full first teamers instead of prospects? Craig Bellamy is a veteran of 300+ Premier League games. He doesn't need first team experience to develop - he's already a complete player, albeit one no longer good enough to break into the Manchester City squad. But he has to be loaned, because he simply won't agree to have his salary slashed in a transfer.
It's an interesting dilemma. When used properly, loans are clearly beneficial to all parties involved, and completely fair. In this case, however, they appear to be being used to stockpile a huge reserve of genuine first-team players that the rest of the league cannot touch, which makes a mockery of the whole system. Something has to be done, and the Premier League is making noise about banning loans entirely between teams in the same division, which in typical Premier League style both misses the point and wouldn't make a difference.
So what can be done? Firstly, we might introduce a player's 'service time' in top flight football. Keep track of that, and prevent players with more than say half a season of games in their parent club(s)'s first team from being loaned out. At all. Other than that, make loans fair game. This allows a team to develop prospects without being able to stockpile players - I think that's an acceptable compromise.
But what do we do about the current situation? As has been pointed out, City are going to have trouble selling anyone, simply because they offer the highest wages. Essentially, they're stuck with the contracts they have until they run out and the player leaves on a Bosman free transfer. I propose that we create a new type of transfer, just to facilitate the paring down of oversized rosters: Allow teams to buy players and propose a contract, and when personal terms are agreed upon, City take off the leftover money they owe to a player from the transfer fee. Accounting-wise, this works out to be identical for both teams, but doesn't have an impact on the player's current salary - it's equivalent to seeing out his city contract and then starting a new one.
I don't like the idea of a salary cap (of course not, I'm a Chelsea fan), and I think my proposal would be workable to solve the problem at hand without impacting the rest of the sport. What does everyone else think - I'd like to hear flaws in my idea as well as alternative proposals.