Brief Analysis of the Premier League Big Six Wages as a % of Revenue
In the highly competitive world of football, financial management plays a critical role in determining a club’s success and future sustainability (Financial Fair Play). One essential aspect is understanding how much of a club’s revenue is allocated towards player wages. In this article, we look at the wage percentages of the Premier League’s Big Six clubs — Liverpool, Arsenal, Manchester City, Tottenham Hotspur, Chelsea, and Manchester United. The data reveals intriguing insights into the financial strategies of these football powerhouses.
What is the ratio?
The wages to turnover ratio is a key performance indicator used by businesses to evaluate the efficiency of players as a generator of income of the clubs revenue. The relationship between wages and revenue highlights the following; A low ratio indicates that more revenue is being generated per player. On the other hand, clubs with a relatively higher wage to sales ratios would often consider selling players in order to improve the ratio. This metric is used in some variants of Financial Fair Play and UEFA recommend that clubs should aim to ensure that the wage control ratios are kept below 70%.
Wages/Turnover x 100
Premier League Big Six Wages as a % of Revenue:
The graph illustrates the following wage percentages as a proportion of their revenue for the 2021/22 season:
Chelsea and Manchester United’s High Wage Percentages:
Chelsea and Manchester United stand out with the highest wage percentages of 71% and 66%, respectively. These figures indicate that a significant portion of their revenue is being invested in player salaries. While high wages can attract top talent and contribute to on-pitch success, this is not always the case as we have seen with Chelsea this past season which saw them finish 12th, behind teams such as Fulham and Brentford.
Liverpool, Arsenal, and Manchester City’s Balanced Approach:
Liverpool, Arsenal, and Manchester City demonstrate a more balanced financial approach with wage percentages ranging from 57% to 62%. This suggests that these clubs may be managing their finances more prudently, striking a better equilibrium between player salaries and other operational expenses. A balanced wage structure indicates they are likely to be more financially stable as well as provide enough room for potential increases in wages paid out to potential targets in the future. An example of this would be Arsenal in this current transfer window, they were able to offer lucrative contract deals to the likes of Kai Havertz and Declan Rice.
Tottenham Hotspur’s Lower Wage Percentage:
Tottenham Hotspur’s wage percentage of 47% is the lowest among the Big Six. This indicates that the club is spending a smaller proportion of its revenue on player salaries compared to its peers. A lower wage percentage suggests that Tottenham may be emphasising financial sustainability, operating within a more controlled budget, and possibly investing in youth development and value-oriented player acquisitions. It does not surprise us as Daniel Levy has done a remarkable job on the business side of things for the club. However, there are still big question marks as to whether he has the capabilities to handle the footballing side of things at the club.
The graph offers valuable insights into these clubs financial management strategies. Chelsea and Manchester United’s high wage percentages raise questions about long-term financial sustainability of the club and whether they will be able to produce the on the field successes to justify their actions. On the other hand, Liverpool, Arsenal, and Manchester City’s more balanced approach indicates better financial management, which is focused on finding the right talents at a reasonable price.
The data also highlights the varying financial philosophies among these football giants, with Tottenham Hotspur opting for a more cautious approach to wage expenditure. Ultimately, successful financial management plays a pivotal role in a club’s ability to compete at the highest level and maintain long-term stability in the ever-evolving landscape of football.
