Seminar Report: The Impact of High Pay in Football
Emily Death reports on the recent HPC seminar
The contentious issue of high pay in football was the topic of the latest HPC seminar. Dave Boyle, author of the new HPC report ‘Football Mad: are we paying more for less’, on the state of pay in football, introduced the discussion.
Mr Boyle’s new research reveals the dramatic growth of player’s salaries since 1961; which has seen wages for those at the top increase by 1500%. In the 1960s wages stood at £20 per week during the season, £12 in the off-season. The dramatic growth in wages at the top is in part, due to the freedom of contract ruling in 1977, and the Bosman ruling in 1995, when the European Court ruled that out of contract players could move freely between clubs within the European Union. However, it was the creation of the Premier League in 1992 that really saw them rocket.
The new Premier League secured TV deals from Sky on behalf of its member clubs. This saw the end of the more even distribution of TV revenue that had characterised the earlier period. Mr Boyle also highlighted the complexity of rewards packages for footballers, an area in which we saw similarities with executive pay. Footballers’ salaries are often augmented by goal bonuses, appearance rights and other similar rewards.
This growth in pay has seen a simultaneous growth in the financial instability of clubs. It has encouraged greater debt, with half of all English League clubs insolvent in the last 20 years. It has equally encouraged greater risk taking. Of those clubs promoted from the second tier to the Premier League in the last 5 years only Norwich did so while spending less than 100% of their turnover on players’ wages.
Mr Boyle also explored the impact of this spending on players’ wages on investment in coaching and developing national talent. Here he drew comparisons with Europe. For example the ratio of coaches to players in Germany is 1 to every 150 players whereas in England it is 1 to 812. Whilst the German FA makes qualifications mandatory, our own FA sets them as ‘aspirations’ for improvement.
According to the last available UEFA figures the UK has less than 3000 qualified coaches, while Germany has nearly 35,000, Italy just under 30,000 and Spain over 23,000.
The investigative sports journalist and author of Richer than God, David Conn, also offered some thoughts, discussing the profitability of the clubs and the returns they make for shareholders and club owners.
Mr Conn explored the progression from local football clubs where owners and shareholders saw it as an honour and a duty to serve their local team, to the current situation where clubs are private companies with Manchester United, for example, being registered in the Cayman Islands and floated on the New York stock exchange.
Mr Conn commented that the arrival of significant revenues from Sky had seen the traditional model where Chairmen, actively put money into the clubs and acted as stewards change. Rather than invest owners had sold out and cashed in, selling shares in UK teams to the tune of £300 million.
Mr Conn noted that technically this behaviour has been regulated since 1889. The FA guidelines stated that: club directors couldn’t earn a salary and that no dividends could be made out of clubs. However, with the advent of the Premiership and the TV contracts which followed, the FA has abandoned all commercial regulation of the game.
These two talks were followed by a lively discussion on the state of pay in football exploring similarities between the growth in pay in football and the escalation in pay at the top in businesses and the financial sector.
If you would like to attend a High Pay Centre seminar in the future, sign up here.
Read Dave Boyle’s report on high pay in football here.