Concern as wages reach €1.5bn in top flight

WAGES at Premier League clubs have shown a worrying 11% leap to £1.3 billion (€1.5bn) overall, according to an annual report of football finance.

Business analysts Deloitte’s report claims the rise is a concern because wages last year accounted for 67% of the turnover of all 20 clubs – a notable increase after a decade where the proportion had stayed between 58% and 62%.

Experts believe the change could pose a problem to the English top flight with UEFA’s new rules saying that from 2012 clubs in European competition will only be allowed to spend what they earn.

The clubs’ wage bill rose by £132m (€160m) over the previous year and Dan Jones, director of Deloitte’s Sport Business Group, said that should act as a warning – especially in the light of Portsmouth being forced into administration by over-spending.

Jones said: “The wages increase is definitely something people should be concerned about, and that will be even more the case when the UEFA initiatives are in full swing.

“This report clearly shows there is an issue there to be dealt with.

“The revenue story is still very positive and has proved resilient to the recession but the clubs have to get costs under control.”

The report added: “A model of profit maximisation is now pursued by a very limited number of clubs and, whilst some clubs seek to break even on a consistent basis, the emerging norm for many Premier League and Championship clubs appears to require significant ongoing benefactor support.

“As such we appear to be seeing a continuing shift from a sustainable ‘not for profit’ model towards one with potentially calamitous consistent and significant loss-making characteristics.”

The situation in the Championship is particularly concerning with wage inflation outstripping revenue growth and annual operating losses having trebled in four years.

Meanwhile, Manchester United’s owners will have to take tens of millions of pounds out of the club every year to pay off their expensive loans, an investigation into the Glazer family’s finances has claimed.

In a programme to be screened tonight, BBC’s Panorama says the Glazer family’s debts total more than £1.1bn (€1.3bn) – £700m (€848m) tied to Man United, £388m (€470m) on mortgages for their First Allied shopping mall business in the United States and £66m (€80m) tied to their Tampa Bay Buccaneers NFL team.

The Glazers say they are comfortable with the situation and that their assets total £2bn (€2.4bn).

But investment analyst Andy Green, who investigated the Glazers’ finances for Panorama, believes the Glazers have no option but to raid United’s coffers to pay off the payment in kind loans – PIKs – which total £220m (€266.5m). These PIKS carry a 16.25% interest rate and unless any payments are made these loans will spiral to £600m (€727m) by 2017.

Green, a United fan, said: “This is not meant to be scaremongering – the Glazers have a stark choice to pay off the PIKs or risk losing the club.

“What I care about is Manchester United being used as a piggy bank to pay off loans instead of money being invested in the team.

“The money the Glazers make from First Allied and the Buccaneers is totally inadequate to deal with the PIKs – only Manchester United can provide the money to deal with those.”

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