Premier League wage bills mean
top-four finishes, but not always
In 2014-15, England's top four teams were Chelsea, Manchester City, Arsenal and Manchester United. This is true in the table, as Manchester United clinched fourth place when Liverpool lost to Crystal Palace. It is also true on the balance sheet, where, according to recently released figures for the 2013-14 season, those same four clubs took in the most revenue in the Premier League and paid out the largest wage bills.
Is this an unusual outcome? And just how often can you predict the outcome of the top-four race by looking at some accounting data?
Good wage bill data exists for the Premier League from 2000-01 up to last year. There have been 56 top-four places available over that time, and 47 of those (over 80 percent) have been won by the teams with the top four wage bills in the league. Only nine times in 14 seasons has a team outside of the top four in wage bill finished in the top four places; adding in the current season would almost certainly make nine in 15. Clubs without the economic power of the biggest clubs can win occasionally, but most of them fall well short year after year.
The following chart shows the rate at which clubs with a certain payroll rank have finished in the top four. The club with the league's top wage bill has only twice finished outside the top four over this span: Manchester United in 2013-14 were the first since Ken Bates' Chelsea in 2000-01. On the other side, no team with a wage bill in the bottom half of the league has finished in the top four.
It even gets worse. Three of those nine underdog sides never actually played in the Champions League. Tottenham Hotspur finished fourth in 2011-12 on a roughly £90 million ($130 million) payroll, but their expected Champions League spots were taken by CL winners Chelsea and the Blues' £170 million ($250 million) wage bill.
In 2004-05, Everton scraped a fourth-place finish from a tiny £31 million ($55 million) budget, eighth in the league, but fell in the Champions League playoffs to the next year. The same happened to Newcastle United in 2003. The leaves just six Champions League clubs in 15 years who were not among the top-wage-bill sides in the league.
So who were those successful underdogs? What can we learn from them and can their successes be replicated? These sides can be divided into three groups and the lessons aren't all bad.
The title contenders
Liverpool, 2013-14: 84 points, second place; £144m wage bill, fifth highest
This team is a genuine outlier. Since 2000, they are the only club without a top-four wage bill not only to compete for the title but to finish within 10 points of first place. Liverpool 2013-14 are the only club in the past 15 years with a wage bill outside the top four to achieve more than 75 points.
Liverpool parlayed a historically great season by Luis Suarez into a dramatic run at the title. With Suarez off to Barcelona, Raheem Sterling sold to Manchester City and other key players either injured or under-performing, the Reds have dropped to a much more appropriate sixth place based on their payroll. It was a great season but history suggests it should be celebrated as a wonderful outlier rather than a baseline expectation for clubs like Liverpool in the future.
Good Arsenal teams with the fifth-highest wage bill
Arsenal, 2000-01: 70 points, second place; £41m wage bill, fifth highest
Arsenal, 2009-10: 75 points, third place; £111m wage bill, fifth highest
Arsenal, 2010-11: 68 points, fourth place; £124m wage bill, fifth highest
Arsenal's unbroken run of top four finishes has been helped by the club's strong financial standing but they have occasionally outperformed expectations. The Gunners have fallen out of the league's top four wage bills three times but all three of those seasons stand among the best by lower-payroll clubs over the last decade and a half. Arsenal's side in 2000 do not have that much in common with Arsenal in 2010 except for the manager.
Fans of the London side have bemoaned Arsene Wenger's consistent lack of contention for league titles but at the same time, his consistent stewardship has prevented any occasional financial disadvantages from keeping Arsenal out of the Champions League.
The true underdogs
Newcastle, 2001-02: 71 points, fourth place; £32m wage bill, eighth highest
Newcastle, 2002-03: 69 points, third place; £45m wage bill, sixth highest
Everton, 2004-05: 61 pts, fourth place, £31m wage bill, 10th highest
Tottenham, 2009-10: 70 pts, fourth place, £67m wage bill, seventh highest
Tottenham, 2011-12: 69 pts, fourth place, £90m wage bill, sixth highest
As noted above, only two of these sides (Newcastle, 2001-02 and Tottenham in 2009-10) actually competed in the Champions League the next season. But they show that with some good fortune, it is possible for a smaller side to at least earn a shot at Champions League play from the modern Premier League.
We can also see here the extreme inflation of wage bills in the Premier League. In 2002-03, Newcastle paid the sixth-most wages with a £45 million ($65 million) bill and a decade later, it cost Tottenham £90 million ($130 million) to maintain the same wage bill position.
The first lesson from this data is that a great season cures all ills. All you have to do is squeeze 80-plus points out of a lesser wage bill and you're golden. But since that has happened once in the past decade and a half, and it still took wage spending of nearly £150 million ($250 million), it's not exactly actionable advice.
The other lesson is that the side with the next-largest budget after the top four should not lose hope. Arsenal just needed Liverpool to underplay their wage bill for a few years while Wenger steered his side to 70-point seasons, which was enough to maintain the Gunners' position in the Champions League. Last year, Liverpool didn't need the good fortune of Manchester United having perhaps the worst points-to-wage-bill season on record, but they could have made the Champions League with a merely good season as well.
For teams on the lower end, the lift is much more strenuous. The following graph of inflation-adjusted wage bills shows just how difficult it is to build a 70-point squad without elite resources.
The lines of the graph mark the most recent payroll figures for the fifth-, sixth- and seventh-highest payrolls in the EPL. A club with Liverpool's resources can regularly compete for top positions, although they are likely to fall short more than half the time. For even sixth-ranked Tottenham, the number of hopeful precedents is low, and for clubs at Newcastle's level and below, they are nearly nonexistent.
It is exceptionally hard to build a 70-plus-point squad on anything other than a top-five wage bill, so these teams have needed good fortune as well as quality play. Newcastle reaped the benefits of Leeds United's collapse and the poor spending of Ken Bates' Chelsea when they managed back-to-back finishes in the top four. Everton somehow lucked into a season where 61 points was fourth-best. Tottenham snuck in while Liverpool were being poorly run, and both Manchester City and Chelsea had off seasons.
An underdog run at the Champions League is not impossible but it almost always takes more than just good play and good management. Smaller sides have to count on further poor performance from the league's richest clubs to open the door first.
Michael Caley is a writer bringing a statistical approach to football analysis. Follow him on Twitter: @MC_of_A.