Payroll covers all the people employed by the club, from the players, through the board members, through to the match day tea-lady.
There are two areas to watch. The obvious one is that that the wages just don't get too high. The graph shows that the wages have fallen steadily and seemed to have flattened off before a jump in 2007. Aberdeen have put in place a good old-fashioned bonus system. When the team gets the results, and the crowds increase then the bonuses will kick in for the players. This ensures the club don't get caught paying too much.
The 2007 rise is explained in the accounts with "... firstly the football payroll budget rose 11.6% in the year representing a 25% rise over the last thee years. This has been done to facilitate the restructuring of the youth development to feed through players and help reduce the wage bill over time. The rest of the increase reflects the increased bonuses paid for third place position". It isn't clear how the youth development comment really relates to the increased wage bill.
The 2008 rise is explained as being "partly from an increase in the base wage level, but mainly as a consequence of bounuses paid to the football staff as a result of the European run".
The second area to keep an eye on is the ratio of the wages to the income. Deloittes who do some in-depth analysis of football finances reckon the target for this ratio in the SPL should be under 60%. This allows the club to cope with the costs of running the business, buying the occasional player, running an youth development system, putting on games, maintaining the ground etc. Aberdeen are struggling to hit this. The 2007 ratio was 68% and the club reports an increase in wage bill for 2008. The 2008 ratio looks okay but it on a one-off income figure which will not be repeated in 2009. As a comparison the figures for Hibs are interesting with their overall payroll lower, and their income higher.
The club suggested in their 2007 accounts that the true figure for the ratio would be 62% if the extra income from merchandising royalties was included. The 68% calculation does include these figures though, which is slightly strange, and the merchandising comes to £301,000 which isn't enough to bring the figure down to 62%. Anyone who can explain this please get in touch so the explanation can be included on here.
Both Hibs and Aberdeen make a big play on the fact that they need to develop young players, and that this is the only way to sustain the club in the long run.
The graph below shows the breakdown of the staff employed by Aberdeen
The number of players and coaches has been roughly level over the last 7 years.
There has been a slight reduction in admin people, and slight drop in the total number of players, but a rise in the scouting and youth development areas. This matches with the aim of developing young players.
