The sample I have taken for this is 9 clubs; the reasoning for this is that they are the only clubs to have been in the Premier League each season from 2006-7 through to 2011-12 (the last season of published finances)
These clubs are Arsenal, Villa, Chelsea, Everton, Fulham, Liverpool, Man City, Man Utd and Spurs.
All figures obtained from Guardian Finance articles (some of Liverpool’s wages were N/A on the Guardian, these wages were taken from Daily Telegraph to complete the data)
Turnover vs Wages
In 2007 the % of turnover spent on wages across these 9 teams was 56%, £570m of the £1.01bn. Of these 9 teams Fulham had the highest with 89% of turnover being splashed on wages, Everton were second with 75% of their turnover going on wages. The highest wage bills showed a distinct ‘Big 4’ with Chelsea £133m, United £92.3m, Arsenal £89.7m and Liverpool £77.6m. If you combined the next 2 highest Spurs £43.8m and Everton £38.4m this would only just surpass the wages Liverpool paid out and is dwarfed by Chelsea’s £133m, If you added Spurs Everton and Man City wages together that season wouldn’t reach Chelsea’s. However Chelsea were still only spending 70% of turnover on wages, this is probably around the highest acceptable % for a club to be able to run break even.
By 2012 the % of turnover spent on wages across these 9 teams was 67%, £1.08bn of the £1.6bn. The highest % spender was Aston Villa 88% of turnover going on wages, next was Man City with 87%. There is now a significant big 4 with the wages, with Liverpool £119m and Spurs £90m, a fair way adrift of Man City £202m, Chelsea £173m, Man Utd £162m and Arsenal £143m.
In summary these 9 clubs have seen an increase in turnover of 57%, £587.5m, but in the same period they have also overseen a 91% increase in wages, £515m. So the majority of the turnover increase from the last 6 years has gone straight back into the players and staffs pockets.
Credit must go to Chelsea who have overseen a 37% turnover increase and only a 30% wage increase (although the 2012 turnover included the Champions League victory, the 2013 figure may show the % wage increase greater than the % turnover) and also to Fulham, with 99% turnover increase and only a 76% wage increase (Fulham’s Wages to Turnover of 78% is still fairly high. The other 7 clubs all oversaw a bigger % increase in wages than turnover.
In 2007 3 clubs were under 50% for wages v turnover and 4 more were between 50-70%; in 2012 only 2 were below 60%, none below 50% and 4 clubs all exceed 75%.
I’m not sure where I was heading with this article but my question is Premier League wages – are they sustainable? If not then when will the breaking point come?
Premier League wages – Are they sustainable
posted on 12/2/14
thanks buzza. thanks hengy.
the richest clubs can sustain it yes. there is no sign whatsoever of the football bubble bursting, in fact every year there is even more investment into the game.
we have already seen that top level football is recession proof.
the question is what effect will FFP have on wage movements going forward?
posted on 12/2/14
comment by Chronic (U3423)
posted 3 minutes ago
thanks buzza. thanks hengy.
the richest clubs can sustain it yes. there is no sign whatsoever of the football bubble bursting, in fact every year there is even more investment into the game.
we have already seen that top level football is recession proof.
the question is what effect will FFP have on wage movements going forward?
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It would certainly appear that FFP could have an effect on wage increases especially during the first few years, I would expect to see the wages plateau for a few years and then once clubs streamline their revenue processes this will begin to increase again. For some clubs I reckon the wages now will be the highest (in %) that we may ever see.
posted on 12/2/14
the question is what effect will FFP have on wage movements going forward?
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In essence FFP is a great idea as it supposed to banish irresponsible spending, however it does also allow the biggest and richest clubs to remain there for potentially a long, long time. Unless the superpowers have an almighty fall from grace which lasts several years they'll always have the massive revenue etc to keep them as part of the elite.
Take someone like bayern Munich for example. How many shocking seasons in a row would it need before someone like schalke are able to rake in anywhere near the sort of revenue they do? Means the teams who aren't at that level (schalke, spurs, atletico Madrid, Roma etc) are reliant on great results on a reduced budget while being able to hang onto their stars or forever finding gems to keep them progressing.
posted on 12/2/14
FFP is more concerned with transfer spending that wages, so I don't think it would have a huge effect on them.
posted on 12/2/14
I'm on my phone at the moment, so I'll look it up later. But I do believe the new premier league FFP that came in last year puts a maximum wage increase year on year.
posted on 12/2/14
I think that might be related to income as well, though.
You can increase your wages by whatever you like as long as it's financially viable, I think.
posted on 12/2/14
The wage increase is capped at £4m per year if wages already exceed £52m per year.
It actually says that you can increase by £4m and any increased revenue from commercial deals.
But that just confused me!! This was the first site I saw that wasn't a red top or the daily mail.
http://www.financialfairplay.co.uk/financial-fair-play-explained.php
posted on 12/2/14
Imagine what could be achieved if ever 20% of the increase turnover was dedicate to youth development and each club.
posted on 12/2/14
I blame Bosman
posted on 12/2/14
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