Evolution of Money in Football - A look at the rising wages of players & managers in football compared to other sports, & how things have changed
There is way too much money in football these days. In this first part of a series which examines the extent & impact of money in football, we take a look at the evolution of earnings of players, how much do the top players and managers earn today.
When I was a teenager at Dundee and I saw the senior players I used to think "Well if I'm with Arbroath at that age,getting £30 a week and all the kippers I can eat, I'll be doing pretty well for myself." - Gordon Strachan
Paradigm shifts in the History of Wage Structures
In 1901, we had a wage limit of £4-a-week in England. It took over 20 years for that maximum amount to double to £8-a-week in 1922, which was subsequently raised to £12-a-week in 1947. It was an entirely different game those days.
In 1961, the first paradigm shift in the way players were paid happened as the wage limit was abolished. When Fulham's Johnny Haynes became the first £100-a-week player in football that year, people were shocked at the ridiculous amount of money in the game. These days, you need to multiply that a thousand times to raise a few eyebrows.
Wages have been steadily increasing in football since the days of Johnny Haynes, like is most other professions. The legends of Manchester United's 1968 team were apparently on about £250-a-week of wages, making a little more from endorsements. Then in 1979, Peter Shilton became the best paid player in Britain with a £1200-a-week salary at Forest.
The 2nd paradigm shift which radically changed the amount players were paid was down to the start of the golden age of Serie A. Brasilian Falcao became the first player to cross 5 digits a week with a rumoured £10,000-a-week salary in the 80s. Roberto Baggio was rumoured to be on a $2.5m a year ($50,000-a-week) salary at Juventus in the early 90s, at the peak of Serie A's golden age.
Then we had the 3rd paradigm shift, which dramatically changed everything. A landmark European court case in 1995, the Bosman ruling gave freedom of movement to out-of-contract players. With clubs now able to get star players for free, part of the transfer fee "savings" were transfered to player wages. Agents of other players who did not benefit from Bosman-style wages negotiated parity for their clients. Pre-Bosman, Chris Sutton was the highest paid player in England on a salary of £10,000-a-week in 1994 at Blackburn, and by 1996, Ravanelli was rumoured to be on a salary of £40,000-a-week at Boro!
Such was the impact of the Bosman ruling on wages, and by the 2000s the wage bill of clubs started to hit the roof. In 2001, Sol Cambell became the World's first £100,000-a-week player, moving on a Bosman from Spurs to Arsenal. The six-digit-a-week barrier had been broken, and all hell was about to break loose...
Top 20 highest Earning Players
Last month, France Football magazine released the rich list of football. Below is their list of top 20 richest football players, based on annual earnings derived from wages and sponsorship deals.
Messi earned a staggering €33m, which probably included about €3.6m of bonuses from winning the treble last season. Does he deserve to earn so much, is any one player that important to merit that much, is debatable. But if any player is worth that much money, its Messi. Brand Beckham is still second, and in reality, only second due to the weakening dollar against the euro. Ronaldo is third at €29m, and Eto'o's record breaking move to Anzhi makes him the 4th highest earning player.
Lets analyse these 20 names to see which league and country is contributing to these massive salaries.
As we can see from above, the Premier League is contributing to 35% of the top 20. This is an increasing number, which is a little worrying as the financial state of English clubs is not the best. What is most interesting, is that the Chinese Super League is contributing 2 of the top 20 wages in football! Thats a growing "dragon", I can see that 10 years from now China may be dominating this list.
People often wonder if we will ever see the first 7 digit-a-week footballer, a player earning over 1,000,000-a-week! While UEFA's Financial Fair Play, which came into effect from this season and will only grow in significance, will delay the player wages reaching 7 figures a week, I guess it is inevitable. And looking at the fast growing "dragon" economy of the east which caters to an audience of over a billion people, I can see a Chinese club breaking this barrier within a decade. Or a Russian, American or Arab owned club. Specially if you imagine someone like Messi or Ronaldo moving on a Bosman, its very possible. In a 4 year deal, if you factor in the transfer fee of someone like Messi at about €100m (If Ronalso went for €98m two years ago...) and a salary of about €30m (Eto'o is on €20m now, throw in image rights and that salary is within the realms of possibility), that relates to a total of €220m, which is over 1,000,000-a-week in wages. Hmmm... thinking about it, this may not even take 10 years.
