Premier League wages hit record high of £1.6bn

The Premier League‘s spend on wages is almost £1.6bn, up £201m in 2010/11 – a record 70 per cent of revenue.

Clubs in the Premier League reported a total revenue of £2.27bn for 2010/11, an increase of 12 per cent, driven mainly by a rise in income from new TV deals.

The wages/revenue ratio of 70 per cent is up from the low-to-mid 60s five years ago. In Championship clubs, the wages/revenue ratio was even more extreme at 90 per cent.

The record spend on wages comes ahead of the introduction of UEFA’s financial fair play rules in 2013, which will impose a £38m cap on a club’s losses. The Deloitte analysis found that Manchester City and Chelsea faced the greatest challenges in conforming to the new regulations.

Click here to see more infographics from Deloitte

Cost concern and profitability should be of major concern for clubs, Dan Jones, partner in the sports business group at Deloitte told Channel 4 News.

“We would see the percentage spend on wages as something that needs to be addressed and we would expect that clubs will be conscious of that,” he added.

Profit fall

In the Premier League, overall operating profits decreased to £68m from by £84m. Deloitte found that the German Bundesliga remained Europe’s most profitable league with operating profits of £154mn, up 24 per cent.

The report predicts a “levelling out” of Premier League clubs’ revenue in the short term, and potentially even a decline for some clubs the future years.

Football finance expert John Beech said that although clubs are operating profits, the level of debt is “worryingly high”.

“The increasing reliance on current levels of broadcasting rights is a possible risk which clubs need to consider in their financial planning,” he told Channel 4 News. “Sooner or later there is likely to be a call for a more equitable distribution.”

Read more: the alternative Premier League results table

Dr Beech welcomed the success of the German Bundesliga. “[It] presents strong evidence that there is a viable alternative to the benefactor-driven model all too common in English football.”

The level of match day revenue has stayed fairly constant, which Deloitte’s Mr Jones said was indicative of clubs’ restraint on ticket pricing to ensure they keep attendance up in a tough economic climate

The 21st Deloitte report does not take the most recent season into account, but it does reflect the 50 per cent tax rate for earnings over £150,000 and the government’s takings from the 92 professional football clubs was almost £1.2bn in 2010/11.

Transfer spending in the Premier League increased by £210m (38 per cent), to a record level of £769m and the combined pre-tax losses were £380m.

Net debt in Premier League clubs fell by 13 per cent to £2.4bn, the lowest level since 2006. Of that, 62 per cent is in non-interest bearing ‘soft loans’, most which relates to three clubs: Chelsea, Newcastle and Fulham.