Premier League Clubs Record First Profit In 15 years
Thu 26th Mar 2015 | Money & Finance
Premier League clubs generated a combined pre-tax profit of £190m in 2013/14, according to Deloitte, the business advisory firm.
The first pre-tax profit in 15 years, the figure is almost four times greater than the previous record of £49m set in 1997/98. This is in sharp contrast to the £2.6 billion of pre-tax losses accumulated over the previous decade.
At an operating profit level, which excludes player trading, net interest charges and the amortisation of player contracts, Premier League clubs recorded a staggering £620m. This is over three times previous record of £185m in 2007/08, seven-and-a-half times the £82m recorded in 2012/13 and greater than the previous six seasons combined.
Dan Jones, Partner in the Sports Business Group at Deloitte, explained: “Last season was the first in the Premier League’s current three-year broadcast deal, which was a record breaker when it was struck.
“Combined with strong commercial growth at the highest revenue generating clubs, this has boosted Premier League revenue 29% to a record £3.3bn. However, despite this extra income clubs showed relative restraint in wage costs, which grew by 6% to £1.9bn.
“In the first year of the preceding two broadcast deals, 56% and 81% of respective revenue growth was absorbed by wage costs. This time it is less than 20%.
“Over the previous ten seasons wages grew by around 9% per year, which is higher than the average annual revenue growth of 7% over that period, demonstrating further what a remarkable turnaround the 2013/14 figures represent.”
This restraint has seen the Premier League’s wages/revenue ratio fall from the 2012/13 record high of 71% to just 58%, the lowest since the 1998/99 season.
Adam Bull, Senior Consultant in the Sports Business Group at Deloitte, said: “The introduction of cost control regulations at both a European and domestic level has caused many clubs to watch their spending more closely than ever before and created a useful tool for clubs to reduce the inflationary pressures during negotiations with players and agents.
“Also, the current broadcast deal has given Premier League clubs such a large revenue advantage over the vast majority of European clubs that they can still attract the top playing talent without over stretching themselves financially.”
With this record profit, the question now will be whether we are at the start of a new era of responsible spending and sustained profitability, and if so, how clubs will spend this money.
Jones, concluded: “The primary aim of a football club is, and always should be, on-pitch success for the fans.
“However, we do welcome these results, which show that the Premier League clubs are starting to convert their impressive revenue growth into a more sustainable net result.
“With the recent announcement of another record Premier League broadcast deal, the revenue increases show no sign of ending and should make this season’s profit a regular outcome.
“Such profits provide the clubs with a great opportunity to invest further in their facilities and youth development activities, but will also no doubt make Premier League clubs even more attractive to potential investors than they already were.
“They can now be reasonably profitable businesses as well as trophy assets.”
Images: Reuters / Andrew Yates Livepic
Posted by: Aaron Gourley
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