Cap'n Clutch wrote:Labour is always going to be the biggest expense of any company. How many companies do you know that actually link revenue to salary expenses?
It would be interesting to know what most companies pay out in salaries expressed as a percentage of revenue.
The percentage of your operating expenses devoted to salaries will depend on the type of industry you are in. Utilities and manufacturing industries have large infrastructure costs that generally make up a much greater portion of their spending than salaries. Consider these Bureau of Labor Statistics numbers as a guide: Industries with the highest median percentage of operating expenses devoted to salaries in 2008 included the health care industry, with a 52 percent ratio, and for-profit services, with a 50 percent ratio. The lowest were durable goods manufacturing at 22 percent, construction/mining and oil/gas at 22 percent and retail and wholesale trade at 18 percent.
Read more: What Percent of My Business Should Be Used for Salaries? | eHow.com http://www.ehow.com/info_7751111_percent-business-should-used-salaries.html#ixzz26XpQu8kF
Players' take is 57%. GMs and coaches typically are $1M+ each, so let's say $3M against an average payroll of ~$50M (basing this on a 21 man roster at a $2.4M average salary) that's another 3.4% of revenues ($3M is 6% of $50M, and if that $50M extrapolates to 57% then 6% of that is 3.4% of revenues).
So with just payers, coaches and GMs you are already past 60% of revenues. And you've got assistant coaches, video coaches, goaltending coaches, trainers, physiotherapists, doctors, nutritionists, scouts, accountants, league executives, office personnel. Probably getting close to 65% if not higher.
Also, I'm not sure if that 57% represents salaries only or payroll taxes as well. Using a US payroll tax calculator, an average $2.4M salary will result in roughly $40K in payroll taxes, which is $840K for a 21-man roster. In Canada payroll taxes include CPP and EI only so you max out way before $2.4M. Assuming it's similar in the US I think it's ok to just assume that $40K would not increase for higher-earning players. It's not too much of a stretch to assume that that $840 per club goes up to $1M pretty quickly with coaches, scouts, GMs, etc. So I think it's safe to say that salaries, including payroll taxes, represent the high 60s as a percentage of revenues. That *is* unusual, to say the least.