The Financial Chasm between Premier League & Football League Clubs

The football revenue of the top 92 clubs in English football reached almost £3.2 billion (Premier League 2.525bn) according to the 23rd Annual Review of Football Finance from the Sports Business Group at Deloitte. Dan Jones, Partner, commented:

Once again the global appeal of the Premier League has continued to drive commercial revenue growth, particularly at the highest ranked Premier League clubs. Matchday revenue also increased by 6% with fewer unsold seats at Premier League games than ever before.

Matchday spending success coincides with the top 92 English clubs investing £211m in stadiums and facilities in 2012/13, the highest amount of capital investment since 2006.

The 2012/13 season was a particularly bleak year for the finances of Championship clubs. A revenue reduction of £39m was compounded by a £40m increase in wage costs, leading to record operating losses of £241m. Pre-tax losses also increased by £170m, equivalent to an additional £7m per club, to £323m.

Adam Bull, Senior Consultant in the Sports Business Group at Deloitte, commented:

The 2012/13 wages to revenue ratio for Championship clubs of 106% is the highest ever recorded by an English division and is clearly unsustainable without ongoing owner support. The introduction of the Championship Financial Fair Play Rules was widely seen, and advocated by the clubs who voted it in, as a necessary step to change clubs’ behaviour. The severity of the punishments applied to those who have not complied with the rules in the 2013/14 season and the eventual result of efforts to change the rules, will determine the extent to which they present an effective deterrent to widespread overspending.

Jones also noted that the Premier League clubs will receive another significant increase in revenue in 2013/14: “We estimate that Premier League clubs’ revenue will have increased by almost 30% to £3.2 billion in 2013/14. This growth will be driven by the revenue from the first season of the Premier League’s new broadcast deals and further commercial revenue growth at the biggest clubs.”

However, the overall Premier League clubs’ wages to revenue ratio reaching a record high of 71%, which led to the aggregate operating profit falling by £2m to £82m, an operating margin of just 3% of revenue. However, 13 of the Premier League clubs made an operating profit in 2012/13.

Other key findings of the Deloitte Annual Review of Football Finance 2014 include:

  • The total European football market grew to a record £17.1 billion (€19.9 billion) in 2012/13;
  • Premier League clubs generated the highest revenue (£2.5 billion) of any league in Europe in 2012/13, followed by Germany (£1.7 billion), Spain (£1.6 billion), Italy (£1.4 billion), and France (£1.1 billion);
  • The Bundesliga remained Europe’s most profitable league with operating profits of £226m, followed by the Premier League, with operating profits of £82m;
  • Average league capacity utilisation at Premier League clubs of 96% in 2013/14 was the highest level recorded in Premier League history and the 17th consecutive season above 90%;
  • Capital investment by clubs across the top four divisions since the Premier League began has now exceeded £3.5 billion;
  • Net debt in respect of Premier League clubs was £2.5 billion, an increase of £139m (6%) on 2012;
  • The Government’s tax take from the top 92 professional football clubs was around £1.3 billion in 2012/13.

Of the £2.5 billion net debt in the Premier League, almost two thirds (£1.6 billion) is in the form of non-interest bearing ‘soft loans’ of which over 90% related to four clubs – Chelsea (£984m), Newcastle United (£266m), Queens Park Rangers (£166m) and Aston Villa (£72m).

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