High wages do not ensure victory… but they can help

By Tony Attwood

The new financial analysis of clubs’ finances for the season 2013/14 makes familiar reading.  Manchester United with its world wide marketing earns the most and spends the most on salaries.  Indeed the clubs vying for the top four places in the Premier League earn the most and spend the most on wages – although not necessarily in the order they will end up at, in the league.

Income and expenditure however is not an absolute guarantee of success, otherwise Man U would be walking away with everything.  Buying the players and paying the players is only part of the deal.

Man U has a bigger turnover than Bayern, Barcelona, PSG, Chelsea and Arsenal, but is at the moment trailing behind each in various competitions where they might meet.

The table showing how much profit a club makes and how much it spends on players wages is something of a guide.

Club Wages £m Turnover £m Ratio % Profit/loss £m Debt
Man U  215.8 433.2  50% 23.8 342
Man C  205 346.5  59 -22.9 67
Chelsea  192.7 319.8 60 18.4 958
Arsenal  166.4 298.7 56 7.3 240
Liverpool  144  256  56  0.4 127
Tottenham  100.4  180.5  56  65.3 0

The reason this is only part of the guide is that it doesn’t tell us the most important question is where are the figures going.

To run a business long term you either need so much money that nothing that you do matters, or you need a viable plan.

And in business part of that plan must be the buying of players and paying them.   I noted this as a problem for Liverpool and Tottenham in an earlier article – it is not that Liverpool spend £22m a year less on players than Arsenal, it is that if they try to catch up with our expenditure, they will find our expenditure rising too, as we bring in more players in the mould of Alexis and Ozil.

To catch up the moving target you need a huge, huge, huge injection of capital – which could come from a new stadium, but only after much of the stadium is paid for.

The rise of Man U’s world wide marketing seems inexorable; they get the money they make the profit and they don’t spend more than they should on players’ wages.  They have a plan, although not the nicest of owners, and really they ought to be top of the league and winning the cup each season.

More than that, they ought to be the second top club in Europe, given that in the European table they are second only to Real Madrid, and above Bayern, Barcelona, and PSG.

For the rest of English football, Man U are financially out of sight and look like they will stay that way for a while to come except for that very annoying debt given to them by the Glazer family who bought the club, and then took the club’s money out of the club to give it to themselves as a refund on buying the club.  It hasn’t held them back yet, but one day…

Debt is only a problem if two conditions are met

a) you are required to repay it

b) you don’t have the funds to repay it and you can’t refinance it.

Arsenal’s debt is secure in that the stadium earns money to pay off the debt, and it gets less each year.  Man U’s is secure because of world wide marketing and because the owners although not quite English gents, know that Man U is their best way of covering losses elsewhere.

But where the business model gets mixed up with one man or one family or even a country, there can be danger.  A death, a coup, a sudden change in oil prices…

But now take Man C, they made a loss, which FFP doesn’t like, and they are at the top end of the spend ratio on players’ wages, which is always a danger sign because above everything else you need players.  If you try to reduce your spend on players you tend to slip down the league.

They want to expand the stadium, to earn more money, but that will take a while.  So how do they turn things around?   Only by being more wily in transfers and on the pitch – the two hardest things to do.  Especially as they are carrying a debt as well.

Chelsea have moved from being bulk spenders to sensible people, but their ratio of income spent on players is at the very top end, and they still don’t have a new stadium which is what they desperately need if their income will really accelerate.

They can afford to buy and build, of course, because of Abramovich’s billions, and stadium costs don’t affect FFP, but time is the one thing Mr A doesn’t control (at least I’ve never seen him lurking around the Doctor Who studios).  Their debt is huge, but since no one is calling it in, it doesn’t seem to matter too much.  The only issue is how Uefa wants to deal with clubs in debt.

Debt is an interesting if often ignored topic, for it was the Uefa report “The European Club Footballing Landscape” of 2010 which led to FFP, and which cited club debt as its major concern.  They’ve gone quiet on debt, but one day…

So while Man U have got plenty of leeway to spend more, Chelsea don’t seem to have nearly so much.  They are where they are – they just have to make the best of it – as indeed they have done this season.

Although Arsenal’s profits are modest, their ratio of money spent on players is satisfyingly mid-range, and these figures reflect only the very start the new marketing deals that are arriving following the end of the initial arrangements made to pay part of the stadium debt.

