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Premier League Clubs Spend Big To Avoid Relegation

Tue 10th Nov 2015 | Money & Finance

The wage spending of English Premier League clubs to avoid relegation is 40% higher than that of Italy’s Serie A and almost five times that of Spain’s La Liga clubs according to research released today.

According to KPMG’s Football Benchmark Team who investigated the total staff costs* spent by football clubs finishing one place above relegation zone in four of the five major European leagues found that Premier League clubs spend the most to secure their position in the league.

The analysis covers football clubs which avoided relegation in the three seasons between 2011/12 and 2013/14 in the English, Italian, French and Spanish top divisions.

Based on available information, the English Premier League the wage spending by Premier League clubs hoping to avoid relegation is consistently higher than in the three other countries analysed.

The average wage expenditure of the Premier League team one place above relegation between 2011/12 and 2013/14 seasons stood at £107m (EUR 72.6m).

The research also showed that Premier League wage bills at clubs hoping to avoid relegation grew steadily over the three year period analysed, from the £97m (EUR 69.2m) spent by Queens Park Rangers in 2011/12 to £110m (EUR 78.4m) invested by West Bromwich Albion in 2013/14 season, an increase of 13%.

However, it’s noted that the gap between the Premier League and other European leagues may further increase as the new £5bn broadcasting deal becomes effective from the start of the 2016/17 season, representing an increase of approximately 70% compared to the deal currently in place.

This will result in bigger budgets available to English clubs and, ultimately, could put upward pressure on staff costs at those clubs looking to avoid relegation.

Andrea Sartori, Head of KPMG’s Sports Practice commented: “It is very interesting to note that, in the time period between 2011/12 – 2013/14, the three Italian teams which avoided relegation in those years generated, on average, revenue of EUR 52.6 million, suggesting a high level of financial instability, as their proceeds were almost entirely eroded by wages.

“However, data for 2013/14 season shows a positive movement with UC Sassuolo avoiding relegation after spending close to EUR 10 million less in total staff costs than the two clubs one place above the drop in the previous two seasons in Italy.”

French Ligue 1 and Spanish La Liga have much lower total staff costs deemed necessary to help avoid relegation, with wage spending being in the range of EUR 15 million - EUR 25 million per club per season. With the new Spanish broadcasting model of collective selling starting next season, we may see upward pressure in terms of costs and total wages for clubs seeking to retain a place in the Spanish top division.

The hypothesis that the higher the expenditure on wages the more likely it is that a club will avoid relegation is generally borne out from the data. This hypothesis is evident in Italy. In Serie A, the clubs who managed to finish one place above the drop-zone over the period 2011/12 – 2013/14 have always invested more than the relegated clubs.

An exception to the rule however, is, Queens Park Rangers who were relegated in 2012/13 despite investing 36% more in staff costs than Sunderland AFC, who survived.

The exceptions over the years show that there may not always be a direct and exact correlation between wage expenditure and on-pitch performance. Other factors such as influential coaching and effective playing skills, team togetherness or luck with injuries, just to mention a few examples, continue to influence a club’s survival in the top division.

Posted by: Aaron Gourley

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