THE true inflationary impact on English football of Roman Abramovich’s takeover of Chelsea is revealed today by a benchmark study that shows player costs in the professional leagues rising past the £1 billion mark in the Russian billionaire’s first full season of ownership.

Wages and net transfers in the 2003-04 season across the four divisions were £1.049 billion compared with £852 million the previous season, according to Deloitte and Touche’s annual review of football finance. It is the first time that player costs have exceeded £1 billion and is a phenomenon caused by Chelsea’s record spending spree in pursuit of the Barclays Premiership title.

To put the sum into context, it eclipses the gross domestic products, on an exchange rate basis, of Lesotho and Mauritania, the African countries that together comprise about five million people. The £786 million in wages alone paid to 2,347 professional footballers is roughly equivalent to the estimated GDP this year of Mongolia. Of that sum, £583 million went to Premiership players.

The surge in costs represents a distortion of the market caused by Abramovich’s arrival at Stamford Bridge in the summer of 2003 and Chelsea’s tendency to buy players from overseas. Transfer spending in his first season was £175 million and, taking in last season, the oil tycoon’s total outlay stands at about £300 million. The investment rewarded Chelsea with their first championship title for 50 years.

The club’s £115 million wage bill is the biggest in world football, £38 million higher than that of Manchester United, the next on the list and still the world’s richest club by turnover. The sum is a demonstration of Chelsea’s supreme buying power, which many fear will only widen the wealth gap between the top and bottom halves of the Premiership.

Stripping out Chelsea, the English clubs’ total wage bill, including backroom staff, fell from £706 million to £696 million as a greater sense of financial reality pervaded the sport, especially in the lower leagues. It is the first recorded reduction since the creation of the Premiership in 1992.

“If a 1 per cent reduction could ever be described as highly significant, then this is it,” Alan Switzer, a consultant in Deloitte’s sports business group, said. “The other clubs realise there is no point taking Chelsea on financially. It’s not a winnable battle, hence the decline excluding Chelsea.”

Since the collapse of ITV Digital three years ago, the Football League has encouraged tighter cost controls. The Coca-Cola Championship clubs’ player wage bill fell from £149 million to £138 million, while those in League One and League Two fell by £8 million and £1 million respectively. Yet Premiership wages are on the increase, albeit at the slowest rate in 13 years. The 20 top clubs’ staff costs rose 7 per cent, to £811 million.

At the height of the media boom in the late 1990s that fuelled football’s commercial rise, the annual compound rate of growth was 23 per cent. It was the unprecedented level of money flooding into the sport, largely from pay television, that led to such high transfer fees and salaries. Twenty-six years on from the transfer that made Trevor Francis England’s first million-pound player, Premiership footballers are now bought and sold for upwards of £25 million.

The British transfer record is still Rio Ferdinand’s £30 million move from Leeds United to Manchester United in 2002. If the England defender gets his way and United increase his pay packet to £120,000 a week, or £6.24 million a year, he could also set a record by becoming the highest-remunerated player in the Premiership.

The average Premiership player costs his club about £17,000 a week, or £900,000 a year, according to the report. The Premiership, the richest league in Europe, should be able to sustain a market for a clutch of highly-paid stars earning as much as £120,000 a week. “Ultimately, clubs have to look at how much revenue they have coming in and how much can go out,” Switzer said. “It may be that they can offer to pay some players that much.”

The collective revenue of Premiership clubs in the 2003-04 season was £1.3 billion, equating to £66.3 million per club, which is more than 50 per cent higher than the average club in Italy’s Serie A, the nearest financial competitor. The Premiership represents 18 per cent of the total £7.5 billion European football market.

Deloitte is predicting a “modest” fall in Premiership revenues in the 2004-05 season under a new £1 billion media deal with BSkyB, the pay-TV operator whose parent company, News Corporation, is ultimate owner of The Times.

FIVE WAYS TO SPEND A BILLION

Wipe out the debt in Sierra Leone (it stands at $1.3 billion).

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