The Premier League's annual total wage bill has smashed through the £1bn barrier for the first time after the biggest year-on-year increase in pay since the league began, according to Deloitte's annual review of football finance.
Using figures from the 2007-08 season – the most recent available – the report shows that the combined wages of the 20 top-flight clubs increased by £227m (23 per cent) to £1.2bn.
Nearly all the massive increases in television revenues in recent years – income that was largely responsible for attracting an influx of new foreign investor-owners – have gone straight back out of club bank accounts to players.
As realistic hopes of generating sustainable profits remain as distant as ever for most clubs, the combined debt in the league has grown to £3.1bn. The "big four" of Manchester United, Chelsea, Liverpool and Arsenal are responsible for almost two-thirds of that sum.
Yet despite hard data showing rampant wage inflation and accumulation of debt, analysts at Deloitte – the official accountants to the Premier League and some of its clubs as well – remain largely upbeat about the English game's future, even as the recession bites.
Indeed, the headline on Deloitte's press release about the report's key findings is: "Premier League clubs' revenues hit £2billion as football proves recession resilient". The sub-heading is: "Premier League clubs regain their status as world's most profitable."
The main headline refers to the fact the clubs' combined income in the review period rose to £1.932bn, up 26 per cent year-on-year, largely as a result of the £900m-per-year, three-year television deals (domestic and overseas combined) that were signed in 2006 and began in 2007.
What the headline does not reflect is that the clubs started spending that cash on extra wages before it even arrived and have continued spending. In fact, of £351m in increased TV money in the two years to 2007-08, the clubs collectively spent £342m on extra pay.
The sub-heading refers to the fact that the 20 clubs, combined, generated record operating profits, before player trading, of £185m in 2007-08. That statistic should be considered alongside the fact the nine clubs made operating losses, and four of those in profit (Manchester United, Arsenal, Liverpool and Tottenham) together accounted for the vast majority (£176m) of the total profit.
Another fact that shows the league is not in such robust health is the sum total of the 20 clubs' pre-tax profits, after player trading. There were no combined profits – the combined losses for the clubs were £236.7m, with Chelsea leading the way by losing £84.5m.
Deloitte's mood remains positive, however. The firm "expects England's top clubs will continue to grow revenues in 2009-10, albeit at a slower pace." Dan Jones, a partner in the Sports Business Group at Deloitte, said: "The domestic and international popularity of the Premier League continues to generate remarkable revenue growth. Between 1992 and 2008, revenues for the top 20 clubs grew at a compound annual rate of 16 per cent, compared with 5.4 per cent for the UK economy as a whole.
"Revenue increased by 26 per cent in 2007-08 and Premier League clubs generated £800m more revenue than their nearest rivals from the other 'big five' leagues. It will, of course, be hard to maintain this pace in the immediate future."
Alan Switzer, a director at Deloitte, said: "Lower revenue growth in forthcoming seasons means clubs will have to focus on improving cost control – both wages and other operating costs – if profits are to be maintained."
Balance sheet: Wages & debt in 07/08
Aston Villa £50.4m/£73m
Man City £54.2m/£147m
Man United £121.1m/£649m
West Ham £44.2m/£36m