Wages in the Premier League are set to break the £1bn barrier for the first time in the competition’s history, a report from Deloitte has revealed.

Salaries and bonuses will increase next season as a £1.7bn television deal for Premiership clubs games comes into effect, the report adds.

Deloitte’s annual review of football finances showed Premier League wages rose 9% to £854m in 2005-06. Chelsea spent significantly more than any of their rivals with an outlay totalling £114m. Manchester United were the second biggest spenders paying out £85m, while Arsenal managed to spend £85m on wages for the season.

Top wage bills
Chelsea – £114m
Manchester Utd – £85m
Arsenal – £83m
Liverpool – £69m
Newcastle Utd – £52m

The new TV revenue means that the clubs will receive about £300m extra per season over the course of the current three-year deal.

However, Deloitte said the new owners at several clubs, including Aston Villa and Liverpool, would be looking to use some of the additional revenue being pumped into the game as a means of servicing the debts they accrued when buying the clubs in the first place.

“A lot of these new owners have had sporting success but also considerable financial success”, said director of Deloitte’s Sports Business group, Alan Switzer.

“A decent chunk of the money will still flow through to the players, but we don’t think it will be the same proportion that flowed through previously.”

Deloitte’s Paul Rawnsley said it was not economically viable for clubs to simply throw money at players.

“Whilst wages will rise, clubs do have the opportunity to increase the importance of performance related pay structures,” he said.

“This will both insulate the business in future when on-pitch results are not so good, and also help motivate and reward players and management for winning.”

Premiership the biggest earner
The report confirmed that the Premiership was again the highest-earning league in the world. Its 20 clubs generated £1.4bn in turnover on 2005-06, a figure expected to rise to £1.8bn in 2007-8.

Manchester United was once again the biggest earners, making £167.7m.
They were followed by Chelsea on £152.8m, Arsenal on £133m and Liverpool on £121.6m.

Arsenal’s revenue is expected to have improved dramtically in 2006-07, with its income from gate receipts and corporate hospitality boosted by its first season in their new 60,000-capacity Emirates Stadium.

Top Leagues by revenue 2005-06
England £1.4bn
Italy 1.0bn
Spain £0.8bn
Germany £0.8bn
France £0.6bn

Despite the huge sums floating around English football, only 9 clubs actually made a profit for the year, with wages, which far exceeded their European counterparts, accounting for a huge share of the wealth generated.

The total wage bill in Italy was 35% below the English level at 806m euros (£548m) while clubs in the Spain’s La Liga spent739m euros (£502m) on player wages.

The “big five” European leagues generated 53% of the total £8.6bn European football market.

Revenue generated by clubs in the Championship – the second tier in England – grew 4% to £312m, making it it Europe’s sixth richest league.