Sunday, February 17, 2013

Spending measures agreed


Premier League clubs agree deal designed to curb wage inflation

The stipulations, coming after nine months of discussion of the deal mean that teams with player costs over £52million can only increase their pay package by £4million this year, £8million in 2014/15 and by £12million in the 2015/16 season. Other stipulations agreed are that clubs can lose no more than £105million over a three year period. Also, any losses must be covered by owners and future funding to the club guaranteed.

Breaching the rules could result in severe penalties; a point’s deduction being amongst the penalties for the worst offenders. If club owners fail to guarantee losses and future funding, they will have to comply with the more scrutinising stipulations. One of those being that the owners must comply with losses of no more than £15million over a three year period.

There are write-offs for clubs who have exceeded the £105million, by showing that if they had not invested in youth development and infrastructure they would not have exceeded the boundary. The measures have been designed to curb wage inflation and force clubs to cut their massive costs in the long term. The top clubs looking to qualify will have to comply with Uefas’ Financial Fair Play rules by next season or face exclusion from European competition.

Premier League chief executive, Richard Scudamore said of the deal;


Former Manchester United and England right-back Gary Neville recently called for all players wages to be made public. Neville argued that the agents influence has become something of concern and that if wages were made public it would reduce the role of agents. He pointed to the banking sector and how it was left un-regulated and the devastation it caused, indicating football could be headed in the same direction.

Clubs Finances
Currently only seven of the league clubs would be under the £52million threshold . Accounts revealed recently showed that Chelsea’s average wage bill per day is £481,468. That is 86 per cent of their income and have had the highest wage bill, £191million over the last few years until Manchester City overtook them with a wage bill of over £200million.

That wage is a whopping 114 per cent of their income, compared to Manchester United’s 46 per cent. Carlos Tevez earns £200,000 a week and Yaya Toure is on £220,000 a week. Manchester City players were taking home an average of £75,000 a week. They are not the only ones paying ludicrous sums of money to their talent. Wayne Rooney earns £8million a season at united while Torres earned £16.7million over 2012, including commercial deals.

Everton’s wage bill reached £63.4million. That’s 75 per cent of the clubs turnover. This was an increase of over £5million being payed out to talent in the space of a year, up from £58million. Manchester United’s wage bill is £160million and 90 per cent of Aston Villas income is spent on talent.

In the 2010/11 season, the wages being paid to players stood at £1.6billion. The wages to revenue ratio now stands at 70 per cent. On average, every Premier League player earns £21,000 a week excluding bonuses and sponsorship deals. This adds up to over £1million per year, per player.

Sports sponsorship expert and Director of brandRapport, Nigel Currie said:


Premier League clubs are making serious losses despite announcements of record income of over £2billion to the Premier League. The losses for league clubs was £361million last year. Manchester City accounted for £197million of this although it was a significant shift from the £350million plus losses from the season before.

Owners like Roman Abramovich of Chelsea and Sheik Mansour of Manchester City have invested over £1billion into their respective clubs. Abramovich has done so since his arrival at the club and |Mansour since arriving in 2008. With such amounts invested, these clubs still produce massive losses. Chelsea has only recently announced that they held a profit at the end of the financial year under the Abramovich era for the first time last year. Much of this was down to them winning the Champions League and a deal with BSkyB falling through leading to them being recuperated money.

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