Top-flight clubs issued warning as wage bills hit all-time high

Report puts spotlight on Premier League excess amid fresh revelations about United owners' debts

Premier League clubs are already spending next season's windfall from the new TV deal, but have been warned the profligacy must stop or else more sides face going into administration like Portsmouth. Figures revealed today show that players' wages among top-flight clubs have risen sharply, outstripping the teams' rise in revenue by some margin. The clubs' income in the season 2008/09 grew by £49m to a record £1.98bn, yet that increase was not enough to cover the £132m increase in wage costs for the same period.

Part of the blame for that has been put down to clubs giving in to wage demands from players and their agents who are only too aware that Premier League revenues are about to balloon again, when the new broadcasting rights deals, which have risen by 30 per cent to £3.6bn, come into effect next season.

The 20 Premier League clubs are so concerned about the prospect of fighting off the demands of players and their agents they have yet to announce just how much money has been raised by selling the league's TV rights overseas. One source said: "As sure as night follows day if there is an announcement concerning revenue growth, the next knock on the chairman's door will be from a player's agent."

The latest figures are released today by Deloitte's Sports Business Group for the season 2008/09, which show that the operating profits of Premier League clubs fell by almost half, from £185m in 2007/08, to £79m. The news comes the day after the BBC screened a Panorama documentary which claimed the Glazer family, the owners of Manchester United, have debts of more than £1.1bn.

According to the BBC's figures, the Glazers' debts include £700m tied to Manchester United, £388m on mortgages for their First Allied shopping centre business in the United States and £66m tied to their Tampa Bay Buccaneers NFL team. The Glazers say they are comfortable with the situation and that their assets total £2bn. The revelations have cast further doubt on whether the Glazers are the right people to own Manchester United, particularly as they are the target of the "green and gold" protest organised by disgruntled supporters.

United's financial concerns are mirrored across the Premier League, which has shown itself to be buoyant in the current recession but still needs to curb the games of financial Russian roulette played by its clubs. Only last week David Sullivan, the co-owner of West Ham United, which has debts of £100m, announced he was hoping to sign 32-year-old Thierry Henry on wages of £75,000 a week.

Deloitte's report shows that in 2008/09 total spending on players' wages rose by £132m (11 per cent) to more than £1.3bn, up to 67 per cent of all revenues. The previous season the proportion was 62 per cent of income. Analysts say the 67 per cent figure is the highest in Premier League history and warn the season just finished is likely to show an even greater proportion of income going straight out on wages.

In the last three years, spending on players' salaries in the Premier League has rocketed. Wages have soared by more than 55 per cent (£474m) in that period, and the most rapid rise in wages has come from teams outside the traditional "big four" clubs of Manchester United, Chelsea, Arsenal and Liverpool.

The Premier League's income is set to rocket again when the new TV deal starts. Alan Switzer, director in the Sports Business Group at Deloitte, urged clubs to spend that increased income wisely, and not to fritter it away on expensive new signings on even higher wages.

Switzer said: "The record wages-to-revenue ratio of 67 per cent in the Premier League is a concern, and we expect wages growth to outstrip revenue increases again in 2009/10. This will further reduce operating profitability, a decline that cannot continue indefinitely. However, clubs have the opportunity, via the revenue uplift from the new broadcast deals from 2010/11, to get wage levels down to a more sustainable share of revenue. It's not the first such opportunity. It remains to be seen whether they grasp it."

Clubs are already paying more in wages on the promise of their increased TV money. But many in the game believe the days of profligate spending are over, and clubs are generally looking to cut costs. They point to the example of Chelsea, who in the past have thrown money down the drain but who are now so determined to reduce their wage bill they risk letting a key asset such as Joe Cole walk away on a free transfer. Tellingly, Cole is a free agent but he has yet to receive an offer he cannot refuse from any club.

The imminent Uefa regulations concerning financial fair play as well as the Premier League's new rules to ensure a quota of "home grown" players are also expected to help encourage clubs to become more parsimonious.

A Premier League source said: "There is a will among Premier League clubs to keep spending down. The league's 'home grown' player quota should help to bring down wages. Clubs will be limited to a squad of 25 players, eight of whom must be 'home grown' which will mean a higher proportion of players coming from the club's own academy."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Caption competition
Caption competition
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Bleacher Report

Daily Quiz
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

The man charged with inspecting doctors explains why he may not be welcome in every surgery
Stolen youth: Younger blood can reverse many of the effects of ageing

Stolen youth

Younger blood can reverse many of the effects of ageing
Bob Willoughby: Hollywood's first behind the scenes photographer

Bob Willoughby: The reel deal

He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
Angelina Jolie's wedding dress: made by Versace, designed by her children

Made by Versace, designed by her children

Angelina Jolie's wedding dressed revealed
Anyone for pulled chicken?

Pulling chicks

Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
9 best steam generator irons

9 best steam generator irons

To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

Rooney admits England must ‘put on a show’ to regain faith

New captain vows side will deliver for small Wembley crowd
‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

‘We knew he was something special’

Radamel Falcao's journey from teenage debutant to Manchester United's star signing
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York