Contrasting Financial Fortunes For Premier League & EFL Clubs
Premier League clubs’ net debt at the end of the 2020/21 season increased just 4% to £4.1bn whilst Championship clubs’ net debt swelled 32% to £1.8bn.
Revenues for the Premier League’s 20 clubs grew by 8% to £4.9bn, up from £4.5bn in 2019/20, and are expected to hit £5.5bn in the 2021/22 season.
However, Championship clubs’ wage costs exceeded revenues for the fourth-consecutive year with a record high wages/revenue ratio of 125%.
Those were the key findings from Deloitte’s 31st Annual Review of Football Finance, released today.
The Premier League was the only one of the ‘big five’ European leagues to see clubs improve total operating profits in the year, which cumulatively increased from £49m to £479m.
On the whole the European football market saw revenues grow by 10% to €27.6bn in 2020/21 (€25.2bn in 2019/20) despite an almost complete absence of fans from stadia during the season.
The report shows a strong recovery in revenue terms of the European market, which contracted for the first time in over a decade in the 2019/20 season due to the impact of COVID-19, fuelled by deferred broadcast revenues and the success of the delayed UEFA EURO 2020 tournament.
The Premier League
Despite matchday revenue falling to just £31m, Premier League club revenues increased by 8% to £4.9bn in 2020/21, following the league’s first ever drop in revenues in the previous season.
Over the reporting period wage costs increased 5% to £3.5bn in 2020/21, with only seven of the 17 consistent Premier League clubs reporting a reduction in wages.
As a result of revenue growth outstripping the increase in wages, the division’s wages/revenue ratio reduced slightly from 73% to 71% in 2020/21.
Operating profits in Premier League clubs increased from £49m to £479m during the 2020/21 season, pre-tax losses remained significant despite decreasing from £991m to £669m.
This is the third consecutive year that Premier League clubs have reported pre-tax losses, with only four clubs reporting a pre-tax profit in 2020/21.
Overall, Premier League clubs’ net debt at the end of the 2020/21 season increased 4% to £4.1bn (2020: £3.9bn).
Tim Bridge, lead partner in the Sports Business Group at Deloitte, said: “As the Premier League enters its fourth decade, it’s further ahead of the competition than ever before, having emerged from the pandemic without as significant an increase in net debt as many might have expected.
“The stark reality, however, is that the league last broke even at a pre-tax level in the 2017/18 season, highlighting the crucial need for strong governance and financial planning in the years ahead.”
Football League Clubs
EFL Championship clubs’ combined revenues of £600m in 2020/21 was a decrease of £78m (12%) compared to 2019/20.
This was largely due to clubs’ matchday revenues falling by £101m (from £166m in 2018/19 to £16m in 2020/21), as the majority of matches in the 2020/21 season were played behind closed doors or with restricted attendances.
Wage costs exceeded revenues for the fourth-consecutive year with a record high wages/revenue ratio of 125%.
Whilst in aggregate, Championship clubs managed to reduce wage costs by 8% to £747m, these savings were exceeded by the loss of overall revenue.
Net debt at the end of the EFL Championship 2020/21 season of £1.8bn was up £433m (32%) compared to the end of the previous season.
In 2020/21, League One club revenues fell by 22% to £129m, while League Two club revenues fell by 4% to £94m.
The negative financial impact of the COVID-19 pandemic meant that the average of League One clubs’ wage costs of £5.5m surpassed revenue for the first time with a wages/revenue ratio of 103%.
For League Two clubs the average wage cost was £3.1m, with a wages/revenue ratio of 80%.
Bridge, continued: “There now can be no doubt that significant change is required to drive long-term financial sustainability in the Championship.
“Without sustained collaboration across the English football system the gap to the Premier League, the competitive advantage of clubs with parachute payments and the cycle of clubs gambling on promotion will continue to increase.”
