Premier League clubs’ revenues increase by 12%
Thu 31st May 2012 | Money & Finance
Premier League clubs’ combined revenue reached a record £2,271m in 2010/11, according to the 21st Annual Review of Football Finance from the Sports Business Group at Deloitte.
In total, the top 92 clubs in English football saw revenues increase by 9% to £2.9bn in 2010/11 with the Football League Championship increased by £17m (4%) to £423m prompted by an increase in the solidarity payments from the Premier League and the promotion of some larger clubs into the division.
Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Top clubs in English football have continued to show impressive revenue growth despite a difficult economic climate.
“Premier League clubs’ revenues increased by 12% in 2010/11, driven by broadcast revenue increasing by 13%, to £1,178m, in the first year of a new three year broadcast cycle. This uplift was primarily due to an increase in overseas broadcast deal values, demonstrating once again the Premier League’s unrivalled global popularity.
“Commercial revenue grew by 18% during 2010/11, although this was largely attributable to clubs with a more global profile. Matchday revenue increased by £20m (4%) to £551m, however almost half the clubs suffered a reduction in matchday revenue in 2010/11.”
However, more than 80% of the Premier League clubs’ revenue increase was spent on wages, which increased by £201m (14%) to almost £1.6bn, and resulted in a record Premier League wages/revenue ratio of 70%.
Speaking of the figures in the review, fcbusiness Editor, Ryan McKnight said: “This represents the good, bad and the ugly of football's finances. Naturally, it was positive to see commercial and total revenues growing. However, operating profits and wages to turnover ratios remain a real cause for concern.
“It appears that clubs are attempting to get ready for Financial Fair Play (FFP) but not with the collectively one would hope for. The brilliant work by Dan Jones and Co has again highlighted the absolute require for the Premier League to follow the Football League's actions and implement a domestic FFP scheme of their own.”
Despite the increase in revenues, Premier League clubs had £2.4bn of net debt, of which 62% (£1.5bn) is in the form of non-interest bearing ‘soft loans’. Almost 90% of this figure relates to three clubs - Chelsea (£819m), Newcastle United (£277m) and Fulham (£200m).
The review also showed that operating profits of Premier League clubs had reduced to its lowest level since 1999/2000 at £68m. Operating margins are now 3%, down from 16% in the Premier League’s inaugural season.
Adam Bull, Consultant in the Sports Business Group at Deloitte, noted: “Despite the increase in revenue generated by Premier League clubs, operating profits reduced by £16m (19%) to £68m in 2010/11 and combined pre-tax losses were £380m.
“The challenge for clubs remains converting impressive revenue growth into sustainable profits. This will become even more important for a number of clubs as the financial results for 2011/12 will, for the first time, count towards their UEFA Financial Fair Play break-even calculation.”
Other key findings of the Deloitte Annual Review of Football Finance 2012 include:
- The total European football market grew to a record £15.3bn in 2010/11;
- Premier League clubs generated the highest revenue (£2.3bn) of any league in Europe in 2010/11, followed by Germany and Spain (each £1.6 billion), Italy (£1.4bn), and France (£0.9bn);
- The Bundesliga remained Europe’s most profitable league with operating profits of £154m, a 24% increase on the previous year and widening the gap to the Premier League, where operating profits decreased by £16m to £68m;
- The top 92 English clubs invested £167m in stadia and facilities in 2010/11 and over £3 billion has been invested over the last 20 years. This is likely to increase further in the future given the anticipated investment in training ground facilities resulting from the introduction of the Elite Player Performance Plan (EPPP);
- Average league capacity utilisation at Premier League clubs was above 90% for the 15th consecutive season, despite total attendances at Premier League matches decreasing by 2% in 2011/12;
- Net debt in respect of Premier League clubs fell by £351m (13%) to £2.4 billion, its lowest level since 2006. This overall reduction is not representative of the experience of every club, with increases at around half the Premier League clubs;
- The Government’s tax take from the top 92 professional football clubs was almost £1.2 billion in 2010/11, a £219m (23%) increase, largely due to the increase in VAT (to 20%) and the introduction of the 50% rate for earnings over £150,000.
Posted by: Aaron Gourley
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