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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