Arsenal are however still paying their mortgage, but that issue is diminishing.

Tottenham as we can see are debt free, but they are about to start work on their stadium, which will change that.  (Amusingly there was a suggestion yesterday that Tottenham were going to get a grant from the local authority to do this, which could well put them in the same boat as WHU and Real Mad in terms of accepting illegal state aid).

So for Tottenham there will be a season without a stadium, and a number of seasons of being hampered by the debt for the stadium – which is going to end up as being a greater cost than Arsenal’s stadium.

Outside our list of the bigger clubs there are one or two snippets.  QPR have a wages to turnover ratio of 195% (ie they pay almost twice out in wages than they earn).  At Leicester it was 116%, and at Burnley it was 110%.  Leicester and Burnley both lost money last year.  QPR’s figures are odd because they got a £60m cash injection – I am not sure what the Football League will make of that.

These figures are for last year, so reflect attempts by the clubs to win promotion.  The fun will start if the Football League seeks to impose fines for breaking its own FFP rules.

Certainly there is no shortage of clubs that are willing to take this risk – Bournemouth is clearly in this mould.

Two triumphs on this day in years gone by…

  • 22 April 1933: Chelsea 1 Arsenal 3 in front of 72,000 and as a result Arsenal became champions with two games spare.  Bastin got 2 and Jack the other. It was part of a run in which Bastin scored in five consecutive games and also Chapman’s final triumph.
  • 22 April 1935: Two years to the day on from Chapman’s 1933 trophy Arsenal made it 3 championships under 3 different managers, again with 2 games to spare, beating Middlesbrough 1-0 with a goal from Drake (giving him 42 goals in 41 league games – Arsenal’s all time record).  He failed to score in the remaining two games.

Please note the complete Arsenal on this day index is now here with around 5000 major events in Arsenal’s history recorded.


22 Replies to “High wages do not ensure victory… but they can help”

  1. The London Evening Prada (sorry Standard) was reporting Spurs will spend £90m on players this summer. Yes of course they are..

    by the way Tonyy, I note that Arsenal are the only team in the red in that table.Should we be worried?:)

  2. @Blacksheep63,
    I noticed the red too, but put it down to Tony showing off his ability to blog in two colours. 😉

  3. Tony

    I understand that Jon Moss is the referee for the FA Cup Final. I have been told that he is very corrupt. Any thoughts?

  4. Arthur,

    I intend to cover the question of Mr Moss’s alleged corruption as part of the referee preview for the FA Cup Final. The questions are raised by one Blog and, as far as I am aware, are unsubstantiated from any other source. They mostly cover a long and historic relTionship with a professional gambler and results over a number of years with West Brom in particular.

    His historic records against Arsenal show him to be among the better referees although, from memory, recent performances have been no more than average.

    Let’s not forget that last year Probert failed to award one of the four penalties that Arsenal should have been awarded and that wrong Important Decisions have been running at 1.5 to 2 per game against us all season.

    At this time I don’t see anything to be overly worried about regarding this appointment although I still can’t shake off a feeling I had after the Quarter Finals that Villa we’re going to beat us in the Final. I’m working on that feeling though.


  5. did anyone hear this. WestHam now have the cheapest season tickets. Everyone and sundry are praising them for having bucked the trend and given back something for the fans from what they got from the TV money.

    Hmmm..Wait.TV money??!!!!…

    Have people forgotten that West Ham have been gifted a new stadium, for which they pay a shameless 3 million a year. And that for a 80K seater. That moving from a 35K seater, seems like a huge vacancy to fill. No wonder there are discounts…

  6. Moss may be very corrupt Arthur, I domnot know. If you check his record of refereeing Arsenal games since his elevation to the elite group of PL officials we have never dropped a point when he has held the whistle, home or away.

    Villa will be rightly concerned.

  7. @ ARSENAL 13 -April 22, 2015 at 10:44 am – What’s the offer ? 2 seats for each supporter. Well with obesity and all , it may be timely .
    And more leg room, too. Will they all be cheering , ‘fat’ Sam?

  8. Where is the support?

    The Guardian is where I seen the story, but I suspect most of the work was done at twitter.


    I think that if there is a high resolution map, or better raw data, someone should get copies.

