PL still leads financially as player wages fall

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Despite maintaining its spot as the No. 1 money-making football league in the world, the Premier League actually had a slight downturn in salaries last year, the first time that has ever happened.

Consider the report, released by Deloitte’s Annual Review of Football for the 2004-2005 season, to likely be an aberration. The Premier League will continue for the foreseeable future to be the measuring stick for all other football leagues. But those salaries almost assuredly will not continue to slip downward.

Part of the reason is because the Premier League is so successful it generates a cycle. The Premier League succeeds and attracts viewers, which attracts lucrative television contracts and sponsors. That in turn makes the people who put the product on the field - the players - more valuable and coveted.

With the results showing a 3.2 percent drop in salary in the Premier League, the people at Deloitte believe the recent Arnaut European Review report that football is in dire need of salary control to be a little off target, as three of the world’s top five leagues saw salary dips.

“Over the past decade, we have seen Premiership wages rise by an average of 20 percent each year,” said Dan Jones, partner in the Sports Business Group at Deloitte. “The three percent reduction in the total wage costs for Premiership clubs, based on the latest available figures for the 2004-05 season, provides a stark contrast.

“Our latest analysis further supports the improving balance between revenue and costs, not just in England but also across Europe. The need to ‘save clubs from themselves’ with a salary cap now seems far less important than it did five years ago.”

Jones said the wage decrease is a direct correlation from efforts to trim salaries. The Premier League wage total dropped from GBP 811 million the previous season to GBP 785 million. Taking out non-player salaries wages dropped from GBP 583 million to GBP 559 million in the league.

At Chelsea, wages fell by GBP 5.9 million. Arsenal’s dropped by GBP 3.9 million, Everton by GBP 2.3 million, and Liverpool, despite victory in the Champions League, fell GBP 1.4 million. Even Tottenham Hotspur, active in the transfer market that season, cut off GBP 1.4 million.

Wages in the Championship League rose only two percent.

Of course, a new television deal that will go into effect next year likely won’t keep the Premier League salaries down for long. Players will keep an eye open for their share of that pie, which will be up to GBP 1.7 billion over the next three-year cycle. That is a bump up of more than GBP 500 million.

Overall, since the figures are before the latest television contract, England again showed itself have the strongest financial leagues. The Premier League ranked first way ahead of any competition, while the Championship League placed sixth. Only the top leagues in Italy, Germany, Spain and France, respectively, provided any buffer between the Premier League and the Championship League.

Chelsea and Fulham were the only Premier League clubs to list an operating loss for the 2004-2005 season, and the 20 Premier League clubs made an operating profit of EUR 240 million and generated EUR 1.3 billion in revenue.

But what was rosy news for England was not as bright in other parts of the world, despite football revenue of GBP 6.3 million generated across Europe, for an eight percent increase over the previous year. Only the top clubs in Germany’s Bundesliga made a profit (EUR 65 million), while clubs in Italy’s Serie A managed to cut their combined losses by EUR 270 million.

Only the Premier League and the Bundesliga recorded a profit. Clubs in Germany and Italy showed the biggest growth rates, moving at 17 and 16 percent respectively.
 
The ‘Big Five’ leagues accounted for 54 percent of the revenues in the GBP 7.8 billion European market. Italy generated 0.9 billion, Germany 0.8, Spain 0.7 and France 0.5.

So England stays ahead of the pack.  The report found that Manchester United again was the biggest revenue earner with GBP 159 million, despite losing to Chelsea for league title in the past two years. Chelsea earned GBP 149 million, while Liverpool, following its Champions League victory, earned GBP 122 million. Arsenal came fourth with GBP 115 million.

The average Premier League club generated revenue of GBP 67 million, up from GBP 66 million in 2003-2004 and compared to only GBP 13 million for first division clubs.

“If you strip out Chelsea, the 20 Premiership clubs on aggregate are estimated to be breaking even at a pretax profit level and that is first time they have done that since 1988-89,” Deloitte senior consultant Alan Switzer told Reuters.

The Premier League was founded in 1992, so Switzer’s comments hearken back to the old Football League.

Despite the sound footing for England, the concern from Deloitte was that the wealthy clubs grabbed a large share of the revenue. For example, Switzer pointed to Spain, where Barcelona and Real Madrid contributed 47 percent of the league’s revenue.

“European football’s stakeholders need to monitor the competitive balance, both within leagues and between leagues, in order to ensure that interest in competitions is maintained going forward,” the review said.