Aston Villa are gearing up for another busy summer transfer window and will have to trim their wage bill
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Aston Villa manager Unai Emery
Aston Villa manager Unai Emery
Aston Villa have reportedly been in discussions with UEFA’s club financial control body (CFCB) in relation to their exceptional wage-to-revenue ratio.
In 2023/24, Villa exceeded UEFA’s permitted allowance of 80 per cent, and The Guardian claims they will struggle to comply with the bodies’ squad cost ratio rules this season without raising revenue via player sales before the end of June.
Reports claim the CFCB will advise Villa to cut their wage bill and are also likely to make them submit a spending plan.
After a lucrative Champions League campaign, Villa’s revenue is expected to increase to around £360m this season, according to outgoing president of business operations, Chris Heck.
But Villa will be playing Europa League football in the next campaign after a controversial ending to the season saw the club fail to qualify for UEFA’s elite club competition again.
Last season, Villa’s wage bill was the 10th highest in Europe when they were also paying out more than Bayern Munich.
Football finance expert, Dave Powell, explained how Villa’s fluctuating revenues and wages could impact on their summer plans.
“With Heck having already revealed where the club expects revenues to sit for the 2024/25 financial year, we can make some assumptions as to Villa’s wage to revenue ratio,” Powell said.
“Using the lower estimate of the £360m that Heck had previously stated, Villa’s wages to turnover ratio will be on the decline for the current financial period.
“For 2023/24, Villa’s wage bill increased by £58m, a rise of 30%, from £194m to £252m, meaning that in the last two years alone the wage bill had grown £115m (84%) due to heavy investment into the playing squad. That sum up to the end of the financial year at the end of June 2024 meant that the ratio of wages to turnover had actually increased from 89% to 91%.
“However, the 2023/24 period was one over 13 months instead of 12 as Villa moved the end of their financial year from May to June. The wage bill would have been lower otherwise.
“It’s hard to put an exact figure on where Villa’s wage bill will stand for the current financial year, which has a month left to go, but in taking on wages for the likes of Marcus Rashford and Marco Asensio, as well as the permanent signings of players like Donyell Malen, it is likely that the wage bill will have increased significantly.
“It has previously been reported that Villa were on the hook for at least 75% of Rashford’s £325,000 per week wages (£243,750). Using that figure, and basing it over the last 12 weeks, that is £2.9m in wages. Say that Asensio’s stay has cost £1.5m in wages, and other additions and renewals have also taken place during the financial year, we could assume that Villa’s wages could climb to £270m per year. With some exits, such as Jhon Duran, that may offer some reduction but there is likely to be a net increase year on year, reflective of the investment by NSWE in the on-field product.
“Using that as a rough estimate, against revenues of £360m that would be 75% in terms of wages to revenue ratio. Were wages to remain stagnant, which they almost certainly won’t, it would be around 70%.
“UEFA has a rule in place for its competitions which clubs must abide by, and that is its squad cost ratio rule. That is the cost of wages, amortisation and agents fees against turnover and profit from player sales.
“Clubs have a limit of 70% but there is some flexibility over that at present on a sliding scale, with the first year being 90%, year two 80% and year three from the change in rules at 70%. This year it is 70%, although there will be a light touch taken to clubs that exceed that by a reasonable amount via fines as opposed to competitive sanctions.
“The squad cost ratio for 2023/24 in terms of UEFA’s rules stood at 86% with revenues and profits on player sales being at £346m. With revenues at potentially £360m for 2025, and wages, say £270m, add in amortisation at a rough £105m, and player sale profit, aided by Duran’s exit, and sales of the likes of Cameron Archer and Douglas Luiz (Moussa Diaby was largely cost neutral), then profit of potentially more than £80m could be achieved.
“Using the £80m figure, added to the £360m, then factoring in a wage estimate of £270m, amortisation of £105m and a guesstimate of agents fees of £10m, then that would be 87.5m, a percentage point above their position last season.
“The above figures are estimates and some fluctuations either way are to be expected, but it’s likely that the club remains within the region of that mid to late 80s in terms of a squad cost ratio percentage. That may incur a fine if so, but they wouldn’t be slapped with sanctions given the amount of clubs that will face a similar scenario.”
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