Top 20 highest earning managers
Lets take a look at how much are the top managers making, according to France Football magazine.
Jose Mourinho on top comes as no surprise to anyone. I guess he has more than justified his salary by winning what he called his "most difficult title ever". The newly rich clubs of PSG, Anzhi, and Malago also have their representatives in Ancelotti, Hiddink and Pellegrini in the top 20, no surprise there either. I am a bit surprised at how much China are paying Camacho for their National Team, yet another example of the growing money power of the eastern sconomies.
Lets see which leagues these coaches are concentrated in, and which country do these originate from.
Clearly, the Premier League leads the charts in money power with 35% again. Thats where the money clearly is these days. More interestingly, Italy leads the origin of the best paid coaches these days, with 4 candidates in the top 20, even though none of these top 20 coaches coach in Serie A. Italian coaches are becoming the fashion these days, possibly down to the strong emphasis on tactics in the peninsula. Top 5 Italian clubs namely Milan, Juve, Inter, Napoli and Udinese, all have upcoming coaches of Italian origin who could soon enter this list, as could Prandelli once he is finished with the Azzurri. But we digress.
Another interesting survey released this week was the ESPN and sportingintelligence.com's survey of Top 278 best paying sports teams in the world. This survey looked at the average wages from top teams covering 7 sports and 10 countries, and included over 100 football clubs in its Top 278. Lets take a look at the average wages at the top 30 clubs, from the start of the 2011-12 season.
Top 30 highest paying clubs
Top 2 are no surprise, the Spanish giants paid dearly for their bunch of superstars last season. The high salaries of the Italian teams is mainly due to the long contracts of their aging stars, even though these have been declining over the last 2 years. Also if your transfer strategy benefits from 30+ year olds on low transfer fees, you will end up paying high salaries. Inter have dramatically cut their wage bill down over the last 12 months, and Milan have a lot of contracts of aging players ending this summer, so I can see the average salaries of Italian clubs falling down even further by next season.
Lets analyse this a bit further, take a look at the two tables below.
There are too many English clubs in the top 30, and that might start dragging the league down as the impact of FFP starts growing more significant. You can see that from the table on the right above, the average salary of a premier league player is about €2.4m! Thats quite a bill to carry, even with the high gate reciepts in this country.
Another interesting observation, is that Bundesliga has as many as 8 (27%) teams in the Top 30, and a higher average salary than Serie A or La Liga. But if you compare the average salary of their top 10 clubs (€2.2m), its lower than the other three leagues (EPL €3.5m, La Liga €2.3m, Serie A €2.3m). This means that the salary disparity between the top half and bottom half in Bundesliga is the lowest of these leagues. Yet another indicator of the good financial health of the Bundesliga, the best managed league of Europe.
How does this compare to other popular sports?
LA Lakers top the list of all other sports with average salary of about €4.7m, the NBA team well below the two Spanish giants of football, and the two newly rich EPL sides. The next is Baseball team NY Yankees also at €4.7m, ahead of Milan at No 7. The list is then dominated by NBA and Football clubs, with a few baseball teams thrown in. Infact, the next top ranked sports team (if you take out these 3 sports) is Kolkata Knight Riders, the cricket playing IPL team from India, with an average (annualised) salary of €3.2m, ranked at 36 on the list. Luckily, that's one fast growing economy not that interested in football... yet.
So while 20 years ago football was not even close to the highest paying sports on the planet, the pay packets in the game have risen astronomically. Football is now one of the highest paying sports, and while FFP may slow down the rate at which the pay packets are growing, growing popularity in "dragon" economies will ensure that we see a €1,000,000-a-week player in the near future.