Today, sportsperson’s salaries are a hotly contested topic in both national and international media. Recently, Raheem Sterling has been under the spotlight for his refusal to sign a £100,000 a week deal at Liverpool, a deal which manager Brendan Rodgers has described as ‘incredible’.
Last week, Bill Gerrard discussed the topic of analysing sporting efficiency using standardised win costs i.e. how much each team is paying for a win. For clubs, investments in players are made under the assumption that it will improve the clubs performance amongst other things such as increasing revenues through match day ticket sales, shirt sales and marketing. That being considered this article looks at the efficiency of Premier League club’s spending on players salaries.
Table 1 Premier League Clubs Spending on Player Salaries 2013-2015
Between 2013 and 2015, Tottenham have recorded fastest growth in annual salaries with £120 million being paid out in 2015, an annual average growth of 7.72%. This coincides with a period following the world record sale of Gareth Bale where the club bought spent £107 million on 7 players. Manchester United rank second in terms of growth in annual salaries after a similar investment at the beginning of the 2014/15 season following the clubs worst ever finish (7th) the previous year. While, Arsenal rank third in terms of growth in annual salaries of players courtesy of a change in transfer policy and the signing of players such as Mesut Ozil and Alexis Sanchez.
So the question remains who have been the most efficient club in terms of spending on annual salaries? Southampton rank first for points per £million spent on players salaries. So far this season, Southampton have accumulated 56 points in the Premier League having spent £55 million on player’s salaries annually. This represents £982,143 spent on players salaries per point accumulated. Swansea have also performed well spending £1.23 million per point on player’s salaries in 2015. Both clubs have recorded average annual growth in wages of just over 5% per year and have both sold some of their best players in recent seasons which make their current league position more impressive. League leaders and champions in waiting Chelsea have also proved to be quite efficient paying £179 million annually in wages while amassing 76 points, a £/point ratio of just over £2.3 million per point.
Stephen Brosnan is a Research Assistant at the Department of Economics, University College Cork.