What I don’t understand is why club doesn’t restrict salaries as part of the budget.
They do.
The overarching umbrella for a club is the BUDGET, which is everything.... travel costs, food costs, fuel costs, purchasing new bus tires, oil changes, maintenance..... pitch maintenance, stadium maintenance, head office staff and localized costs. Do you have a chef on staff for the players, do you have three, ten? If you do, how much do you pay them?
Support staff roles, drivers, janitors, housekeeping (a lot of clubs let new transfers stay in apartments on Grounds).
Each of these areas has a budget.
The budget is typically defined by the prior year's costs. So, based on income: Sponsorships, marketing, selling Bavarian Pretzels and Spaten on game day, CL revenue, League, ROI on summer touring and marketing income, league finish, all competition finishes.
If you want to look at it from a macro level, "First Team Costs" would include everything above. Entire budget takes into account everything, Transfers are typically seen as Y costs and salaries as X. With wages, often times teams will establish market standards for their players based on similar players at other clubs who operate at similar levels.
Also, internally, Clubs establish the importance of players to the club. Bayern famously told Toni Kroos they wouldn't pay him more than 10M Euros a season (all amounts in Gross) because he wasn't as important to the team as Neuer, Robben, Ribery, etc. So, at least at Bayern: "Star" players are no more than like 25M a year. Your "Important, Squad" players (Umpamecano, Pavard, Hernandez) are at no more than 12 or 15 a year. It adjusts down until the youth team players are paid like 250 Euros a week or whatever.
So, computing all those salaries and bonuses (goals, assistas clean sheets, I didn't poop my pants) you can establish a longevity of wage costs, that budget is normally set by week or month.
Depending on how well structured and disciplined your team is, you can either finance loans for transfers, using long term financing to pay back the initial monthly loan payments or use player sales to fund good recruiting and scouting (RB Leipzig, Napoli), use budget surplus from the prior year to fund transfers (Bayern, most "major" clubs), or use cash "injection" from insane sponsorship deals which are outrageous (City).
Honestly, you need to play Football Manager.
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