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Palios - Wages are the problem

Image: Palios: Wage cuts are key

Mark Palios has stated that regulation of wages and a more stable approach is needed for clubs to survive.

Former FA chief exec feels clubs must cut wage bills to survive

Mark Palios has stated that regulation of wages and a more stable approach to spending is needed for clubs to survive during the current economical climate. New Prime Minister David Cameron announced that plans of £6.2billion cuts would be made over the current year, a figure that is likely to affect the majority of the country. With wealthy clubs such as Manchester United and Liverpool suffering from vast amounts of debt, financial organisation Deloitte announced that the current state of the English top flight was strong due to much of the debt being down to wealthy benefactors such as Chelsea chairman Roman Abramovich. Despite Deloitte's defence of the Premier League, Palios felt that even though the major clubs in England will stay strong whatever their debts, smaller clubs will have to service their disposable finances better if they want to stay afloat. "Football appears to be a different case and appears to be resilient in the face of the downturn that is facing all of Europe," Palios, who advises banks and businesses on turnaround and debt restructuring, told Sky Sports News. "Some of the revenues in the case of the Premier League will be coming from television rights, this is a deal which has been cut and it is an excellent deal.

Sustainability

"The issue as usual is lots of the money goes out of the game in transfers and wages. "These clubs need to look at the operating profits to ensure the sustainability of these clubs going forward." The former FA chief executive urged officials in the Premier League to regulate clubs more efficiently, with teams who try to 'live the dream' by spending vast amounts rather than trying to stay afloat with fixed costs of running a football club being a major reason for falling into difficulty. However Palios was also quick to point out that killing off club's ambitions was not what should be done, as it was a fundamental part of the game to be successful. "What you don't want to do is forbid the likes of lesser clubs taking the opportunity to get up there with the elite. You don't want to kill off that aspiration which is the lifeblood of the game from top to bottom," he added. "If you look at the figures what you see is that it is very difficult to turn the dial on a football club other than to increase your stadium capacity because a lot of the costs are fixed. "The major costs are, for example, the wages and this has been a perennial issue because people who run football clubs get wrapped up in the effort to try and make that leap across the gaps that have been forming between the Premier League, the Football League and across Europe. "You never really sort of forbid clubs to 'live the dream' and that is one of the difficulties. "The challenge for the Premier League is not so much to keep the revenues where they are, but to show their maturity in controlling the wages element and the cost element so that clubs are sustainable. "The Premier League have led the way in terms of the revenue and sales side, but they now need to make sure that making proposals in controlling the costs and sustaining viability of clubs is maintained."

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