Thursday, 23 January 2014

The Rules of Football (4)

From Deloitte's Annual Review of Football Finance:

This year they spared us the wailing about "players' wages keep increasing as a % of club revenues" and even saved me the bother of pointing out that nearly all increases in club revenues go into higher wages:

Europe's premier leagues

• Within the Premier League total [revenues] of £2,360 million for 2011/12 [up by 4%], Premier League clubs' revenues ranged from £320m (Manchester United) to £53m (Wigan Athletic)...

Wages and transfers

• The total wage bill, across all employees, of Premier League clubs in 2011/12 was £1,658m (up 4%), ranging from £202m (Manchester City) down to £35m (Swansea City).

• There were six Premier League clubs with total wages above the average of £83m, all of which finished in the top eight positions in the table. 13 Premier League clubs had total wages in a relatively narrow range between £35m and £64m…

• Premier League clubs' total wages are projected to have been c.£1,800m for the 2012/13 season. Given the upcoming step-change in 2013/14, the key question is how much of the extra £600m revenue will be spent on wages?

• If historic trends are repeated, increasing wages will absorb about 80% (£480m) of the extra revenue.


DBC Reed said...

So what's the problem, capitalism-wise? The fact is that all the big clubs are desperately looking for the big name marquee signings like Ronaldo and Messi and there are not enough to go round.Supply (limited) demand (enormous) = inflation, surely?

Mark Wadsworth said...

DBC, it's not "a problem", the situation is exactly as you describe it for those reasons.

Kj said...

So in this situation,, does higher rate taxes fall on the player or the club?

Ben Jamin' said...

What would be the effect of a tax on seating at football matches?

Players moving abroad to play instead probably, but if this was a Euro Tax, this might work in reducing wages?

Mark Wadsworth said...

Kj, BJ, if all countries with big leagues imposed the same high income tax, then it would have no behavioural effect and the players would bear the tax (they actually get rent, not wages).

If only one country did it, then better players would leave that country and/or clubs in that country would bear the tax.

BJ, there is a tax on seating at football matches, it's called VAT.

And their biggest source of income is TV rights and so on, which AFAIAA is also subject to VAT.

VAT is a "Euro tax" and in this instance is not the worst tax.

As things stand, the VAT almost certainly reduces the amount of revenue going to the players.