Tag Archives: Wage Structure

It’s time for Spurs to shatter the wage structure

By Charles Richards / @spurs_report

For the past three seasons, Spurs have been engaged in a high-wire act, trying to bridge the chasm between the Premier League’s financial elite and also-rans, on a far smaller budget while investing £800m in a shiny new stadium.

Thanks to the brilliant work of Mauricio Pochettino, the discovery of a superstar striker from within the academy and the assembly of a strong and cohesive core of players, Spurs have managed to defy gravity. But now, with the new stadium rising from the ground and the end within touching distance, Spurs have started to sway.

Much has already been written about Danny Rose’s uncomfortable (you can pick your own adjective) comments about the club’s strategy and ambition, and I don’t want rehash these arguments. I’d recommend this excellent piece by Daniel Storey on the context of the comments, and this piece by Alan Fisher captured a lot of my torn emotions about the summer Spurs have had.

Instead, I want to look at what Spurs can do to respond on one of the key issues raised by Rose: the club’s wage structure.

(I’ve recently looked at transfer spending, as well as stadium spending — for new readers, there’s plenty in the archives to get stuck into on the stadium and finances.)

For the past three years, the Spurs wage bill has been more or less flat, hovering around £100m. It is the sixth highest in the league, per the last set of financials. Arsenal have the fifth highest wage bill, and at £195m it is almost double Tottenham’s.

The wage structure at Spurs is widely reported as being a series of tiers. Hugo Lloris and Harry Kane are on top, earning around £100,000 per week. Then there is a tight band of senior players on a tier below, earning between £60,000 and £80,000 — the likes of Toby Alderweireld, Jan Vertonghen and Christian Eriksen — followed by younger players such as Dele and Eric Dier, who are regularly rolled onto new deals until they reach the second tier.

It has been a structure that has worked — the team has performed on the field, and seems to genuinely get along off it. It appears that Pochettino has wanted to maintain this balance for the sake of squad unity, rather than risk bringing in expensive players on higher levels that may disturb the status quo. Up until now, Levy and Pochettino have done a good job of persuading current players to sign new deals and buy into this structure, even if at a discount to what they could earn elsewhere.

The approach was always going to run its course eventually. The question now is: has that moment arrived?

Daniel Levy is a stubborn man, and his reaction to Rose’s interview may well be entrenchment. After all, Rose only recently renewed his contract — no-one forced him to sign it, and contracts should be honoured. Pochettino appears to genuinely be on the same wavelength as Levy on wages and spending, and in his pre-match press conference on Friday, made exactly this point.

As principled a stance as this is, it’s also a losing one — players invariably end up getting what they want.

If the frustration was limited to Rose, perhaps he could be quickly shifted up to Manchester United, the money banked, and a new left back sought. But, as widely reported, it seems that Rose’s views on uncompetitive wages are shared by many within the Spurs squad.

Here’s a simple chart of revenue vs wages. The figures are from club accounts, until financial year 2016. For 2017, I’ve estimated revenue conservatively, based on known changes to PL and UEFA money; wages is harder, but I’ve attempted to gauge the shift in total wage spend based on the comings and goings and contract renewals in past 12 months as reported in the media. The figure that came out was about £115m — it’s very rough, but I want to at least illustrate it.

Rev v Wages to 2017

As you can see, wages are starting to diverge a long way from revenue. It’s really quite a big gap now — too big, from the perspective of the players.

WHAT CAN SPURS DO?

A few ideas have been floated in terms of how Spurs can address the frustration within the camp, and see off any potential mutiny. A unilateral wage bump, a lifting of the ceiling, or an expanded bonus pot for on-field performance. But these seem reactive, like trying to stick something that is broken back together, knowing it’ll never quite be the same.

It may simply be time to accept that the status quo has changed, abandon the wage structure altogether, and deal with player contracts on a case-by-case basis.

It’s risky, but if players are complaining in public about being underpaid and about a lack of squad strength, they are less likely to be disappointed to see new signings or current teammates suddenly earning a lot more than them. Instead of the goal of the wage structure being unity, it becomes about ambition — players see teammates’ earnings jump, and accept it in the knowledge that the club is trying everything to win (and that their turn will come).

