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Salary / Revenue Ratio

By Louis Platt :  01/06/2008 :  Comments (10) :

I was interested if not a little concerned to read that Everton spent 75% of their revenue in the 2006-07 season on wages (?wages? apparently also covers agent fees).

The club were left with a deficit of £8.1million that season despite finishing 6th in the league; also our total wages paid (£38,427,000) was below the average in the Premier League (£48,450,000) and 9th highest in the league. We were well and truly punching above our weight as all the ?top four? teams had a wage bill more than double ours whilst Spurs ?  and Villa?s bill was £5million greater.

According to football finance expert and Evertonian Prof. Chris Brady ?If you can keep your expenditure on salaries below around 55 per cent of your revenue, you are going to be viable.?

Going by that logic, Everton needed to increase revenue by £10,247,200 in 2006-07 to be a viable business. That is quite simply shocking and to me confirms more than anything how David Moyes is carrying the club as without him and the prize money his team earned we would have been struggling even more so. If Everton?s wage bill was 55% of revenue then Everton would have been the fourth lowest paying club in the Premier League that season. When you take into account that Everton had the 7th highest average attendance in the country that year, all signs are pointing to Everton?s need to develop a way of gaining revenue from outside of Football.

Here?s a table showing Wages/turnover ratios of Premier League and Championship clubs in 2006-07:

Team Name

% of turnover
used for wages

Tottenham

42

Man United

44

Arsenal

50

Sheffield Wednesday

51

Sheffield United

57

Liverpool

58

Watford

58

Reading

59

Bolton Wanderers

60

Norwich City

60

Premier League Average

63

Manchester City

64

Plymouth Argyle

65

Southampton

65

Ipswich Town

68

Chelsea

70

Newcastle United

72

Leicester City

73

Wolves

73

West Bromwich Albion

73

Everton

75

West Ham United

76

Hull City

77

Championship Average

79

Middlesbrough

80

Aston Villa

82

Birmingham City

85

Blackburn Rovers

85

Stoke City

88

Fulham

89

Portsmouth

90

Cardiff City

90

Sunderland

90

Queens Park Rangers

94

Charlton Athletic

95

Preston North End

97

Wigan Athletic

100

Coventry City

101

Burnley

102

Derby County

125

And another showing the amount in wages spent by Premier league clubs from 2006/2007:

Chelsea

132,817,000

Man United

92,310,000

Arsenal

89,703,000

Liverpool

77,589,000

Newcastle

62,475,000

Premier League Average

48,450,000

West Ham

44,160,000

Tottenham

43,804,000

Aston Villa

43,194,000

Everton

38,427,000

Middlesboro

38,270,000

Portsmouth

36,888,000

Blackburn

36,712,000

Man City

36,381,000

Fulham

35,169,000

Charlton

34,297,000

Bolton

30,715,000

Reading

29,815,000

Wigan

27,480,000

Sheffield United

22,421,000

Watford

17,636,000

Some reports also say that the club was below the league average for stadium utilisation last season. I do not find this surprising and have often wondered why the Everton reserves can not also play at Goodison Park. I believe that introducing a new pitch surface technology would allow for first team games and reserve games to be played) with little or no problems, the cost of installing the pitch would no doubt be cheaper than paying to use the Halton Stadium.
This is not as far fetched as you may think and there are many examples of a multi-use-stadium in the United Kingdom.

  • Wigan Athletics? JJB Sports stadium also host Wigan Warriors Rugby team games
  • Hull City?s KC Stadium is also home to Hull FC of the Rugby Super League
  • Doncaster Rovers Keepmoat Stadium is also home Doncaster Rugby League Club and the ladies football team Doncaster Belles.
  • Huddersfield Town's Galpharm Stadium is also home to the Huddersfield Giants and plays host to international rugby games.

All of the above can also host concerts. Following Huddersfield's example, a way of increasing revenue would be to host interanational football games, Arsenal have hosted several Brazil games and Brentford (also in London) have hosted an international game between Ghana and Nigeria and that brought some much needed money to the club.

Doncaster boasts that their pitch uses ?an innovative mix of synthetic fibres and natural grass?. I never thought I?d be suggesting Everton follow Doncaster?s example. Whilst most Evertonians are proud that Goodison Park was the first football-specific stadium, the club really should be looking to redevelop it into a multi use stadium to help increase revenue.

Reader Comments

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Anthony Newell
1   Posted 01/06/2008 at 22:04:46

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Some concerning info there but no surprise. I agree that a stadium needs to be generating income all year round and as much of it as possible. That is why I’m strongly for being close to the city centre and not in some out-of-town wilderness. When it comes to making sound business decisions I wouldn’t trust the current lot with running a Church tombola
Louis Platt
2   Posted 01/06/2008 at 22:21:26

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Anthony, you share my feelings too but I don?t really want this to turn it into a Kirkby debate.

Since I posted this article to TW, I?ve been told that St Helens Rugby Club wanted to use Goodison Park in February last year to host World Club Challenge games but Everton asked for too much money and Bolton Wanderers took the business.

