Richard of Warwick was flabbergasted when he read reports that one our opponents next season, Newcastle, were paying over £70m in wages.
Others on the message board, like Jamie, have been complaining that we have not spent enough to compete, and if we did, we would have won promotion.
I guess the fact that Newcastle have spent that much and not been successful kind of sinks the boat Jamie wants to sail in, but how much really does it cost to establish your self in the top League?
Premier League clubs spent over £1bn in wages last year! That’s 75 per cent more than La Liga clubs spend, and double the German, French and Italian leagues.
The Bundesliga however is the most profitable, mainly down to the fact that their wages-turnover ratio is about 45 per cent.
Most Premier League clubs are operating on a wage/turnover ration of 70 per cent, which just sounds crazy to me, when 55 per cent is considered a safe level.
As a result of this, in 2006/7 only 8 clubs made a profit – that’s EIGHT!
And this is despite the fact that their revenues now exceed £75m for each club. During the same period, the Championship sides shared a pot of £329m, that’s just over £13m each.
Five of those eight were the big four, plus Spurs. The other three were relegated – Reading, Sheffield United and Watford. Ominous!
So if we want to compete at the top table, what sort of wage budget do we need to match?
Man United is surprisingly not the biggest payer, £121m, despite having easily the highest turnover.
It’s Chelsea that have that honour, paying an estimated £150m – their bill was £133m in 2006/7, but since then they have signed Lampard, Terry, Essien, Cech on fat, new contracts.
When I say fat, I mean Lampard’s weekly wage would pay for 300 nurses for a week, finance 340 factory workers on an average wage of 23 grand a year, or add an extra 500 soldiers to the battalions who risk their lives for us every day.
Not to be flippant, but Lampard hasn’t played at Ninian Park this year, so hasn’t been in any danger on the field!
Arsenal’s outlay is £ 101.3m, added to a service debt for their stadium £ 20m. Their turnover has grown to £ 223m though! Arsenal message boards are filled with stories suggesting that while Fabregas is on £100k per week, the ‘kids’ like Jack Wiltshire, who can’t get into the first team, are on £15k/week. And we wonder why the likes of Jason Scotland, Dorus, and even Andy Robinson are tempted to look elsewhere.
Liverpool’s are not far behind in wages, and the club that caused Richard such bewilderment, Newcastle were the fifth best payers in 2006/7 and their wages have increased 16 per cent since then.
The average wage bill in the Premiership was £50m in 2006/7.
The next question is what size of squad will we need?
Liverpool is the biggest team with an incredible 62 players. Arsenal has 59, Manure 51and Chelski 46.
The average squad size is 40 though, though Bolton has the smallest in number – 27. Our squad currently numbers 31.
We are debt free, but what happens if we get promoted?
Would we allow ourselves to take on debt to stay in the Promised Land, and risk going into freefall like Charlton and as we did in the 80s.
Or should we play a long game like West Brom, seesawing between the top two leagues, using the TV money to build a robust business that can eventually sustain itself in the Premier division?
Equifax, the online credit rating company has stated that ten of this season’s Premier League clubs would struggle to repay their debts. These include next year’s opponents, Middlesbrough and Newcastle, but more indicative of where we are right now, Hull and Stoke had ratings of 1/100 and 17/100 respectively.
WBA (71/100) were 3rd in the list, behind Arsenal (98/100) and Man United (93/100), and look to be the best model for sides in the Championship in my opinion.
The level of debt in the Premiership is however is quite frightening. Here’s the league table of debt:
1. Chelsea – (£620m)
2. Manchester United (£605m)
3. Arsenal – (£268m)
4. Fulham – (£182m)
5. West Ham United (£142m)
The top two clubs owe more that the entire Championship debt, which just exceeds Arsenal’s deficit at £289m.
Jamie may have had a point when it comes to splashing the cash though.
The four biggest spenders in the Championship in 2006/7 were the three promoted to the Premiership that season, Birmingham, Sunderland and Derby, while WBA were the fourth, and were promoted the following year, though all three have suffered relegation since too.
Anyone else not bored by stats, and wanting to get an idea of what we face in the Premiership, and how wise we are building this club slowly, you can take a look at this club-by-club outline from Deloittes review for 2006/7 on The Guardian website.