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Premier League Clubs’ revenues exceed £2bn

Thu 9th Jun 2011 | Money & Finance

Premier League clubs’ revenues exceed £2 billion for the first time in 2009/10, despite the economic downturn

Premier League clubs’ revenue reached a record £2,030m in 2009/10 and will have exceeded £2.2 billion in 2010/11 in the first season under new broadcast deals, according to the 20th Annual Review of Football Finance from the Sports Business Group at Deloitte. In total, the top 92 English clubs saw revenues increase by 5% to almost £2.7 billion in 2009/10.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Despite the difficult economic environment, Premier League clubs’ revenues increased by 2% in 2009/10.

“Broadcast revenue grew by 7% to £1,040m to become the first £1 billion revenue stream of any domestic football league, even before further growth in 2010/11 from the uplift in overseas broadcast deal values. Commercial income also increased (up 6%).

“The dip in matchday revenue was mainly due to the change in the mix of clubs in the Premier League (in particular Newcastle United’s relegation) and earlier exits from the UEFA Champions League by all four English clubs compared to 2008/09.

“Like for like average Premier League attendances were broadly level in 2010/11. Top flight football has shown remarkable recession resistance.”

However, for a second successive year the increase in Premier League clubs’ total wage costs of £64m (5%) exceeded the rise in revenue (£49m), driving total wages up to over £1.4 billion and resulting in a record wages/revenue ratio of 68%.

Alex Byars, Senior Consultant in the Sports Business Group at Deloitte, noted: “Of the £49m increase in Premier League clubs’ revenues, less than 10% (£4m) fed through to operating profits, which increased from £79m to £83m.

“The challenge for clubs continues to be converting impressive revenue growth into sustainable profits that allow for investment in both infrastructure and talent.

“The record pre-tax losses of £445m in 2009/10 are a concern, particularly as credit is likely to remain less available to football clubs than it was two or three years ago. This may also, in part, explain why gross transfer spending by Premier League clubs decreased by more than 20% from the record £713m in 2008/09 to £559m in 2009/10.”

Revenue in the Football League Championship exceeded £400m for the first time in 2009/10 (up 9%), largely due to the change in mix in clubs and, in particular, the presence of Newcastle United.

Alan Switzer, Director in the Sports Business Group at Deloitte, commented: “The Football League’s achievement in attracting fans and growing revenues is often overlooked. The Championship is the third best attended League in Europe, ahead of the top divisions in Spain, Italy and France.”

Switzer added: ‘Whilst revenues have held up well, a wages/revenue ratio of 88% is a cause for concern and will need to be addressed by Championship clubs, particularly given that Football League clubs have been put on notice about the need to rein in their spending due to the forthcoming 25% reduction in the value of live TV rights, effective from 2012/13.

“The Football League has calculated that over 80% of player contracts will have expired before the new TV deals start, which gives clubs time to reduce their cost base. However, financial history does not bode well. The League will be keen to encourage its members towards consensual solutions to assist with financial responsibility and stability for the well-being of the competition and its member clubs.”

Other key findings of the Deloitte Annual Review of Football Finance 2010 include:

  • The total European football market grew to a record £13.3 billion in 2009/10;
  • Premier League clubs generated the highest revenue (£2.0 billion) of any league in Europe in 2009/10, followed by Germany (£1.4 billion), Spain and Italy (each £1.3 billion), and France (£0.9 billion);
  • The Premier League remained the second most profitable football league in the world. Whilst operating profits increased slightly in the Premier League (up £4m to £83m), they fell by 20% to £113m in the Bundesliga;
  • The top 92 English clubs invested £179m in facilities in 2009/10 and around £3.5 billion has been invested in English football clubs’ stadia and facilities over the last 20 years;
  • Total attendances at Premier League matches increased by 3% in 2010/11. Average capacity utilisation at Premier League clubs was unchanged at 92%, the 14th consecutive season above 90%;
  • Net debt in respect of Premier League clubs fell by 20%, from £3.3 billion in 2008/09 to £2.6 billion in 2009/10, owing to a number of factors, including debt to equity conversions – notably at Manchester City - and, in Arsenal’s case, property sales;
  • The Government’s tax take from the top 92 professional football clubs will have exceeded £1 billion in 2010/11 due to the increase in VAT (to 20%) and the introduction of the 50% rate for earnings over £150,000.

Of the £2.6 billion net debt in the Premier League, around 40% (£1.0 billion) is in the form of non-interest bearing ‘soft loans’, of which the majority relates to just two clubs - Chelsea (£740m) and Fulham (£187m). On the positive side of the balance sheet, Premier League clubs had £1.8 billion carrying value of tangible fixed assets, reflecting the huge investment in facilities seen over the past two decades, and the carrying value of player registrations, which exceeded £1 billion.

Looking forward, Paul Rawnsley, Director in the Sports Business Group at Deloitte, commented: “Cost control remains the biggest challenge facing clubs, at all levels of the professional football pyramid.

“Given the record wages/revenue ratio and pre-tax losses in the Premier League in 2009/10, we welcome the steps taken by football authorities, domestically and at a European level, to help clubs address this issue.

“The UEFA financial fair play regulations will require clubs competing in UEFA competitions to aim to ‘break-even’, with potential sanctions from the 2013/14 season for non-compliance.

“Premier League clubs should be well placed to comply with UEFA’s regulations, as the Premier League remains the top revenue generating league in Europe. Clubs have time to make adjustments to their business plans before the new regulations are effective, as well as increased broadcast revenue from 2010/11 to help deliver a better balance between spending on players and revenue generation.”

Rawnsley added: “The English football bodies have expressed support for the principles of financial fair play and there is now some initial discussion about developing some form of break-even requirement at a domestic level.”

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