In the book Soccernomics, the authors make the point that there is a correlation between payroll spending and winning (although the same does not hold true for transfer fee spending). I was curious just how much correlation there really was. Remembering the Guardian published the wage bills for EPL clubs from the 2007-08 season, I thought it would be interesting to see how teams fared compared to what they spent on payroll. Here is the 2007-08 table, with the wage bill for each club. Note that the Guardian couldn't get the numbers for Liverpool, and didn't publish the numbers for the clubs that were relegated: English Premier League - 2007/08 1 Manchester United 87 points -- £121.1m 2 Chelsea 85 -- £149m 3 Arsenal 83 -- £101.3m 4 Liverpool 76 – Not Available 5 Everton 65 -- £44.5m 6 Aston Villa 60 -- £50.4m 7 Blackburn Rovers 58 -- £39.7m 8 Portsmouth 57 -- £54.7m 9 Manchester City 55 -- £54.2m 10 West Ham United 49 -- £44.2m 11 Tottenham Hotspur 46 -- £52.9m 12 Newcastle United 43 -- £74.6m 13 Middlesbrough 42 -- £34.8m 14 Wigan Athletic 40 -- £38.4m 15 Sunderland 39 -- £37.1m 16 Bolton Wanderers 37 -- £39m 17 Fulham 36 -- £39.3m 18 Reading 36 – N/A 19 Birmingham City 35 – N/A 20 Derby County 11 – N/A We don't have Liverpool's numbers, but the other Champions League spots are all occupied by teams that spent over £100 million on player wages. At the other extreme, seven clubs spent less than £40, and six of them are at the bottom of the table, just above the relegation line. The only exception was Blackburn, which finished a very respectable 7th on a limited budget. Six other teams spent between £44.2m and £54.7m, that is, something in between, which put them in the top half of the table (well, Spurs were 11th, but close enough) below the Champions League spots. The lone exception where big spending produced tepid results was Newcastle, which spent £74.6m for a pedestrian 12th place finish. Now, it's only one season, but it does look like a payroll over £100 bought a team capable of winning a Champions League spot, while payrolls under £40m bought clubs destined for the lower half of the table and a relegation battle. There's another way to look at this too, who spent above their means? Various proposals have been floated in Europe suggesting player wages be capped at 65% of turnover to keep teams out of financial trouble. The rule was actually adopted by the League of Ireland, although I'm not aware of any other country that has done so. Even so, I relaxed that standard a bit, figuring teams just over 65% probably could have gotten into compliance if they had to, and looked at teams were wage bills were 70% or more (sometimes a lot more) of gross revenues. Those spending a lot of their revenue on payroll are in italics, including Blackburn (just, to be fair), Portsmouth, West Ham, Middlesbrough, Newcastle, Wigan and Fulham. Knowing what we know about some of these clubs today, it isn't surprising that some were overspending in an attempt to keep up and got themselves into trouble. They were swimming against the tide though. Four of these six clubs were also among the 8 clubs that averaged under 27,000 in attendance that year (together with two other clubs that were relegated). Lower attendance and over spending seem to typically go hand in hand. By contrast, it's hard to argue most of the big clubs, with the notable exception of Newcastle and West Ham, were living beyond their means. We don't have the Liverpool data obviously, but of the top 10 drawing teams that year, only Newcastle spent more than 70% of its gross revenue on payer wages. At the very top of the table, Manchester United may be highly leveraged because of acquisition debt, but it isn't spending itself into trouble because of it's high payroll -- at least it wasn't in 2007-08. So, does the amount spent on payroll matter? Yes, for this season it appears it did. Did some of the smaller clubs overspend trying to keep up? Yes, several did. Link to the Guardian: http://www.guardian.co.uk/football/2009/jun/03/english-premier-league-debt __________ Note: I mentioned in another thread that I've got some new professional responsibilities and, as a result, I'm going to be taking a break from Big Soccer starting next month, so forgive me if my replies in this thread are limited.