Football still not converting revenue growth into sustainable profit!

Premier League clubs’ combined revenue reached a record £2.27bn 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.

Dan Jones, Partner in the Sports Business Group at Deloitte, said: ‘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 £1.18bn, 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.’

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%.

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. Gross transfer spending by Premier League clubs increased by £210m (38%), to a record level of £769m.’

‘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.’

Revenue in 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.

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 fourth best attended League in Europe, ahead of the top divisions in Italy and France.’

‘Whilst Championship revenues have held up well, a wages/revenue ratio of 90%, combined operating losses of £130m and record pre-tax losses of £189m, are a cause for concern. It is therefore encouraging that in April 2012 Championship clubs agreed to the implementation of new financial fair play regulations that aim to help clubs reduce the level of annual losses.’

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 £1.6bn), Italy (£1.4bn), and France (£900m);
• 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 £3bn 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 £2.4bn, 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 £1.2bn 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.

Of the £2.4bn net debt in the Premier League, 62% (£1.5bn) is in the form of non-interest bearing ‘soft loans’, of which almost 90% relates to three clubs – Chelsea (£819m), Newcastle United (£277m) and Fulham (£200m).

On the positive side of the balance sheet, Premier League clubs recorded a carrying value of tangible fixed assets of almost £1.9bn, reflecting the huge investment in facilities seen over the past two decades and a carrying value of player registrations of around £1.2bn.

Goal-Line technology moves a step closer

Goal-line technology is set for a high-profile debut at Wembley Stadium when England take on Belgium on 2nd June as part of the side’s UEFA Euro 2012 preparations.

Hawk-Eye technology will feature in the friendly played by Roy Hodgson’s side ahead of the tournament, but its readings will not be available to match officials during the game and will have no impact on any contentious goal-line decisions.

The first live test of Hawk-Eye’s systems were conducted earlier this month in the Hampshire Senior Cup final at St Mary’s Stadium.

Independent testers EMPA will observe the system along with representatives from the International Football Association Board (IFAB) and FIFA.

The trials are being conducted alongside tests of the GoalRef system in Denmark. If the trials prove successful the IFAB could approve the introduction of goal-line technology at its special meeting on 2^ndJuly, where a final decision on the subject is set to be made.

The IFAB in March reduced the number of companies bidding to implement the initiative to two, rejecting six devises, leaving only Hawke-Eye and GoalRef.

A statement from FIFA read: ‘FIFA would like to place on record its sincere thanks to The Football Association for their willingness to support the live match tests, a critical part of test phase two for goal-line technology. The phase two test results will be provided to the IFAB in order for a definitive decision on the use of goal-line technology.’

RFU Championship to Receive Major Play-Off Changes from Next Season

The play-off system in the Rugby Football Union (RFU) Championship is set to be revamped from next season.

The Championship promotion and relegation pool stages have been abolished by the RFU. From next season the top four teams in the second tier will play a two-legged semi-final and a two-legged final.

There will be no relegation play-offs at all, with the bottom team automatically demoted to National One.The system is intended to streamline the league and reward the best teams throughout the regular season.

Since its inception in 2009, the Championship’s top eight clubs were split into two pool groups, while the bottom four clubs formed a separate relegation play-off.This format was adopted to increase revenue, as every club would end up playing an extra two home ties after the regular season had finished, and it is thought that these additional games will now be filtered into the British and Irish Cup fixtures.

The current system has received widespread criticism, especially from the best performing clubs, as their push for promotion was based on their performances after 22 rounds had concluded.

Lords critical of LTA progress

The Lawn Tennis Association (LTA) has fought back after being labelled “a total shambles” in the House of Lords on Tuesday.

The chair of the All Party Tennis Group, Baroness Billingham, described the organisation’s record as “pitiful” and called for an inquiry into how the LTA uses public money.

