Buddy, Can You Spare A Dime?

A report is published today that tells us that in spite of the credit crunch and the squeeze and that "we are all in it together", the cost of wages paid to footballers in the Premier League continues to rise. The driving force seems to be the wages paid to the players at the top six clubs. Chelsea's wage bill rose by £17m to £191m — the highest in the league — but Manchester City's wage bill went up by a staggering £41m to £174m — which accounted for 114% of the club's total income. The latest report by accountants Deloitte suggests that control of wages "continues to be football's biggest commercial challenge." You can say that again. Wages, on average, demanded 70% of all club incomes but the most successful club in the league, Manchester United kept its wages down to 46% of income. In the 21st Annual Review of Football Finance Deloitte tells us — in a statement of the blindingly obvious — that pay discipline is needed "in order to deliver robust and sustainable businesses".

The business model for the Premier League is never likely to look anything other than something from Alice in Wonderland. The top clubs spend buckets of money on players and get quite good attendances at matches — 50,000+ — while smaller, less wealthy clubs struggle to get good players — the best are unaffordable — and to get enough income. Most of the top clubs rely on billionaire owners to fill in the funding gaps and this has the effect of pushing wages higher and higher. The problem is exacerbated by the stadiums. Most clubs have a stadium that will hold 30,000+ spectators — which they struggle to fill and which costs a fortune because it is hardly ever used. Most are needed for about six hours per week and for the rest they sit like vast beached whales gathering dust and occupying a lot of expensive space. New stadiums should be shared and should incorporate other things to dissipate the costs.

Overall, in 2010-2011 the Premier League recorded pre-tax losses of £300 million with only eight clubs making any profit at all. Manchester City may have won the Premier League title this year — beating their rivals at Manchester United on goal difference only — but at what cost. Manchester City posted a pre-tax loss of £82m, while Manchester United made a profit of £100m. Some difference. Is this what they call buying success?

Nevertheless, the Premier League is such a money spinner that six of the top clubs in Europe — in terms of money generation — are in the Premier League. They are, as could be predicted, Manchester United, Arsenal, Manchester City, Liverpool, Tottenham Hotspur and Chelsea. I don't think that ex-Premier League Bolton Wanderers are likely to get onto the list any time soon — unless, of course, they can find themselves their own Russian billionaire.

/