Most of us look at our labour rates. A restaurant owner will write her rota and give hours to waiters and chefs based on anticipated takings that week – for example 8% of takings will be spent on wages. I’ve been told Tesco store managers aim to keep labour below 5%.
Well, if you think you’re doing something wrong at 15%, 25% or 35% then think about running a football club. Fernando Torres, Suarez and Andy Carroll have sent the back pages in a spin recently but the underlying labour rate at football clubs is 60%!
Stefan Szymanski from Cass Business School has published a study that says 60% of a premiership football club’s expenditure is on players’ wages. The study calculates that it costs £7m to win a game, up from half a million at the start of the premiership. Assuming you need 28 wins to take the title, costs would be around £200m to lift the silverware.
Where on earth is the profit in this game? How can it survive on these labour ratios and systemic debt without scores of billionaire sugar-daddies willing to treat it as a hobby? Isn’t it the very definition of unsustainable?
Photo credit: Karen Horton