Tag Wages

Tag Wages

The Rooney effect: wages rocket

Ed October 27, 2010 Tags: , , Opinion 30 comments

Reports that John O’Shea is to sign a new four year contract worth – wait for it – £80,000 a week is proof if any is needed that intense wage pressure remains in football, despite the downturn in transfer market spending. Even Manchester United, relatively prudent on the wage front for so long, is now no longer immune to the madness it seems.

Aside from wage inflation in the wider football community, the effects of Wayne Rooney’s lavish new £180,000 a week contract will now be felt throughout the club. One of the key challenges for United in raising the bar for Rooney’s aggressively negotiated deal is the trickle down effect on the club’s squad. While the United’s leading players will seek, if not parity, then close to it with the 24-year-old striker, even squad players such as O’Shea can now expect a hefty rise.

The Irishman is out of contract in 2012 along with a rash of other United players and the club is expected to conclude talks with each by next summer. That O’Shea turns 30 in April is seemingly not affecting the club’s thinking on a new long-term deal for the Waterford-born player.

Meanwhile, Patrice Evra’s new offer is reportedly worth around £100,000 a week. The Frenchman, out of contract in 2012, also turns 30 this season. Anderson, also a free agent in two years time, is likely to settle for a little less unless Ferguson finally loses patience beforehand. Bless.

While no negotiations have begun with Dimitar Berbatov, the Bulgarian is out of contract in June 2012, as is Scottish midfielder Darren Fletcher, who can expect at least parity with O’Shea.

The new contracts are among several deals at Old Trafford in the recent past. Park Ji-Sung signed a three-year deal last season that pays the South Korean a relatively miserly £65,000 each Friday, while Nemanja Vidic finally accepted a £90,000 deal in late summer that will keep the Serbian at Old Trafford until 2015.

The increase in wages at United reflects salary inflation in the wider football industry, although fans may ponder where exactly O’Shea could earn the £4.16 million a year he is set to receive at Old Trafford. The deals may also account for the creation next April of a new higher rate tax band of 50 per cent on wages over £150,000 per year. And even Bébé earns that much.

Despite the heavy pressure on wages during the Glazer family’s tenure at Old Trafford, United’s wage-to-turnover ratio remains a very healthy 46 per cent. Wages are growing but revenues have grown faster in the past five years. The ratio is easily the lowest in the Premier League, with notoriously parsimonious Arsenal on 49 per cent.

In recent seasons though United has fallen behind both Chelsea and Manchester City in the Premier League wages ‘league table’. According to City’s last accounts, the blue half of Manchester spends more than £133 million on wages, compared to United’s audited £132 million. However, with City yet to report its 2009/10 figures, a further rise is expected at Eastlands, accounting for the deals that brought David Silva, James Milner, Jérôme Boateng and Aleksandar Kolarov to Eastlands this summer.

Chelsea spends an eye-watering £149 million per season – 68 per cent of turnover – to head the Premier League wages table. But even Roman Abramovich is a skinflint compared to Europe’s leading clubs. Real Madrid’s provisional salary budget stands at £190 million, while Barcelona has recently set a budget for sporting salaries of £192 million for the current season.

The challenge for United of course is to keep the overall budget below the 50 per cent cap the Glazer family has set as policy in a period of heavy pressure, while remaining competitive for leading players. Indeed, if the club is forced into raising salaries for even mediocre performers such as O’Shea then pressure is likely to be felt elsewhere in the business to find new revenue streams and cut other costs.

United’s penny-pinching in recent seasons has seen several rounds of redundancies in back-office staff and even an end to visitors’ snacks in the Carrington canteen.

Fortunate for the Glazer family then that six players are out of contract in the summer. None of Edwin van der Sar, Gary Neville, Paul Scholes, Ryan Giggs, Owen Hargreaves nor Michael Owen has been offered a new deal by the Old Trafford hierarchy.

There is speculation that the American owners may loosen the purse strings in the coming summer. Talk of bringing in marquee names  is cheap though.

O’Shea’s new contract is definitely not.