Deloitte report: Clubs crossing a 'dangerous line' in race to the Premier League
Thursday 05 June 2014
The desperation to reach the Premier League, and enjoy the unprecedented financial rewards that accompany membership of English football's top flight, is forcing a number of Championship clubs to cross a "dangerous line" in paying out more in wages than they earn in revenue.
For the 2012-13 season, wage costs overtook revenues for the first time in a dozen years, leading to the highest ever wages-revenue ratio of 106 per cent, accompanied by record losses across the division of £241m.
The figures are published today in the latest annual review of football finance by the Deloitte Sports Business Group and reveal that while wages in the Premier League have also reached record levels – the average Premier League salary is £1.6m – it is a sustainable rise, given that each club in the top flight will earn an average of £25m more a season from the new TV deal.
Financial Fair Play and the Premier League's own restrictions have stopped wages rising more quickly than expected, but in the Championship, despite imminent FFP measures agreed by the Football League, half the clubs had wage costs greater than revenue. The report states that "this level of spending poses a significant risk to clubs' medium to long-term viability" .
"This desire to reach the Premier League saw clubs gamble heavily in 2012-13 to achieve promotion," said Dan Jones of Deloittes.
"This is a reckless model and one which Championship clubs themselves voted in regulations to address. These are scheduled to take effect from the 2013-14 season.
"Looking at the chart of wages v revenue it is clear a dangerous line has now been literally, not just metaphorically, crossed."
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