Moving up a tier? Wigan and the Premier League financial league table

Posted by Tony Brown

Franco Di Santo celebratesEmpicsFranco Di Santo: Bound for Anfield next month?

Over the years, Wigan Athletic have delivered performances ranging from the majestic to the downright nightmarish - none more so than the 2010 season opener against Blackpool. A 4-0 home defeat to anyone would have been bad enough, but to a team who the pundits had already condemned to relegation even before a ball was kicked? It was to prove a difficult season for Latics, only securing safety on the final game of the season. It also went down to the final game for Blackpool, who put up an amazing fight before eventually succumbing to Manchester United.

An old Bob Dylan song reminds us that "Money doesn't talk, it swears." The primary reason the pundits had tipped Blackpool for relegation that year was the perception that they did not have enough players of Premier League quality. Their Chairman, Karl Oyston, was not willing to splash money around like confetti and put the club at risk of insolvency. Blackpool's salary bill that season amounted to just £14 million. Wigan's was almost £40 million. During that 2010-11 season Blackpool were to do the home and away double over a team with a salary bill almost 10 times that of their own. That was Liverpool, at £135 million.

In the end Blackpool couldn't quite avoid that relegation trap-door in the Premier League, where clubs regularly make huge losses in an effort to keep up with their peers. You could say Blackpool got it right. Their salaries amounted to only around 25% of their income - compared with the league average of around 69% - and this helped them gain a positive cash flow for the season. They continue to be run on a sound financial basis in the Championship.

Manchester City actually spent more on salaries than the revenues they had coming in, and even Aston Villa were leaking 92% of their revenue on salaries. No wonder Villa have since cut back, putting the emphasis on youth rather than established big-earners. It could be argued, however, that they have gone too far as the lack of quality and experience in this year's squad makes them candidates for relegation.

Statistics show that the Premier League is financially tiered. In the 2010-2011 season club salary levels published by the Daily Telegraph ranged from £14 million to an absurd £190m. The top three clubs in the table paid in the £150m-£190m range. The teams finishing 4th and 6th paid in the £120m-150m range, Tottenham bucking the trend by finishing 5th on a budget of "only" £91m.

Fulham and Everton, with budgets around £58m managed to finish ahead of Aston Villa, who spent £84m on salaries. Then followed a clump of clubs paying between £40m and £60m, which included West Ham who were to be relegated despite a wage bill of £56m. Wigan Athletic, Wolves and West Bromwich had salary totals between £37m and £40m, with only Blackpool below. It would be interesting to see salary levels for the current season, when these become available.

According to the Guardian " The Premier League's 20 clubs collectively made a loss of £361m last year, after spending all of their record £2.3bn income. Of the clubs which were in the Premier League in 2010-11, the year of most clubs' latest published accounts, eight made a profit, of £97.4m in total." Dave Whelan wrote off Latics debts for £48m in August 2011. He advocated financial fair play to ensure that debt is maintained at "reasonable and sustainable levels".

According to Alan Switzer, of accounting group Deloitte, clubs with salary to revenue ratios of 70% and above are not likely to make a profit. He suggests that levels should go down to the low 60s. In 2010-11, Wigan Athletic were around the 80% level, according to the Daily Telegraph stats, which indicates a negative cash flow of £0.1m.

The Daily Telegraph statistics show a clear correlation between salary levels and success on the field, although there are some exceptions. So how does a team stay afloat in a tiered Premier League? Do Wigan Athletic have to significantly increase salary levels in order to move up a tier in the league table? Would doing so make them financially less stable?

Last season both Mohamed Diame and Hugo Rodallega left at the ends of their contracts. A rough estimate might suggest that Wigan Athletic lost maybe £10m in potential transfer money for the two. Whelan rightly insists that Wigan Athletic keep a lid on their salary payments so it is unlikely that either player was given an offer he could not refuse to stay on at the club.

This season we have Franco Di Santo and Maynor Figueroa in their final year of contract. Both are key players. Figueroa has developed into an excellent left of centre defender in Martinez's tactical system. He could prove costly to replace. Di Santo has now added goal poaching to his repertoire and could be worth in the region of £20m on the open market if he continues to improve at this rate. When Martinez took over at the club various higher wage earners were sent packing to bring down the wage bill. He is now facing a dilemma in how to keep his top players from leaving at the ends of their contracts, given the total salary cap imposed by his chairman.

Given the factors above, is it possible for Wigan Athletic to consistently reach a mid-table position? Could they defy the stats on an annual basis, keeping a nucleus of good players, allowing a couple of stars to go for premium transfer fees each summer? In this way, the budget could be balanced.

The first step would be to already have the replacements for the stars ready and in place. The second would be to find a way to offer top players longer contracts at competitive rates, whilst maintaining a reasonable total salary cap. Food for thought for Bob and Dave.

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