Premier League Clubs' Wage Bills Highest Ever

According to a survey of football finances, English Premier League clubs are now spending more on wages than ever before.

May 29, 2008 11:10:40 AM

Ricardo Carvalho - Wayne Rooney, Chelsea - Manchester United (PA)

The revenues of top-flight English clubs topped £1.5billion for the first time in the 2006-07 season, analysts Deloitte have revealed, while the ratio of players' wages to turnover is at its highest level since the league was founded in 1992.

Deloitte reveal that only eight of the 20 Premier League clubs recorded an operating profit in 2006-07, compared with 16 in the previous year.

TOP FIVE PREMIER LEAGUE WAGE BILLS, 2006-07
(2005/6 wages in brackets)
1. Chelsea - £132.8m (£114m)
2. Manchester Utd - £92.3m (£85.4m)
3. Arsenal - £89.7m (£82.9m)
4. Liverpool - £77.6m (£68.9m)
5. Newcastle Utd - £62.4m (£52.2m)

Source: Deloitte

The total wage-bill paid by Premier League clubs increased by 13 per cent from the previous season to £969million, with Reading's bill more than doubling, and Portsmouth and West Ham United spending 49 per cent and 41 per cent more, respectively, on players' wages than a year earlier.

Chelsea had the highest wage bill, totalling £132.8m

The higher wages partly reflected the new three-year broadcasting deal, worth £1.7billion, which kicked in August last year, and which Deloitte calculate will boost Premier League revenues for the 2007-08 season to around £1.9billion.

"A number of clubs essentially spent some of the money on new players and wages in advance," said one of the Deloitte report's authors, Alan Switzer.

"They knew the broadcast revenue was coming so it was acceptable to do so, but what would be more worrying would be if clubs' wage bills increased even more significantly in coming years."

Switzer described the wages-to-turnover ratio - which rose from 48 per cent in 1996-97 to 62 per cemt in 2005-06 and 63 per cent in 2006-07 - as still being at "a sustainable level."

"Wages will have gone beyond £1billion for the season which has just ended. It will be interesting to see what happens next, and how high they will go," adds the report.

The New Owner Effect

Dan Jones, a partner in Deloitte's sports business group, commented that a lot of the investment has been by clubs who have acquired new owners, but stressed that clubs' "failure to produce a strong bottom line could mean that club owners do not have a burning desire to achieve significant profits.

"The improvement in cost control which would demonstrate a normal business culture of maximising profitability does not appear to be happening at Premier league clubs," said Jones.

"It seems that, as in prior decades, we are seeing football clubs treated as 'trophy assets', except with clubs now owned by billionaires from a range of nationalities rather than local businessmen made good, reflecting the global appeal of the game."

Jones added that the 'key strategy' for making money for the club was in selling it on by building up a brand value, "rather than a more tangible ongoing measure such as profitability."

European Comparisons

The top-flights of the French, Italian and Spanish leagues spent about the same proportion of turnover on wages as the English Premier League. But the notable exception was Germany, where only 45 per cent of income went on salaries.

Deloitte reported that the Bundesliga had the highest operating profit margin in Europe at 18 per cent.

Germany boasts Europe's highest average attendances - with fans attracted by the lowest ticket prices on the continent.

But the report suggested that "the price of Bundesliga's clubs' very good financial performance seems to be a struggle to reach the latter stages of European club competition in recent years."

DEBT BURDEN OF PREMIER LEAGUE CLUBS
(At end of 2006-07 season)

1. Chelsea - (£620m)
2. Manchester Utd (£605m)
3. Arsenal - (£268m)
4. Fulham - (£182m)
5. West Ham Utd (£142m)

Source: Deloitte

PREMIER LEAGUE CLUBS WITH LOWEST STADIUM UTILISATION
(Average percentage of stadium filled for home games)
1. Bolton Wanderers - 75%
2. Middlesbrough - 76.3%
3. Blackburn Rovers - 76.8%
4. Wigan Athletic - 76.9%
5. Sunderland - 89%

Source: Deloitte

2006-07 SEASON FACTS
*Arsenal's matchday revenue grew 105% to £91 million in the Gunners' first season at the Emirates Stadium
*Premier League gross spending on transfers was £492 million
*The top four spenders in the Championship (Sunderland, Birmingham City, West Bromwich Albion and Derby County) occupied the top four league places in that division.

Source: Deloitte

Mark Hinton, Goal.com

Thank you for your comment!

Please enter your name

Please enter your location

Please share your comment!

Main

More News

Premier League Clubs' Wage Bills Highest Ever

According to a survey of football finances, English Premier League clubs are now spending more on wages than ever before.

May 29, 2008 11:10:40 AM

Your Say