A post by Ross reminds me that I haven't covered Deloitte's Annual Review of Football Finance 2012 yet.
Basic logic (the law of rents*) says that all increases in clubs' gross revenues will end up as higher players' wages, which I explained in the context of their reviews for 2010 and 2011.
So let's see if this stacks up, taking Deloitte's figures for the last three years for the "big five" leagues:
2010 Review: Increase in revenues EUR 230 million, increase in players' wages EUR 305 million.
2011 Review: Increase in revenues EUR 400 million, increase in players' wages EUR 407 million.
2012 Review: Increase in revenues EUR 169 million, increase in players' wages EUR 104 million.
In summary: over the last three years, total revenues have increased by EUR 799 million and total wages have increased by EUR 816 million.So yup, the theory holds.
* All additional profits accrue to the least elastic factor. If there is a limited number of 'the best footballers' (by definition there is) and clubs' revenues are growing, then the best footballers' wages soak up the increase; if there is a limited amount of land and a growing economy, then land rents soak up the increase.
Claptrap
14 hours ago
2 comments:
"All additional profits accrue to the least elastic factor. "
Which is presumably why in profit maximising sports leagues they restrict the number of teams that can exist. Thus whereas Premiership football clubs pay about 70% (with some clubs spending over 90%) of the revenues to players, in closed North American leagues it's generally about 50%.
R, no, limiting the number of teams exaggerates the effect rather than diluting it.
The point is that the net income of the 'clubs' (after players wages) is fixed at whatever it needs to maintain the pitch etc and the balance goes to players.
So if it costs £100 to run the club and total income is £110, the players get £10. If total income is £150, players get £50, and so on.
The reason why the North American leagues don't pay such high wages is because their total income isn't very high.
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