Billingham was part of the All Party Tennis Group that levelled similar allegations two years ago when asked to investigate the governing body by the then Sports Minister Gerry Sutcliffe in the wake of a Davis Cup defeat to Lithuania.

Despite a heavy defeat to Belgium last month in Davis Cup Euro-Africa Zone I, some progress has been made, in particular at women’s world-class level with four Britons currently in the world’s top 150.

Billingham said: “The LTA are a total shambles, tottering from one broken pledge to another, the British press and the world’s press aghast at the huge cost and pathetic results of six years of mismanagement. It is pitiful.

“I call on Hugh Robertson, the Minister for Sport, to set up an urgent review and inquiry into British tennis. He must insist on transparency of all expenditure and salaries, especially given the LTA receives public money – taxpayers’ money.”

Following the speech, the LTA, who strongly dispute the majority of the allegations, hit back, saying: “The speech contained a number of inaccuracies that do not reflect a true picture of British tennis.”

Manchester City get record income from Premier League Broadcast payments

Manchester City’s have secured a record income of £60.6million from Premier League broadcast payments for last season but even bottom club Wolves earned £39million.

The figures highlight the money available to clubs in the richest league in the world – and the fact that compared to many other leagues the split of the cash is not skewed massively towards the top sides. Half the domestic TV cash and all the overseas rights income are split equally between the 20 clubs.

“The Premier League’s income distribution mechanism rewards sporting success in the League while also guaranteeing a significant amount of broadcast revenue to each club in order that they can plan from one season to the next,” Premier League chief executive Richard Scudamore said.

“It has been a fantastic season, arguably the best of all the 20 Premier League seasons, and the clubs deserve huge credit for the quality of football on show throughout 2011-12.

“We believe the way we distribute broadcast income plays a part in allowing each club to compete at the highest level.”

Each club received an equal share of £13.7m from domestic TV money, £18.7m from overseas broadcast rights, plus £755,000 for each place they finished in the final league table – that was the sum received by bottom Wolves while champions Manchester City earned £15.1m.

On top of that, each club receives around £570,000 for each time they are featured in live TV matches – at least £5.7million but in Manchester United’s case £13.5m after taking part in 26 live TV games.

That explains why Tottenham finished below Arsenal in the league table but earned more – £57.3m compared to £56.2m – because they played in 23 live TV games, compared to the Gunners’ 19.

The Jockey Club shows strong financial form

The Jockey Club, the largest commercial group in British horseracing, has reported double-digit growth in underlying turnover and operating profits for 2011, allowing the Group to increase its investment into horse racing – including a record contribution to prize money of £16.4m.

This is up from the £13m contribution made in 2010, an increase of 26%, in line with its commitment to invest all profits back into British racing. The Jockey Club, which also owns Cheltenham, Aintree, Epson Downs and Newmarket Racecourses, generated increased turnover of £139.4m in 2011 (2010: £138.0m), despite receiving £8.8m less in industry funding.

At £19.2m, The Jockey Club’s operating profits were also up for 2011 (2010: £18.3m), driven by growth in major racing festivals, which helped Jockey Club Racecourses to attract record annual attendances of 1.9m, plus increased income from media rights, hospitality sales and sponsorship, and the loss of fewer fixtures to the weather.

Adjusting for the decision to inject an additional £3.4m into prize money, the Group grew underlying operating profits by £4.3m or 23% year-on-year. With record attendances of 1.9m in 2011, The Jockey Club’s racecourse arm welcomed nearly a third of the UK’s total racing attendance, from hosting a quarter of the sport’s fixtures. 

The Jockey Club ended 2011 with bottom line profits of £2.3m after tax, interest, depreciation and waivers, which reportedly exceeded its expectations.

During 2011, the Group achieved its target of paying down its debt by £10.3m (to £92.3m) in line with its scheduled repayments, following investments of more than £150m in state-of-the-art facilities and upgrades in the last eight years.

