According to a survey of football finances, English Premier League clubs are now spending more on wages than ever before.
The revenues of top-flight English clubs topped £1.5billion for the first time in the 2006-07 season. Financial analyst Deloitte said, while the ratio of players' wages to turnover is at its highest level since the league was founded in 1992. He also reveal that only 8 of the 20 Premier League clubs recorded an operating profit in 2006-07, compared with 16 in the previous year.
TOP TEN PREMIER LEAGUE WAGE BILLS, 2006-07
(2005/6 wages in brackets)
1. Chelsea - £132.8m (£114m) +17%
2. Manchester Utd - £92.3m (£85.4m) +8%
3. Arsenal - £89.7m (£82.9m) +8%
4. Liverpool - £77.6m (£68.9m) +13%
5. Newcastle Utd - £62.4m (£52.2m) +20%
6. West Ham United - £44.2m (£31.2m) +41%
7. Tottenham Hotspur - £43.8m (£40.7m) +8%
8. Aston Villa - £43.2m (£38.3m) +13%
9. Everton - £38.4m (£37.0m) +4%
10. Middlesbrough - £38.3m (n/a) +/-(n/a)
The total wage-bill paid by Premier League clubs increased by 13% from season 2005/2006 to £969million, with Reading's bill more than doubling then Portsmouth and West Ham United spending 49% and 41% more, respectively, on players' wages than a year earlier.
Chelsea had the highest wage bill, (Michael Ballack £121,000 a week) totalling £132.8million. 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% in 1996-97 to 62% in 2005-06 and 63% 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.
However in Germany, only 45% of income went on salaries. The Bundesliga had the highest operating profit margin in Europe, the report said, at 18%.
2006/2007 Facts :
1. Arsenal's matchday revenue grew 105% to £91m in its first season at the Emirates Stadium
2. Premier League gross spending on transfers was £492m
3. The top four spenders in the Championship (Sunderland, Birmingham City, West Bromwich Albion and Derby County) occupied the top four league spots.
Premier League with Most Debt 2006/2007 :
1. Chelsea - (£620m)
2. Manchester Utd (£605m)
3. Arsenal - (£268m)
4. Fulham - (£182m)
5. West Ham Utd (£142m)
Figures are total debt at end of 2006/7 season
Arsenal have the third highest debt. At the end of 2006/07 their net borrowings stood at £268 million, with the second highest loans balances in the country. They are required to pay £19 million in net interest costs, but that is dealt with comfortably by revenues (match-day revenue doubled to £91 million in 2006/07 alone) generated by the move to the Emirates Stadium.
Arsenal also had the best stadium utilisation this season with 99.5 per
cent of their 60,054 capacity used. It is just as well: Arsenal were
the major stadium investors in 2006/07 with £34.2 million, while their
pricing strategy this season did not increase on the previous one.
Also, by refinancing a £260 million loan, the club has reduced its annual debt service cost from £32 million to £20 million per annum. Moreover, the club is predicted to have an operating profit of £103.9 million over the next five years - the second highest in the country. Arsenal also lead Manchester United as the club with the most assets, put at £113 million at the end of the 2006/07 season.
Finally, according to 2006/07 figures, they bring in the third largest amount of money through television rights - £29 million.
Premier League Operating Profit :
1. Manchester United (£79.1m)
2. Arsenal (£51.2m)
3. Tottenham Hotspur (£29.7m)
4. Manchester City (- £1.4m loss)
5. Bolton Wanderers (- £2.01m pre-tax loss)
Source: Deloitte
Annual Review of Football Finance 2008 Highlights.pdf
