There is a great deal of debate concerning wages at PL Clubs and it is being asked if we can compete, or are willing to compete, with the rest of PL Clubs.
At the risk of stating the obvious, the Clubs are working on different levels viz a viz turnover.
We are currently 5th in the PL for T/O and that league is as follows:
1. Manchester United
2. Ar5ena1
3. Chelsea
4. Liverpool
5. THFC
All Clubs have to make a profit (or at least break even – yes even Chelsea) T/O is not everything as wages can only be paid after loan payments have been made.
All of the above Clubs are in debt (except THFC) and (with exception of Chelsea) have to pay interest and capital on their loans.
Ar5ena1 and United are able to service their debts without too much trauma due to the capacity of their grounds (as well as other revenue streams) and the Gooners get > £3 million for every home match.
United have horrendous debts due to the Glazers putting the Club into debt to pay for their purchase.
Out of those 2, Ar5ena1 are the stronger in the long term financially. The Gooners wage bill is twice that of ours BUT that includes signing on fees for their players (dispelling the myth that Wenger gets his players for nothing – the Club he gets them from get nothing but the players do – a la Campbell).
I posted the link yesterday which shows that United have been told to get their wages under 50% of T/O and that wage levels will not be broken for anybody.
Both United and Ar5ena1 are profitable i.e. they trade profitably.
Chelsea, without Roman, are bankrupt and are still making losses of tens of millions each year. I posted the link yesterday which showed that Roman has insisted that they break even by 2009/10 and that wages are reduced to a sustainable level. They will never break even under the current business model and would need a 60,000 seated capacity stadium (and fill it each match) to get anywhere near being profitable – they do not have the fan base to do that and IMO Roman will not build a new stadium.
Liverpool are heading for a disaster as the new finance deal puts the Club into debt (a la Glazer) and the Club now has interest payments alone of close to £20 million per annum. Their last accounts showed them at a wage ratio of 58% and they made a loss of over £5 million – they were already in debt before this week’s announcement and they have also been instructed to get their wage bill down to lower than 50% - they are in serious trouble if they do not get CL football next season.
In short, all of the top 4 Clubs are reducing their wages both in absolute terms as well as % ratio versus T/O.
What about THFC? The last 3 financial years has seen our wage bill go from £33.1 million to £40.6 million to our current bill at £43.8 million. Because of our increased revenue, and superb business management, our wage ratio has reduced from 57% to 42% - please note that our ratio has gone down even with our absolute figure going up.
What about the rest? Newcastle are the wild card as their fiscal policy is amateurish at best (Ashley only finding out the true level of debt after buying the Club shows just how bad it is up there) – their current wage bill is unsustainable and the last accounts show a +/- £12 million loss and wage ratio at 61%. IMO Ashley will throw money around but he is going to struggle financially as he will have to pay top dollar on transfers (as they always do) as well as unsustainable wages.
All the rest of the Clubs have a T/O of 60% or less than THFC – Everton have a wage bill of £36.9 million which equates to a ratio of 64% which are unsustainable and they lost over £10 million in their last accounts.
If Manchester City match our wages then they will be well over a ratio of 70% which will be unsustainable, likewise with West Ham.
Our wage bill is greater than a lot of club’s T/O so the likes of Pompey cannot compete regardless of what the media will tell you.
The Clubs are owned by shareholders and they demand profit – even Roman has said enough is enough so Clubs have to either dramatically increase T/O (as we do) or reduce the wage bill.
What also has to be remembered is that all Clubs are Limited Companies (some are PLC) and have to abide by UK Company Law. If they make a loss they have to have guarantees from the shareholders that the Club can survive and be self financing in the very near future.
The likes of Manchester City and West Ham have had money men come in but they all want profit – they have injected cash for players but that is only a short term measure. Their mid and long term strategy is to make a profit – West Ham need a new stadium for that.
What does it all mean for THFC? It means that we have nothing to worry about for the mid and long term – it is crucial that we get a bigger Stadium but we all know that is in the pipeline.
Please take all the talk about wages being offered, or our being turned down by players, with a HUGE pinch of salt. Football is first and foremost a huge business and if the figures do not add up then it is not logical and therefore all nonsense. You only have to check Companies House to get all the information on Clubs and how much they pay – we are the 6th best payers in the PL and the gap between us and the top 4 is closing and when we get the Stadium then we will be on par and still be hugely profitable.
