Runaway wages are damaging the national game

By 20.08.12BlogSeptember 2nd, 2020No Comments

High Pay Centre report shows how excessive pay is making football more expensive and less exciting

Optimism is a pre-requisite for supporters of football clubs outside the Premier League’s top three or four. And the opening day of the season, which took place this Saturday, affords the opportunity for fans to indulge their dreams of free-flowing football, victories over local rivals and an inexorable march to title-winning glory unfolding over the next 9 months.

But new research from the High Pay Centre shows how dramatic wage escalation in football has made the game less competitive and more expensive to watch, while also channelling the vast sums of money coming into the game from TV money to casinos and Mercedes dealerships, rather than grassroots coaching.

Clubs competing in the Champions League receive in excess of £200 million in revenue, more than double the amount earned by smaller Premier League clubs. Most of this money goes straight into the pocket of expensive new signings, with Manchester City, for example, spending 114% of turnover on players wages.

The net result is that the supposedly exciting and unpredictable Premier League has become depressingly uncompetitive. In the past three seasons, a club finishing in the bottom three has beaten a side finishing in the top three on just four occasions out of 54.  Statistically, last season’s Bolton Wanderers team could have played their Manchester United counterparts 10 times and would not expect to beat them once.

It’s a similar story between the divisions. Prior to the establishment of the Premier League, 50% of TV revenues were distributed across all 92 football league clubs. Today far smaller payments are made at the discretion of the Premier League, with the money again being spent on players wages instead. Premier League players earnings have risen by 1508% since 1992, compared with 518% in the second tier, 306% in the third and 233% in the fourth (not to mention 186% across the population as a whole).

As a result, only one team, Norwich City, achieved promotion to the top flight in the last five years without either receiving the ‘parachute payments’ available to ex-Premier League clubs or running at a desperately unsustainable wages to turnover ratio of over 100%. Half the professional clubs in England have been insolvent at some point in the last 20 years.

The most depressing thing about all this is that the negative effect of pay escalation on the England football team is not insignificant.  The bi-annual navel-gazing over the poor technique of English footballers that greets our early exit from every major tournament can be traced back to our lack of investment in coaching. In England there are 812 registered players to every qualified coach. In Germany, it’s 150, despite the fact that German league rules dictate that clubs must run on a breakeven basis, and their ticket prices are lower, meaning there is less revenue to invest in coaching.

It hardly needs saying, that Germany – and Spain, Italy and France, where the number of qualified coaches is also much higher – have consistently outperformed England at World Cups and European Championships. In English football, as in many other industries, excessive wages are draining resources that could be used for genuine investment.