    Dividing the landsurface of earth into equal sized hexagons makes sense, the problem is determining the size of hexagon. Assign each team a colour (Arsenal got yellow), and colour hexagons by majority rule seems to be what was done,

    There are places which are nominally yellow (I may have errors): SE England, northern Europe, Sweden, Japan, Korea, Vietnam, Cambodia, NW coastal Africa, the notch in Africa, Chile, Amazon interior, and a reasonable chunk of USA and southern Canada.

    The article then zooms in on specific parts of the world, I don’t “know” UK geography, so I will leave that for others.

    The America’s: I wouldn’t have thought there were enough people in Iqualiut (sp) or Tuktoyuktuk (sp) to map, but they like Arsenal. The two red dots seem to be the upper Thelon Basin, and few people live there). Where I live seems to be painted Liverpool, bleech! I’m not sure where the Liverpool NW of me is, Watson Lake?

  9. Is it just me or is Arsenal breaking new ground in football, again. Arsenal just does not stand still, Arsenal evolves, and our oppositions have started to see “the light”, well some of them anyway.

    @Andrew Crawshaw
    Concerning Villa, i know what u mean, but it will have to be the ref AND a sending off of one of ours to stop us winning, depending on injuries of course what with the Chel$ game on Sun. Just hope injuries are minimal.

    This is the BIG one of the season.
    Can’t wait for sunday.

  10. Tottenham Hotspur liable for player brain damage.”

    To be fair, if they decided to play for Tottenham, they probably already were.

  11. I think I read somewhere that the Spurs balance sheet from which these figures come is a ‘preliminary’ one in that it includes last years sales (eg Bale) but not last years purchases (eg Soldado – who is now, it would appear, surplus to requirements).
    Spurs need to sell big to buy big in order to cover up for the mistakes of the past. And they’ll still struggle to get into the top four and to justify a new stadium.
    As for WHU – they are boasting of cheap tickets because they are too weak in the market to charge any more. And isn’t that policy exactly what Orient were complaining about years ago? When other clubs go out of business we’ll see whose side the fan organisations are on.

  12. I see from articles in the media that West Gam and Man city are better big held up as Heroes for having such low season ticket prices. Now I know you are a clever lot on Untold but can anybody tell me what these 2 teams have in common?

  13. I suppose the West Ham directors can revert to basics & attract punters with a voucher for a second hand porn magazine on each seat!! 😉

  14. As both the Arsenal and Spurs exist in the same neck of the woods, they are subject to the same market forces!

    The Arsenal employ 548 and 860 matchday temps.

    Spurs employ 380 and 570 matchday temps.

    It is the net pay that should be used:

    The Arsenal net was £146 millions approx.

    Spurs net was £89 millions. (including £5 millions approx for redundancy and impaired contracts!

    That is the trouble with the teenage scribblers, not comparing like with like.

    No, No, not you Tony!!!

  15. Insideright

    “I think I read somewhere that the Spurs balance sheet from which these figures come is a ‘preliminary’ one in that it includes last years sales (eg Bale) but not last years purchases (eg Soldado – who is now, it would appear, surplus to requirements).”

    Relating to this, I must admit to having a wry smile this week whilst reading in the rags how Spurs will be ‘offloading’ 90 Million pounds worth of surplus, not up to it players.

    The amazing thing is they said it without a hint of irony or contrition, which is quite surprising really considering how these where the same rags that where telling us how wonderful Levy and Spurs where for getting all these players in, in the first place.

    And in so doing embarrassing Wenger and Arsenal by showing them how this transfer business should be done, especially what with Wenger wasting his time playing volleyball and all !!!

    I think our friends in the aaa where merrily riding along on that particular band wagon.

    Ironic really, all that money spent, and if it wasn’t for Harry Kane they’d be a mid table side.

    Yep they really showed us there 😆

  16. In the news today are various reports about UEFA fiddling with seeding coefficients.

    Yes, if UEFA decides England isn’t worth 4 CL places, that is a big deal. Fiddling with seeding is something UEFA does, and is expected. Strong teams, seeded or not, should still have a reasonable chance.

    I seen Monaco successfully had a 0-0 game to get punted out of CL (Barcelona, Juventus, Real Madrid, Bayern Munich) semifinals.

    I think all of football should do what it can to remove 0-0 as a final score. Within the confines of quarterfinals CL, I think situations where a pair of teams tie both games (including the dreaded 0-0), should result in both teams having a chance of not being chosen for the semifinals.

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