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Football, Finance and the Future: A Bubble About to Burst?
Wage inflation in professional football in England.
A look at the next table shows how wage inflation in football affects all levels of the professional English game:
| Wage:Turnover Ratio in the Four Professional Football Leagues in England |
| All professional clubs |
65% (52% in 1994-95) |
| Premiership clubs |
58% |
| Divisions 1 and 2 |
80% |
| Division 3 |
95% |
The result of the increasing wage:turnover relationship, the lower down the professional game you go, is clear. It will mean greater debt for the smaller and less successful clubs. The Annual Review of Football Finance cited on the previous page highlighted this fact; only five Nationwide League clubs (out of a total of seventy-two) made an operating profit
during the 1998-99 season. This compares to fourteen out of twenty Premiership clubs, in a similar position.
It seems that clubs in the lower leagues, more perhaps than their Premiership 'cousins', need to remember that transfer fees are paid out once, but wages are a liability throughout the period of a player's contract - irrespective of that player's performance on the football park.
Football is a labour intensive business, so wages form a higher proportion of turnover than in most other industries. Whilst football clubs clearly have other overheads to finance, none of these are likely to rival players' wages, in scale.
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