Simon Bazalgette, Group Chief Executive, The Jockey Club, said: ‘British racing is on the up and I’m very pleased The Jockey Club continues to be our sport’s commercial powerhouse, working hard to generate increased profits so we can put more back in. The growth in interest in British racing is reflected in our Group business performance. By working hard to meet and exceed our targets in 2011, we were able to afford to contribute more than ever to British racing in the form of prize money, despite the challenging economic environment around us.’ ‘It’s fantastic that more people than ever watched our equine stars on course last year and in increasing numbers on television. By working together as a sport we are succeeding in broadening its appeal. Now we must keep building on these gains, because for the health and sustainability of British racing; we must be a relevant sport for generations to come.’ ‘That which we can control, I’m pleased to say, seems to be going well. However, British racing is still significantly underfunded. We need the Government to press on with a legislative framework that allows racing to receive a fair commercial return from the betting industry. While this is being worked through, we will see little benefit in the next couple of years, so it is more important than ever for The Jockey Club to perform well for the good of British racing, in order to invest the maximum possible into our sport.’

Premier League TV Broadcast Rights out for tender

The Premier League has issued an invitation to tender for the domestic UK broadcast rights for the 2013/14 to 2015/16 football seasons, with 154 matches set to be shown live on TV each season.

The proposed schedule is more than currently broadcast, with over 40% of all top-level matches set to be shown on television.

The extra 16 live games comes as matches are moved away from Saturday 3pm kick-off times, due to Europa League involvement or police advice, but games that do kick-off at 3pm will still not be shown.

The 154 games will be split into seven packages comprising five packages of 26 matches and two packages of 12 matches.

No one buyer will be allowed to buy more than five packages or 116 matches.

The rights are currently held by Sky and ESPN, and Al Jazeera is also expected this challenge for rights this time round.

Another sales process will be conducted for two “near live” packages each containing 226 matches, and an internet-based clips package for all 380 matches.

SPL Postpone Financial Fair Play Talk

Scottish Premier League clubs agreed to postpone talks, over financial fair play proposals

until next week.

Discussions over whether to introduce tough new rules for clubs which go into administration

or face the prospect of liquidation were set to take place at a general meeting at Hampden,

but at a time when administration-hit Rangers are attempting to find a new buyer, the clubs

agreed to delay talks.

Sale Sharks owner Brian Kennedy and the Blue Knights confirmed on Monday they have

submitted a revised bid for Rangers, with US tycoon Bill Miller also in the running for a

takeover.

Manchester to Host 2013 Rugby League World Cup Final

The 2013 Rugby League World Cup final will be hosted in Old Trafford while Wembley will play host to both semi-finals.

The 14-teamtournament, to be held in October and November next year, were unveiled in Manchester on Thursday attended by delegates from the Rugby League International Federation.

Organisers announced in March that Cardiff’s Millennium Stadium will host the opening ceremony and a double-header to launch the event and also confirmed venues for the group matches and quarter-finals, but kept the big games under wraps after a delay in finalising contracts.

Co-hosts Wales will get the tournament under way on Saturday, October 26 against qualifiers Italy, followed by England’s group A clash with favourites Australia, while the final will be on Saturday, November 30 at Old Trafford, which was also the venue for the last final to be held in England in 2000.

Wembley hosted a double header during the 2011 Four Nations Series and is a regular venue for the Challenge Cup final.

RLWC 2013 General Manager Sally Bolton, said: “It’s a stunning venue and has hosted some famous Rugby League World Cup games in the past,” said RLWC 2013 General Manager Sally Bolton.

“Having two matches back to back will make for a wonderful day of Rugby League with the four top teams going hammer and tongs for a place in the Rugby League World Cup final.

“We know Old Trafford very well too, a venue that always delivers a fantastic Super League Grand Final for us.

“Holding the final there will allow the Rugby League community, the people of the North West and we hope many new fans to witness a fantastic spectacle.”