Players are gorging on a feast of cash as English football feeds the highest wage bills in the world to maintain its position at the top of the global order. The overall wage bill of the Barclays Premier League clubs is thought to have crashed through the £1billion mark last season, driven by player salaries that were heading towards £700million in the 2006-07 season, as clubs fight to keep their places at the richest sporting table in the world.

The Deloitte Annual Review of Football Finance, the most authoritative guide to football economics, reveals that the total income flowing into the top four divisions in England exceeded £2billion for the first time

in 2006-07. The top flight inevitably took the lion's share, with revenues hitting a record £1.5billion to underline its standing as the richest league in the world. The Football League also cashed in, though, with its income up to almost £500million.

But Dan Jones, a partner at the Deloitte Sports Business Group, warns that these record earnings have been accompanied by rampant spending on players' wages, with double-digit inflation that would blow a hole in the finances of any other form of business.

English football has turned its back on the credit crunch and spent its way to success, but the price is a sea of red on the balance sheets. Jones says that English football could become a profit-free zone, but billionaire owners in the Premier League, who nurse their traditional businesses with care, allow their clubs to spend huge amounts on transfers and wages. The result is a wall of debt and top-tier clubs in the 2006-07 season spending the £2.7billion broadcasting revenues negotiated by the Premier League a year before these payments kick in.

In the Deloitte report, Jones says: “A shared will and action individually by all the clubs to limit wages growth would deliver increased profitability for all. But the pursuit of on-pitch success and intense competitive desire to gain an edge mean clubs continue to invest heavily in their playing squads and bid the market up to the detriment of clubs' finances and the benefit of players and their agents.”

The new broadcasting cash should boost the prospect of better profits this year, but the Deloitte survey of the 2006-07 accounts makes for sobering reading. While total revenues for the Premier League clubs hit a record, their wage bills were 75 per cent higher than the Spanish league and double those of the top leagues in France, Germany and Italy. Only eight Premier League clubs recorded an operating profit in 2006-07; total debt for all 20 clubs was up 19 per cent to more than £2.4billion, although £1.25billion of that figure is accounted for by Manchester United and Chelsea, and interest charges for Premier League credit were £144million in the year.

Caught in a squeeze between longing for Premier League riches and fearing lower-league penury are the clubs in the Coca-Cola Championship. In their struggle to enter the top flight Championship clubs racked up net debt of £289million, with ten clubs having debts of £10million or more. Jones says that the only way to wipe out such arrears is promotion, which means more money on players, or finding a benefactor to pay it off.

Jones adds a warning for clubs in League One and Two, where there have been a series of administration orders on clubs such as Luton Town and Bournemouth. “Below the top two divisions, managing the club's financial position remains a challenge,” Jones says. “Legacy debt issues and the risks taken by some boards of directors will, without correction, inevitably lead to a continuing flow of insolvencies.”