Clubs and players in Europe need to wake up to the realities of the global credit crunch by reining in their wage demands and transfer fee expectations.

That is the view of Arsenal chairman Peter Hill-Wood, as Premier League wages hit £1billion for the first time.

Hill-Wood warned that the days of easy money had come "to a pretty sudden end," despite rising revenues from television coverage of English and European soccer games and an influx of overseas billionaires.

"There is an awful lot of talk about big transfers and major demands of players but you will find throughout the UK and Europe that money is not quite as easy to obtain as it used to be," Hill-Wood said in an interview published on the club's official website.

He also warned against reading too much into reports about player transfers that were sourced to players' agents.

The most recent three-year television rights deal for the English Premier League runs until 2010 and brought in £1.7b - two-thirds more than the previous agreement.

The country's leading clubs also earn a lucrative slice of earnings from television coverage of the midweek European Champions League, leading to rampant wage inflation and fuelling a record spending binge on player transfers.

According to separate reports by Deloitte & Touche, spending by English clubs on players during last summer's transfer window was two-thirds up on the previous year at more than £500m while player wages among the top 20 clubs topped £1bn for the first time in 2007/08.

Debt has also played a key role as clubs throughout Europe, including Arsenal, have built state-of-the-art stadiums and as overseas investors have taken over English clubs.

In some cases, real estate was used as collateral under pre-credit crunch assumptions that have become less relevant as borrowing costs rose and house prices tumbled. U.S. billionaires Tom Hicks and George Gillett bought Arsenal rivals Liverpool for more than £200m, mostly using debt.

The pair went through tough rounds of refinancing with their lenders earlier this year, ultimately signing a one-year extension of their deal. They have also had to mark down the planned design of a new stadium because of budget constraints.

According to Deloitte & Touche, the collective net debt of the Premier League's 20 clubs rose by 19 per cent to £2.47bn in the summer of last year.