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The Premier League Wage Table: 11% Annual Increase Represents Very Real Problem

by Mr Neutral

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Time for English top tier to take long hard look in the mirror (not literally as that would require a very large mirror).

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Soaring wages are threatening the stability of Premier League clubs, a report into football finances has said.

Premier League clubs spent 67% of their revenues on player wages during the 2008/09 season, Deloitte said.

Chelsea again topped the wages bill, at £167m, while Manchester City’s wage bill soared from £54m to £83m.

Mr Jones, the editor of Deloitte’s Annual Review of Football Finance, said the wages ratio was above the 58% to 63% of the past decade.

TOP PREMIER LEAGUE WAGE BILLS 2008/09

Continue reading the main story
Chelsea – £167m (£172m)
Man Utd – £123m (£121m)
Liverpool – £107m (£90m)
Arsenal – £104m (£101m)
Man City – £83m (£54m)
(2007/08 wages in brackets)

Source: Deloitte

“The result is that profit margins are very thin or non-existent, and with the tightening of credit as well, that is really making that problem come into sharp focus now, and those debt levels start to pinch,” he said.

The wage bills of Premier League clubs have recorded double-digit percentage growth for three years running. In 2008/09 they were up by £132m, or 11%, to £1.3bn.

Total wages have grown by 55%, or £474m, in that three-year period.

“The growth in wages is difficult to slow down, given existing three or four-year [player] contracts, but must nonetheless be reined back to address clubs’ declining profitability,” Mr Jones added.

And he said that the wages ratio in the Football League was 86% as a whole and 90% in the Championship.

“That is too high, that needs to be brought back under control,” said Mr Jones.

And the challenging economic environment meant that revenue growth at Premier League clubs was restricted to 3% – leaving it just short of the the £2bn level, at £1.981m.

Meanwhile, Premier League operating profits fell by more than half to £79m, their lowest level since 1999/2000.

Only 10 of the 20 top league clubs made an operating profit in 2008/09, one less than a year before.

And Premier League club’s net debt at the end of the 2008/09 season had increased to £3.3bn from £3.2bn the year before.

However, just under half of that was “soft loans” from club owners.

Almost two-thirds, or more than £1.9bn, of the total net debt related to Arsenal, Chelsea, Liverpool and Manchester United. (BBC Sport)

Added to these figures its also worth noting that Agents’ fees increased by 4% to £80m in 2008/09,
and that these payments represented 36% of the total net transfer spending which is up from 28% on the previous year and that five clubs were responsible for more than 50% of the
total amount paid to agents.

Why aren’t agents banned from the game? Seriously they represent the biggest expense in the game that could very easily be removed from the equation. Perhaps clubs could refuse/be banned from paying agents so that any costs are totally transfered to the player who would then in time realise that the expense is an unnecessary one.

As for the wage increase. These statistics are for the season before the one just ended so hopefully things will have plateaued by last season. Clearly football as a business will show signs of the same economic boom and bust philosophy as any other sector but one can only hope that clubs realise that levels of spending can’t be sustained.

Even with TV deals increasing and with ticket price rises showing no signs of abating the top tier has to think long and hard about the direction they go in. With Manchester United and Liverpool showing huge levels of debt and with Portsmouth becoming the first Premier League club to go into administration there is a big disconnect between the expectations of players and their hangers-on and the realistic earning potential of the sport as a whole.

Talk of wage caps and other guidelines to help restrict excessive spending is all well and good but what would be far healthier is if the game decided to govern itself out of this crisis and started to attempt to live within their means and if at all possible doing so without looking to further burden fans with increased costs. Perhaps this is just a distant dream?

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