Levy isn’t stupid — he knows that he’s had the benefit of a relatively low wage bill for several years, enabling him to shovel money into the stadium project. There was always going to come a time when this ended. For several years now, we’ve been talking about Spurs being a “young” team, and they’ve been paid like it. Relatively, Spurs may still be quite young, but actually, this is a group of players in their prime. Of the core 15 or 16, only Winks and Dele are under 23. Kane is 24, Eriksen 25, Trippier 26 — these aren’t kids.

The wage structure has increasingly become a limitation. Players who could have strengthened the team — Sadio Mane for example — have gone elsewhere, forcing Spurs to settle for poorer alternatives.

How would this new approach work in practice? Next up on the contract list is surely Alderweireld — he’s one of the best CBs in the league, so pay him like it, even if it is more than Lloris and Kane. Toby isn’t stupid — he knows what he is worth, and simply isn’t going to accept that what should be the biggest deal of his career is far below market rate. After Toby, it is probably Eric Dier’s turn — again, pay him close to what he is worth, or at least match the highest earners. Spurs need to be realistic — to lose one of the best back five in the league last season is unfortunate, to lose three or four would be careless.

(BTW, I utterly disagree with the “he’s earning more in week than most people earn in a year so he should shut up” complaint — elite sportspeople have enormously valuable skills and very short careers that can end in an instant. They are also humans — people want to earn what they are worth.)

Spurs can never top what these players could earn at Man City — clubs fueled by petrodollars will always be able to outbid those run rationally. But Spurs can offer a competitive wage, in a team that can contend for the title, a manager they respect, London and the best new stadium in Europe from next summer. It’s not a bad pitch.

CAN SPURS AFFORD THIS?

“Hang on”, you’re probably thinking, “how on earth are Spurs going to pay for this?”

I was going to go into a big spiel here with numbers and projections, but ultimately, there is no accurate information for individual player wages, and it’s hard to see where stadium funding begins and ends in terms of football-related revenue vs debt.

But at a higher-level, in the last accounts, wage-to-turnover ratio was 47.4%. Under my projection of the next accounts, the ratio drops to 41.3% — that’s incredibly low. Manchester United are the only other club below 50 percent. Arsenal stand at 55%, while Liverpool are at 69%. With a stadium to finance, it’s not realistic to expect Spurs to stand spending in an unrestrained way — but it is realistic to expect Spurs to spend in a competitive way.

If Spurs were to maintain the current 47.4% ratio into the next financial year, that would mean a wage bill of about £133m — that’s £33m more than is currently spent. Spurs could offer nine players £70,000 per week wage increases, and still the wage-to-turnover ratio would drop in the next accounts. (Of course it’s more complex than that with bonuses and so forth, but you get the point).

Spurs have issued a raft of new deals in the past financial year, including many senior players, but it would appear there is still significant room for more, if the club chooses. And revenue is going to climb further in the next two years — for example, Spurs will have the new Nike and AIA deals showing in the FY 2018 accounts. There’s also the chance to sell huge numbers of tickets at Wembley — all those outrageous £3.50 booking fees will start adding up — and then hopefully we’ll be in the new stadium.

With concerns over growth of TV rights income, fears of stadium cost overruns and no naming rights sponsor, plus an inflated transfer market where value is hard to gauge, let alone find, there are a lot of factors weighing on the club’s decision making. The hope is that Levy doesn’t get seduced by the complexity — Spurs have a team that is good enough to win trophies, and appealing enough to help sell those swanky premium seats at the new stadium. More depth is needed, but the core was cheap to assemble — if the price of success is that it is a bit more expensive to keep together than planned, then so be it. It’s a pretty good problem, in the grand scheme of things. It certainly feels there’s significant scope to increase wages before getting into the territory of the club spending money that doesn’t exist. Hell may need to freeze over first, but it may be that Levy and Joe Lewis reach a point where they accept it’s time to push the envelope a bit on football spending to take that final step.

Is Levy prepared to swallow some pride, and some cost, to keep this squad together? Pochettino’s masterful handling of Friday’s press conference — his “disappointed dad” tone was pitch perfect — showed both firmness, and a little flex. The fact the agency and club were able to get together on a statement to de-escalate the situation beforehand helped, and suggested plenty of work is going on behind the scenes. Pragmatism may yet rule the day — contrast that to the situation with Liverpool and the timing of Coutinho’s transfer request, designed to make Jurgen Klopp look a fool.

Danny Rose, in his hopelessly unprofessional (and scorchingly honest) way, may have done Spurs a favour. It’s time to recognise that the environment has changed, shift strategy quickly, and take a sledgehammer to that wage structure.

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