Premier League: higher wages = higher league position

Looking at the Deloitte analysis of “Annual Review of Football Finance 2022” the correlation between wage costs and league position is still very strong. Overall wage costs actually increased by 5% to £3.5 billion in 2020/21 eventhough clubs had agreed to wage cuts with the impact of COVID-19. However with revenue outstripping the growth in wages, the division’s wages/revenue ratio has reduced from 73% in 2019/20 to 71% in 2020/21.

Notable points from the graph are:

• Big 6 clubs (Manchester City, Manchester Utd, Liverpool, Tottenham Hotspur, Arsenal and Chelsea) increased wages by 7%.

• Manchester City has the biggest wage bill and revenue level.

• Leicester were the biggest spenders outside the top 6

• Fulham (relegated) and Crystal Palace had the highest wages/revenue ratio at 98% & 95%.

• Sheffield Utd and Tottenham Hotspur had the lowest wages/revenue ratio at 49% & 57%

• Both Sheffield Utd and West Bromwich Albion were relegated and spent the lowest on wages – £57m and £77m. Burnley was the next lowest at £86m but managed to avoid relegation by finishing 17th.

• The big six accounted for 51% of EPL wage costs.

• The wage gap between 6th place (Tottenham Hotspur) and 7th place (Leicester City) was £13m.

• *Spearman’s correlation coefficient increased from 0.66 in 2019/20 to 0.87 in 2020/21 – means a stronger correlation between wages and league position.

*Spearman’s rank correlation measures the strength and direction of association between two ranked variables.

Source:

Deloitte “Annual Review of Football Finance 2022”

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