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Thursday, August 5, 1999 Published at 15:30 GMT 16:30 UK

Business: The Economy

Footballers proving 'too costly'

Michael Owen: one of the biggest names in a top-heavy industry

The annual review of the financial health of the English football industry has found that money is pouring into the game - but is pouring out even faster, mainly through the escalating costs of players.

John Thorne reports on how small clubs can compete against wealthy large clubs
The review - of the 1997/98 season by accountants Deloitte & Touche - also found that the gulf is growing ever wider between the elite clubs and the rest of the industry.

The report says the total wage bill is at a critical level in every division, and in Divisions Two and Three it is 84% and 97% of total income respectively.

[ image: Chris Sutton: one of this summer's big-money signings]
Chris Sutton: one of this summer's big-money signings
The five biggest Premiership clubs have a combined income greater than that of the entire 72 clubs of the Football League.

The profits of the 20 Premiership clubs topped £100m for the first time, while the 72 League clubs made losses totalling £52m.

The review said that, while the total income of the English clubs was up a healthy 23%, the total wages and salaries bill grew by 33%. It was the second year running in which wages grew faster than income.

Big business

In recent years, the leading clubs have been going through an increasingly rapid transformation into multi-million-pound businesses capable of matching the best in the world.

Report author Jason Zillwood: "Boom times for football are going to continue"
This means being able to afford a squad of top players big enough to cover the inevitable injuries and suspensions, without which no club can remain competitive in the long battle for trophies throughout a season.

But the best players cost many millions of pounds to buy and many more per season in wages.

This has given rise to concerns about whether many clubs could go out of business, and also about the emphasis on bringing in foreign players at the expense of developing home-grown talent.

The report highlights the fact that the industry must address these concerns if it is to have a successful future.

Good value

One of the most interesting findings of the study is that there is little direct correlation between high spending on players and high league positions.

Some clubs, it seems, are much better at extracting good value from their players than others.

Also, pre-tax profits in excess of £1m are not the exclusive domain of Manchester United, Arsenal, Chelsea, Newcastle United and Aston Villa. Crewe Alexandra, Stockport County, Stoke City, Gillingham and Carlisle United joined the illustrious list.

Huge adjustment

The report says that promotion to the Premiership means growing from a £7m business to a £15-20m business in 10 weeks over the summer.

Building an appropriate infrastructure cannot be done in that time and it is hardly surprising if promoted clubs are relegated again the next season.

The Premiership is still the biggest in the world, generating £569m, compared to £400m by the Italian Serie A, £345m by Spain's Primera Liga and £185m by the French Division One.

Gerry Boon, head of Deloitte & Touche's football industry team, said: "The average Premiership side generated income of £28.5m, compared to £22.2m in Italy and £19.2m in Germany.

"That represents a lot of competitive advantage. Let's turn it into trophies."

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