Also another statistic is that without the top four, the average total wages paid by a club are £36,115,250 (Everton are £2,311,750 above that).

Here is another quote from the same professor regarding artificial pitches and a possible method of generating more money on a match day:

"Take a simple example, they have to think about the advantages of artificial surfaces which are now virtually indistinguishable from real grass.

The advantages are that you can use the pitch for any variety of activities (rugby, American football, concerts etc). You could also use it for youth and reserve games before the main game. In that way more people would watch the youngsters developing, spectator arrival would be staggered, more food would be purchased."

Colin Wordsworth
3   Posted 01/06/2008 at 22:42:09

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I think this must make disturbing reading for all Evertonians.

It does show that we are punching above our weight as a football club, at least the much maligned KW is correct on this point!

I feel that the club need to be more radical than just lay a new pitch.... which I believe is in the process already. We are desperate for more corporate funding.
Alex Carew
4   Posted 01/06/2008 at 22:45:55

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Am I right in thinking that as these figures are for 2006-07, the figures might be slightly different for last year?

We had a European adventure, a decent league cup run and a 5th place finish. We also became a more recognisable club on and off the field and also the Sky money improved dramatically!!!

So it's just quite possible that its not as bad as it all seems, why not take a look at the 1998 or 1999 figures and tell me what you find.

Also, our gate receipts are worthless if we have the lowest entries in the league, unfortunately we would need to increase ticket prices or as you said move home to make these worth considering.
Eric Myles
5   Posted 02/06/2008 at 02:58:19

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I remember in the 60’s and early 70’s going to reserve games at Goodison and England Schoolboy games too. So it can be done.
Paul O'Hanlon
6   Posted 02/06/2008 at 08:04:57

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Scary article Louis. I?ve seen these figures before and it does make me wonder where the hell we?re going to find decent funds this summer without outside investment or further borrowing.

I can?t see this season?s figures being too much different as the UEFA and League Cup runs brought in minimal additional funds. So that just leaves the extra TV money and (as with all PL clubs) the players will have taken this with wage rises. We did sign most of the first team on new contracts this season after all, not to mention new players like the Yak coming in as a high earner.

I really don?t see how moving reserve games back to Goodison will help improve our finances as they hardly sell out! There?s a few hundred to a thousand in attendance at most and don?t season ticket holders get in for free or discounted anyway? Then you have to take away the operational and maintenance costs of the stadium. I?m sure if it made us money they wouldn?t of moved the games.

Although using the stadium for more than just home matches is the way to seriously increase revenues, however with the old lady in the state it?s in we?ve got no chance of hosting anything decent. Look McCartney?s home coming this weekend, was Goodision mentioned once as a possible venue? Never is and probably never will be if that lot build a super new shiney bowl a stone?s throw away.
Graham Atherton
7   Posted 02/06/2008 at 15:56:27

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As usual figures like this are designed for headlines rather than accuracy.

Those figures exclude turnover from merchandising as that was outsourced to JJB in the previous year. In the year prior to the JJB deal the turnover due to merchandising was around £9 million. Add that figure back in and you get 63% wages/turnover



Feels a bit better?


NB turnover isn’t profit or revenue it is total VOLUME of business
Neil McKinney
8   Posted 02/06/2008 at 19:48:38

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Firstly, I would agree that EFC could probably do better than they do in generating revenue from GP. It is no secret that we are hardly setting the standard when it comes to maximising revenue and marketing the club.

However...

"Take a simple example, they have to think about the advantages of artificial surfaces which are now virtually indistinguishable from real grass."

I don’t buy that shit for a second. Has this professor ever played footy on one of these artificial pitches? I very much doubt it. They may be getting better but they are a long way from being a viable surface for top-flight football!

And as for Wigan... did you not see their pitch for the last three months of the season? It was a fucking disgrace, as are many of the pitches that serve dual Rugby/Football purposes.

I am yet to be convinced that artificial pitches will work. I am open to the idea as it would solve a lot of problems that this rain ridden country has, but at the moment they are a long way off. Put that idea back where you found it.

The point of your article is one which I, in essence, agree with. However, some of your reasoning and conclusions are non-starters for me.

COYB!!
Brian Baker
9   Posted 03/06/2008 at 11:35:07

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Everything will be higher for 2007-08.

Don’t forget most of our top players got pay increases last summer aswell!
Ryan Rooney
10   Posted 03/06/2008 at 12:27:41

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Neil, to be honest I agree with Louis and the Professor.

Louis’ conclusions are valid and for the information he had to hand, I agree with his conclusion. But as was pointed out the catering and merchandise deals are excluded although I think Graham Atherton’s figure of £9million sounds too high though.

After a quick google search, I found that the professor is the Dean of Business at Bournemouth University. The professor in question is a former semi-pro and has a lot of FA coaching badges and he wrote a book on football management so he does know what he’s talking about.

The technology for artificial pitches is almost here and I believe that all premiership games will be played on artificial grass by 2012.

Although I am surprised I hadn’t heard of him before, he can’t be much worse than Tom Cannon :)

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