Mind the (pay) gap
Wonder whether Jabba's a regular reader of the BBC's website? Their Business Editor Robert Peston's opinion piece on the results of Deloitte's review of football finances for the 2009/10 season makes for very interesting reading, and contains some sage advice: "Disproportionately low spending on players' wages is probably not a sustainable strategy ... There is a clear correlation between survival in the top rank and a willingness and ability to pay those humungous players' salaries."
As we've said before, Jabba's stubborn determination to drive down the wage bill (and rein in transfer expenditure) is laudable in that it indicates a mature and responsible acknowledgement that clubs need to live within their means rather than blithely continue frittering away money unsustainably. After decades of financial risk-taking, it's remarkable that we appear to be taking a lead and trying to set an example while others go on overstretching themselves (although, of course, internationally imposed financial regulations are going to enforce this in due course anyway).
But, as Peston suggests, the danger of this is that clubs become so hell-bent on frugality that they cut off their noses to spite their faces - unwilling to pay big wages, so unable to attract (or retain) the players who have the quality to ensure avoidance of the financial meltdown that accompanies relegation. Jabba's apparent desire to ship out senior high-earning members of the squad - ASBO, Kevin Nolan, Alan Smith - may not be exclusively motivated by economic factors but those are the terms in which the refusal to meet contract demands is being couched. With a large, loyal fanbase and significant annual turnover we're surely in a better position than many of our Premier League rivals to afford the fees and wages demanded by some of the bigger-name stars?
As I said when looking forward to the next campaign recently, it all comes down to a question of ambition, really. As unexciting as it might seem, personally I'd probably be content with another season of comfort and consolidation, and another mid-table finish - too many newly promoted sides, buoyed by finishing well clear of relegation, then get grand ideas, overstretch themselves and crash back down into the second tier in disarray. But even realising that relatively modest ambition that will demand investment, and Jabba should heed Peston's warning: generally speaking, clubs get what they pay for.
As we've said before, Jabba's stubborn determination to drive down the wage bill (and rein in transfer expenditure) is laudable in that it indicates a mature and responsible acknowledgement that clubs need to live within their means rather than blithely continue frittering away money unsustainably. After decades of financial risk-taking, it's remarkable that we appear to be taking a lead and trying to set an example while others go on overstretching themselves (although, of course, internationally imposed financial regulations are going to enforce this in due course anyway).
But, as Peston suggests, the danger of this is that clubs become so hell-bent on frugality that they cut off their noses to spite their faces - unwilling to pay big wages, so unable to attract (or retain) the players who have the quality to ensure avoidance of the financial meltdown that accompanies relegation. Jabba's apparent desire to ship out senior high-earning members of the squad - ASBO, Kevin Nolan, Alan Smith - may not be exclusively motivated by economic factors but those are the terms in which the refusal to meet contract demands is being couched. With a large, loyal fanbase and significant annual turnover we're surely in a better position than many of our Premier League rivals to afford the fees and wages demanded by some of the bigger-name stars?
As I said when looking forward to the next campaign recently, it all comes down to a question of ambition, really. As unexciting as it might seem, personally I'd probably be content with another season of comfort and consolidation, and another mid-table finish - too many newly promoted sides, buoyed by finishing well clear of relegation, then get grand ideas, overstretch themselves and crash back down into the second tier in disarray. But even realising that relatively modest ambition that will demand investment, and Jabba should heed Peston's warning: generally speaking, clubs get what they pay for.
Labels: finances
posted by Ben at 1:07 pm
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