Million plus salaries cripling football clubs

Football shooting self in foot

As the football transfer window opens across Europe, clubs are working around the clock to attract top class players and renegotiate contracts to hold onto their brightest stars. This period, sometimes known as the ‘silly season’, is a time when tens millions of pounds can exchange hands in a matter of minutes.

But a leading financial adviser has warned clubs to act with caution and rein in player wages, which are spiraling out of control and creating unsustainable businesses.

Deloitte, which provides consulting services to several Premier League clubs, just released its latest report into the state of football finances. A key finding is that the Premier League’s wages-to-revenue ratio has risen to 70 per cent for the first time.

For most of the 2000s the ratio was 60 per cent and Deloitte warns that anything above the low 60s is dangerous for the long-term viability of a business. Deloitte, itself, has a wages-to-revenue ratio of 41 per cent.

The good news is that the increased operating costs are mostly being offset by increased club revenue. At a time of flat economic growth, football’s popularity has not waned, helping the sport remain a viable product.

Premier League club revenues increased by 12 per cent to £2.3bn, which is remarkable growth when you consider that in 1991/92 the collective revenue of England’s 92 professional clubs was £263m.

Revenue growth was driven by increases in broadcasting revenue (13 per cent) and growth in commercial revenues (18 per cent). The growth in broadcast revenue for clubs is due to the distribution of money generated from TV broadcasting rights. Overseas broadcasting rights more than doubled in the past year.

Despite all of the extra money coming into football clubs, it is exorbitant player salaries that are threatening their very future.

The Premier League’s wage bill soared by 14 per cent to 1.6bn, which is equivalent to 80 per cent of the increase in revenue.

Pay rises mostly come from the ‘Big Six’ clubs, although Manchester City (who spend £174m in annual wages) and Chelsea (£191m) are the major culprits helping to drive the inflation.

Manchester City, which spent more than £100m net on transfer fees, is already under the microscope of UEFA, European football’s governing body. 

From the just completed 2011/2012 season, UEFA will be monitoring club finances as part of financial fair play rules that require all clubs competing in Europe to break even. In 2015, clubs will be assessed and punished if they do not comply. At present, only eight Premier League clubs reported pre-tax profits with Manchester City reporting the largest operating loss of £82m.

In the past decade, player wages have inflated to unsustainable levels at a time when many football supporters face pay freezes or cuts. If clubs do not take responsibility for controlling player salaries, then football authorities should consider regulation to cap it.

As most companies have had to adapt to much harsher economic conditions in recent years, the football industry can no longer afford to turn a blind eye.

David Beckham lies on floor, expensively, Photograph, Getty Images

Arvind Hickman is the editor of the International Accounting Bulletin.

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Inside Big Ben: why the world’s most famous clock will soon lose its bong

Every now and then, even the most famous of clocks need a bit of care.

London is soon going to lose one of its most familiar sounds when the world-famous Big Ben falls silent for repairs. The “bonging” chimes that have marked the passing of time for Londoners since 1859 will fall silent for months beginning in 2017 as part of a three-year £29m conservation project.

Of course, “Big Ben” is the nickname of the Great Bell and the bell itself is not in bad shape – even though it does have a huge crack in it.

The bell weighs nearly 14 tonnes and it cracked in 1859 when it was first bonged with a hammer that was way too heavy.

The crack was never repaired. Instead the bell was rotated one eighth of a turn and a lighter (200kg) hammer was installed. The cracked bell has a characteristic sound which we have all grown to love.

Big Ben strikes. UK Parliament.

Instead, it is the Elizabeth Tower (1859) and the clock mechanism (1854), designed by Denison and Airy, that need attention.

Any building or machine needs regular maintenance – we paint our doors and windows when they need it and we repair or replace our cars quite routinely. It is convenient to choose a day when we’re out of the house to paint the doors, or when we don’t need the car to repair the brakes. But a clock just doesn’t stop – especially not a clock as iconic as the Great Clock at the Palace of Westminster.

Repairs to the tower are long overdue. There is corrosion damage to the cast iron roof and to the belfry structure which keeps the bells in place. There is water damage to the masonry and condensation problems will be addressed, too. There are plumbing and electrical works to be done for a lift to be installed in one of the ventilation shafts, toilet facilities and the fitting of low-energy lighting.

Marvel of engineering

The clock mechanism itself is remarkable. In its 162-year history it has only had one major breakdown. In 1976 the speed regulator for the chimes broke and the mechanism sped up to destruction. The resulting damage took months to repair.

The weights that drive the clock are, like the bells and hammers, unimaginably huge. The “drive train” that keeps the pendulum swinging and that turns the hands is driven by a weight of about 100kg. Two other weights that ring the bells are each over a tonne. If any of these weights falls out of control (as in the 1976 incident), they could do a lot of damage.

The pendulum suspension spring is especially critical because it holds up the huge pendulum bob which weighs 321kg. The swinging pendulum releases the “escapement” every two seconds which then turns the hands on the clock’s four faces. If you look very closely, you will see that the minute hand doesn’t move smoothly but it sits still most of the time, only moving on each tick by 1.5cm.

The pendulum swings back and forth 21,600 times a day. That’s nearly 8m times a year, bending the pendulum spring. Like any metal, it has the potential to suffer from fatigue. The pendulum needs to be lifted out of the clock so that the spring can be closely inspected.

The clock derives its remarkable accuracy in part from the temperature compensation which is built into the construction of the pendulum. This was yet another of John Harrison’s genius ideas (you probably know him from longitude fame). He came up with the solution of using metals of differing temperature expansion coefficient so that the pendulum doesn’t change in length as the temperature changes with the seasons.

In the Westminster clock, the pendulum shaft is made of concentric tubes of steel and zinc. A similar construction is described for the clock in Trinity College Cambridge and near perfect temperature compensation can be achieved. But zinc is a ductile metal and the tube deforms with time under the heavy load of the 321kg pendulum bob. This “creeping” will cause the temperature compensation to jam up and become less effective.

So stopping the clock will also be a good opportunity to dismantle the pendulum completely and to check that the zinc tube is sliding freely. This in itself is a few days' work.

What makes it tick

But the truly clever bit of this clock is the escapement. All clocks have one - it’s what makes the clock tick, quite literally. Denison developed his new gravity escapement especially for the Westminster clock. It decouples the driving force of the falling weight from the periodic force that maintains the motion of the pendulum. To this day, the best tower clocks in England use the gravity escapement leading to remarkable accuracy – better even than that of your quartz crystal wrist watch.

In Denison’s gravity escapement, the “tick” is the impact of the “legs” of the escapement colliding with hardened steel seats. Each collision causes microscopic damage which, accumulated over millions of collisions per year, causes wear and tear affecting the accuracy of the clock. It is impossible to inspect the escapement without stopping the clock. Part of the maintenance proposed during this stoppage is a thorough overhaul of the escapement and the other workings of the clock.

The Westminster clock is a remarkable icon for London and for England. For more than 150 years it has reminded us of each hour, tirelessly. That’s what I love about clocks – they seem to carry on without a fuss. But every now and then even the most famous of clocks need a bit of care. After this period of pampering, “Big Ben” ought to be set for another 100 or so years of trouble-free running.

The Conversation

Hugh Hunt is a Reader in Engineering Dynamics and Vibration at the University of Cambridge.

This article was originally published on The Conversation. Read the original article.