Football Premiership Player Wages Transfer Fees
For the first time in the history of the Premiership total wages and salaries costs fell in the 2004-5 season. According to Deloitte’s Annual Review of Football Finance, 90 per cent of the reduction was down to a decrease in players’ earnings. Despite money being no problem, Chelsea’s £115m wage bill was trimmed by almost £6m. However, in absolute terms Chelsea are still £32m ahead of their nearest rivals, Manchester United, in terms of wages paid out. Other top clubs made comparable reductions: Arsenal down £3.9m; Everton down £2.3m; Liverpool down £1.4m; and Spurs down £1.4m. Looking at the Premiership as a whole, the reduction of 3 per cent is relatively small compared to average annual increases of 20 per cent over the past decade, but the reduction of £1.3m club is still a move in the right direction. The combined effect of a reduction in total wages and the small rise in turnover resulted in the Premiership wages/turnover ratio falling below 60 per cent for the first time in six years. The number of Premiership clubs with ratios below 50 per cent doubled to four. However, this new prudence was in part a result of the Premiership’s less lucrative television deal which expires at the end of the 2006/7 season and is then replaced by a more lucrative deal which may lead to renewed upward pressure on wages.
The picture in the Championship is more worrying, however. Clubs in this league have always been prone to over spending in an attempt to capture the biggest financial prize in world football, the £40m that promotion to the Premiership brings, likely to rise to £50m in 2007. Player wages in the Championship are now almost at the record levels recorded in 2001/02 and the extra spending doesn’t necessarily bring results on the pitch as there is less correlation between spending and league position in the Championship than in the Premiership. Across the Football League as a whole, wage costs rose by 2 per cent. However, turnover rose faster at 5 per cent so the wages/turnover ratio fell to just over 70 per cent, the lowest level since 1996/7.
Across all 92 clubs there was a 25 per cent fall in net transfer fees payable. Over the past two years almost £0.5 billion has left the English game in transfer payments to non-English players and agents. The level of redistribution of funds from transfer payments by Premiership clubs to Football League clubs slowed down in 2004/5 to £28m, the lowest level for three years, putting further strain on the finances of lower division clubs. The main beneficiary of the funds was Leeds United as they offloaded several players following relegation from the Premiership.
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