First Team Star
Jun 22, 2010, 3:35 AM
Post #4 of 5
Your post on another thread:
The Norwich City chairman says you need to average around 35,000 or above to break even as a Premier League club - only around half the division reaches this (9/20). And yet, according to figures you have relayed, the Premiership has overall profitability. I'm replying here as the tables/charts above provide a useful context.
I do not doubt any of this. Clubs such as Liverpool and Manchester United were turning in good profits, before leveraged takeovers started eating into them, while many clubs at the lower end of the table are losing money, and have no hope of turning this around.
However, it does not have to be this way - there is one obvious cost that can be brought down until the club breaks even, players' wages. If one club acted on this, then it would effect their competitiveness. If half the division or more did so together, then it would bring down players' wages. It will not even cause an exodus of foreign mercenaries, as the Premier League could still be offering competitive salaries with all the other major leagues.
I suppose no one is suggesting a maximum wage in this day and age. A salary cap as the total amount a club can spend on player wages as a percentage of total revenue might be feasible. Somewhere around 60% is what the accountants seem to think is sustainable.
Apart from the difficulties and added costs of monitoring clubs' accounts, it means clubs can only grow organically, and stymies the working of a free market.
A modified guarantee system might work better. If a club spends more than 60% of its revenue on player wages, then the owners/directors of the club should be required to provide guarantees for a substantial part of the excess amount.
Financial penalties for breaches, such as fines as a percentage of the amount in excess might help deter cooking of books.
I also think that increasing the pyramid not only reduces the risk of the smaller clubs in the Premier League over-extending themselves, it also creates a more level playing field within each level of the pyramid.
It doesn't address previously incurred debt (including from leveraged takeovers) and any costs of ground development, which can be substantial.
(This post was edited by rainjar on Jun 22, 2010, 8:20 AM)