Players' wages in the English Premier League fell for the first time in the 2004/05 season, according to consultants Deloitte.
The Deloitte Annual Review of Football Finance, released this morning, found that Premiership wage costs fell 3 per cent after rising by 20 per cent each year on average in the past decade.
"Our latest analysis further supports the improving balance between revenue and costs, not just in England but also across Europe," said Deloitte partner Dan Jones.
"The need to 'save clubs from themselves' with a salary cap now seems far less important than it did five years ago."
Premier League clubs remained by far the biggest earners in world soccer and were the most profitable in Europe, generating more than £1.3 billion sterling (€1.89 billion) in revenue.
The big five leagues in England, Italy, Spain, Germany and France generated revenues of (€6.3 billion, a growth of 8 per cent over the previous year.
However, only clubs in the Premier League ((€240 million) and the Bundesliga ((€65 million) posted operating profits in 2004/5.
Big-spending champions Chelsea, bankrolled by Russian billionaire Roman Abramovich, and Fulham were the only clubs to report operating losses in England's top flight.
"Clubs are adopting a much more realistic attitude in terms of wages, much more flexible wage bill, the use of loan players, increased performance-dependent elements," Deloitte senior consultant Alan Switzer said.
"There's been an increasing polarisation in terms of the top players earning more and commanding higher transfer fees, and the majority of players who are getting smaller transfer fees and potentially lower wages."
Manchester United reported English football's highest operating profits although they fell from a record £52 million in 2003/04 to £33 million. Liverpool's 2005 Champions League success boosted their profits to £25 million.
The average Premier League club generated revenue of £67 million, up from £66 million in 2003/04 and compared to just £13 million for First Division clubs.
"If you strip out Chelsea, the 20 Premiership clubs on aggregate are estimated to be breaking even at a pre-tax profit level and that is first time they have done that since 1988-89," said Mr Switzer. The Premier League was established in 1992.