In Soccernomics, Simon Cooper and Stefan Szymanski explain that between 1978 and 1997, transfer spending only explained 16% of total variation in league position. Salary spending explained 92%. From 1998-2997 this dropped, but wages still explained 89% of league position variation. This is the main reason I think Manchester City are likely to win the league in the next couple of years if things stay the same.
Manchester City, interestingly, was the club whose wages didn't buy them commensurate results. Not saying they should have been a top club in that period, but they underperformed a bit.
(Funny line from the chapter about the people who run football clubs, whose hiring policies are hilarious: 'The staff of football clubs tend not merely to be incompetent, they are also often novices')