Premier League clubs are spending a greater proportion of their cash on wages than ever before, a report into football finances has found. The revenues of top-flight English sides topped £1.5bn for the first time in the 2006/7 season, Deloitte said.
But the ratio of footballers’ wages to turnover hit its highest level since the league began in 1992. Pursuing on-pitch success meant clubs spent on players to the detriment of their finances, the report said.
Only eight of the 20 Premier League clubs recorded an operating profit in 2006/7 - half the number which did so a year earlier. However, strong English representation in the Champions League - with three semi-finalists in successive years - suggested that quality in the Premier League was continuing to improve, it added.
Wages paid by top-flight English sides grew by 13% from the previous season to £969m. One club, Reading, saw its wage bill more than double, while Portsmouth and West Ham United spent 49% and 41% more respectively on paying their players. Chelsea had the highest wage bill, totalling £132.8m
Spending was partly driven by the arrival of a new three-year broadcasting deal - worth £1.7bn - which began in August last year. This will propel Premier League revenues for the 2007/8 season to about £1.9bn, the report estimated. The wages-to-turnover ratio hit 63%, up from 62% in 2005/6 and 48% in 1996/7.
The “key strategy” to making money for the club was in selling it on by building up a brand value, he added, “rather than a more tangible ongoing measure such as profitability”.
Elsewhere in Europe, the top flight of the French, Italian and Spanish leagues saw about the same proportion of turnover being spent on wages as in the Premier league.
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%. This was helped by Germany having Europe’s highest average attendances - with fans drawn by the continent’s lowest ticket prices.
However the report noted 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”.
