Wages and profits have risen sharply in the English Premier League, but the league still behind Germany’s Bundesliga in terms of profitability, a study by accountants Deloitte has revealed.
Manchester United remain England’s richest club with record operating profits of £66m.
But the Premier League’s hefty wage bill of £942m – up 13 percent on the 2006-2007 season – its collective profit to £94m.
That compares to £168m profit for the Bundesliga, the annual study showed, despite the German league’s failure to produce a Champions League finalist since 2002. 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.
Wages paid by English sides grew by 13% from the previous season to £969m, with one club, Reading, seeing 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. The London-based club has amassed debts of £620m, even though Abramovich has used £575m of his own money to buy players.
Deloitte said however the wealth was being enjoyed by all Premier League clubs.
“In 2007-2008, England’s Premier League clubs will have had around one billion euros (or 50 million euros per club) at their disposal.
“We believe all 20 Premier League clubs are now in the world’s top 50 by revenue,” said Dan Jones, partner of the company’s Sport Business Group.
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.
“A number of clubs essentially spent some of the money on new players and wages in advance,” said one of the report’s authors, Deloitte’s Alan Switzer.
“They knew the broadcast revenue was coming so it was acceptable to do so, but what would be more worrying would be if clubs’ wage bills increased even more significantly in coming years.”
The wages-to-turnover ratio hit 63%, up from 62% in 2005-6 and 48% in 1996-7, though Mr Switzer said this was “still at a sustainable level”.
“Wages will have gone beyond £1bn for the season which has just ended. It will be interesting to see what happens next, and how high they will go.”
Not surprisingly, given the wages on offer, Deloitte said the Premier League was increasingly the destination of choice for the world’s biggest stars.
“There is increasing evidence that it is also becoming the most popular league for players to ply their trade,” Jones said.
English clubs are also set to get richer when they feel the effects of a new, £2.7bn television deal from August 2008.