Analysis: Wage control – more than ever the elephant in the room for Premier League clubs

By David Owen

May 13 – So, it’s official, more or less. The Premier League’s website confirms what has been widely reported, that “the UK renewals for the next broadcast cycle – from seasons 2022-23 to 2024-25 – will be concluded at the same overall value as the current arrangements between the Premier League and its broadcast partners”.  

This, the league goes on, “will provide financial certainty to clubs throughout professional football”.

The problem is the financial certainty that it provides is that the chief revenue stream for most participants in the English top tier looks like being at best flat for another three years. This when cumulative pre-tax losses for the covid-hit 2019-20 financial year are set to weigh in at somewhere in the region of £1 billion. That’s £50 million per club on average, or £1 million per week each.

True, 2020-21 may not be quite so bad because it will include, as well as the current campaign, revenues from the delayed conclusion of the 2019-20 season. But that still leaves four more years before there is any hope of the sort of jump in domestic broadcasting income that clubs used to be able to take for granted with each new three-year deal. How will clubs cope?

Well, for the Big Boys, revenues from UEFA competitions may still continue to grow, as may international media rights. Developments at other sports bodies suggest that commercial/marketing revenues may also hold potential for growth, particularly if the wider economy enjoys the sort of post-pandemic bounce we are all hoping for. Mind you, servicing blue-chip sponsors to their satisfaction tends to take a lot more imagination and elbow-grease than simply cashing the TV rights cheques as they come rolling in.

The transfer market may also continue to provide a certain amount of relief for some, especially if it is perceived that financial fair play has fallen somewhat into abeyance. But willing buyers may be thin on the ground – it is hard to imagine Super League “villains” Barcelona, Real or Juve splashing much cash this summer, although Manchester City seem poised to take advantage of what has become a buyers’ market – and there seems little doubt that player valuations have dropped.

And with so much uncertainty about the future, leveraging up can be only a temporary sticking-plaster, especially at the sort of fancy interest rates some clubs have already begun to fork out.

That leaves cost, ie wage, control as the obvious path to restored financial equilibrium – except that it is something clubs have proved terribly bad at throughout the Premier League era.

In the absence of some sort of league-wide wage cap – sure to be fought tooth and nail by arguably the most effective trade union still in existence – this is most likely to be realised in dribs and drabs, as the contracts of journeyman players are run down, month by month.

It would be a mightily slow process, however, with five, five-and-a-half, even six-year contracts, which enabled hefty transfer fees to be amortised over a relatively long period, not unknown.

It makes little sense to talk of austerity, given the sort of sums most Premier League players rake in, and the mega-stars, with the biggest marketing deals to top up their salaries, will still command telephone-number pay-cheques. For the majority, though, this TV rollover may finally signal that gravity is about to reassert itself.

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