06/09/2010 08:51 am ET Updated May 25, 2011

English Soccer's Financial Timebomb Ticks a Little Louder

LONDON, ENGLAND - It's a fun time to be in England. The people have the same anticipation that children have on Christmas morning. It's time for the start of the soccer World Cup.

Wherever you go and whatever you do, you'll see the excitement for the globe's biggest competition.

The enthusiasm is all-consuming. But while little could happen to dampen the excitement of the supporters, soccer's businessmen will be feeling positively glum this week.

Leading accountants Deloitte announced that the English Premier League's operating profits have fallen by half, to £79 million ($114m), falling behind Germany's top flight league, the Bundesliga.

The sport's finances in the UK have become a growing concern. You see, there are no constraints for spending in the EPL. No salary cap, no requirement to live within your means, nothing.

Of course, that was fine when the money poured in. But the global financial downturn has led to sponsors becoming reluctant to spend as freely, and fans a little less willing to part with their hard earned cash.

But while income has dropped, salaries have continued to soar.

English soccer's superstars are not solely to blame. The likes of Wayne Rooney, Didier Drogba and Fernando Torres reportedly pick up close to £200,000 ($290,000) a week - but the argument is that they pull in the big bucks, so they should get their slice of the pie.

But the by-product of inflated wages is that the division's average, uninspiring sportsmen are picking up phenomenally inflated pay packages. The reported annual salary for players in the EPL is now £1.6m ($2.3m), a not-too-shabby £30,000 per week. That's more than the average UK worker earns in a year.

Deloitte's study revealed that clubs are spending 67 per cent of their revenues on wages and that the league's top four clubs - Manchester United, Chelsea, Arsenal and Liverpool - paid a combined total of £501 million ($724m) in 2008-09 on their players' pay.

The hunger for success has filtered down the 20-team league too. In February this year, lower-league side Portsmouth became the first Premier League team to enter administration, with debts of £138 million ($199m). That should have been the wake up call. It hasn't been.

There is increasing worry among panicky owners, both in the EPL and stretching down the league's three other professional divisions, for action to be taken.

The most obvious action - and one I would endorse - is the introduction of an American-style salary cap. The governing body, the English Football Association, could set a top level for earnings which cannot be surpassed. Soccer players are hardly going to quit the sport if their earnings are reduced. It seems reasonably simple, but nobody in power is willing to take the first step.

That's partly due to the different climate in European sports to that of America. In the US, restrictions can be set without the realistic threat of leagues in competing nations pinching the best talent. But England is in ferocious competition not only with Spain and Italy, but now with Germany, France, Qatar and even the MLS.

Rocking the boat, without pan-European support, could see a mass exodus of English based players to those nations . And if the standard of player drops, the major sources of income - television revenues and money generated through the Europe's Champions League (an estimated £50 million - $72m - per club, which can potentially triple for the eventual winners) come under threat. English clubs have featured in five of the last six finals - they literally cannot afford to become also rans.

But if there is such a struggle to get one governing body to change the way it approaches soccer finances, getting all the key nations around the table would require serious commitment to restructuring the game.

Most of the soccer world will forget about the monetary misery it faces during the next four weeks. But it cannot survive too many more wake up calls. Widespread change is needed before the financial timebomb goes off.

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