Wage outlay is worrying, top clubs told
PREMIER League clubs have received a stark warning over their spending by one of the leading authorities on the game’s finances.
Dan Jones of Deloitte’s Sports Business Group says the proportion of income that clubs are lavishing on wages is “worryingly high” and must be brought under control.
The average wages/revenue ratio for teams in the top flight rose to a record 67 per cent in 2008-09, according to Deloitte’s latest Annual Review of Football Finance, published today.
Even though total revenue climbed to a best-ever £1.98bn, clubs’ soaring costs meant that operating profits were halved.
“The issue of cost control is pretty pressing,” Jones told City PM “The wages/turnover ratios are pretty damning. They look worryingly high, particularly when you consider there probably isn’t going to be rapid revenue growth in the future, and credit is harder to come by. There is a real need for focus on cost control.”
The warning comes amid unprecedented concern surrounding the finances of England’s top clubs.
Portsmouth became the first Premier League outfit ever to go into administration earlier this year, after they accumulated debts of more than £100m.
Even some of the most successful sides have been subjected to intense scrutiny, with fears raised over the amounts owed by Manchester United and Liverpool. And Jones is anticipating an unusually quiet summer of transfer activity, as chairmen look to tighten their belts.
“Normally in a World Cup year you would expect to see a busy summer of transfer activity, but I’m not sure,” he added.
“One of the things we’ve seen change is that more of the Premier League clubs are spending among themselves, not abroad. I wouldn’t be at all surprised to see restricted importing and less spending on the whole generally.”
It is not all bad news, however, with the steady increase in revenue tipped to continue thanks to the start of lucrative new media rights deals.
Jones said: “We thought football was pretty resistant to the recession and that is right.”