London, August 5, 2004 — The 13th edition of the Deloitte Annual Review of Football Finance is published today. It was first published the year before the Premier League commenced.

Deloitte estimate that European clubs and federations now generate more than £7 billion of income each season. More than half of this total was income generated by the clubs in Europe's "Big Five" top divisions (England, Italy, Germany, Spain and France) — £3.9 billion in 2002-03, up 7 percent from the previous season. Read our highlights from the report, which covers the following points — and more:

• England is the European champion in a £7 billion game.
• Wage costs have stabilised in Europe's top divisions.
• English clubs generated income of almost £1.7 billion in 2002-03.
• There was a decrease in total player spending by English clubs — the first in more than a decade.
• Clubs in England’s top four divisions paid about £550m in taxes in 2002-03.

Dan Jones, partner in the Sports Business Group at Deloitte comments: "Whilst some commentators have been predicting a collapse in European football finances, the financial reality is that most clubs are turning the corner. Revenues continue to grow and greater wage restraint and a general slow down in transfer spending are bringing an improvement in the bottom line and club cash flows."

Competing in Europe
The English Premiership maintains its position as the "financial champions of Europe," generating income of £1.2 billion, stretching its lead over the Italian Serie A clubs who generated income of £0.8 billion in 2002-03 — that is an average of £62 million per club in the Premiership compared with £45m in Serie A.

The English Premiership also has higher operating profitability than its European counterparts. The average English club generated an operating profit of £6.2 million in 2002-03, well ahead of the German Bundesliga operating profit per club of £4.4 million. Encouragingly, in 2002-03, Italian Serie A and French Ligue 1 clubs also halted a worrying increase in the scale of losses over the previous two seasons.

Total wages and salary costs for clubs in the top divisions of the Big Five stabilised at £2.5 billion. In England there was the lowest rate of wages growth since the formation of the Premiership — total wages and salaries for the average English club grew by 8 percent to £38 million, well below the average annual increase of around 25 percent over the previous 10 years.

The clubs in Serie A and Bundesliga actually managed to reduce their overall wage costs. As a result, the wages to turnover ratio for Italian clubs reduced significantly to 76 percent (2001-02: 90 percent), which was still higher than the ratio in Spain (72 percent), France (68 percent) and England (now down to 61 percent). The highly regulated German clubs had a wages to turnover ratio of just 45 percent.

Stadia investment has helped fuel the English Premiership clubs' competitive advantage over the majority of their European counterparts. English clubs have invested more than £1.6 billion in facilities in the post-Taylor years (£1.2 billion in the Premiership). In aggregate, English Premiership clubs generate more than £360 million from matchday income, more than double that of clubs in any other European league.

Paul Rawnsley, from the Sports Business Group at Deloitte notes: "England leads the way in Europe in terms of football finance and in particular, its business acumen in stadium management. Average Premiership crowds are about the same as in the Bundesliga, but the stadia are more fully utilised and the revenue per attendee is double German levels."

England's top four divisions
In addition to analysis of the latest financial results of the clubs in Europe's top five leagues and key developments in the European football landscape, the Deloitte Annual Review of Football Finance also documents the financial situation for the clubs in England's top four divisions.

The clubs in England's top four divisions generated total income of almost £1.7 billion in 2002-03. Of this total, the Premiership clubs generated three-quarters of this, or £1,246 million, up 10 percent on 2001-02 (£1,132 million). Deloitte forecast that income will continue to increase steadily and estimate total Premiership income of £1.36 billion (up 9 percent) for the 2004-05 season about to start.

For the 2002-03 season, the loss of ITV Digital monies resulted in total Football League clubs' income falling by 12 percent to £412 million. However, Deloitte predict a steady rise in income for Football League clubs for 2003-04 and 2004-05, fuelled by improving levels of matchday support — the aggregate attendances for the three divisions below the top flight are now at their highest level since 1963-64, cementing the League's position as the best-attended sporting competition in Europe.

The key challenge for football clubs is to control costs. Dan Jones comments: "Total payments by English clubs in respect of players — that's wages plus transfer costs — fell by 5 percent to £852 million in 2002-03. This is a relatively small percentage, but, in reality, a monumental change. The first recorded year on year decrease in total player spending since we started producing the Annual Review twelve years ago."

The new restraint is evident in the fact Premiership clubs recorded the lowest rate of increase in total wages for over a decade, and there were absolute decreases in total wages costs amongst Football League clubs. In relation to player transfer costs, there has been a marked downturn. The total of transfer fees committed by English clubs in 2002-03 (of £203 million) was down a massive 50 percent on the total in the previous season (2001-02: £407 million).

Gerry Boon, partner in the Sports Business Group at Deloitte comments: "Whilst there will continue to be big fees for the big stars, in general, clubs are no longer prepared to, nor need they, spend significant sums on acquiring player registrations. As we predicted, the 2001-02 season was a watershed and the subsequent financial results demonstrate that the market has changed."

Boon adds: "Discretionary transfer spending by clubs has largely halted, with a few notable exceptions such as Chelsea. Clubs, particularly in the Football League, had little choice but to reduce costs, in the process reducing squad sizes and retaining whatever player transfer receipts they could generate. We are unlikely to ever again see the levels of spending of just a few years ago — over £400 million of transfer spending by English clubs in both 2000-01 and 2001-02."

For almost all Football League clubs, the collapse of ITV Digital was a turning point, not just due to the direct impact on club income, but more so the sea change in sentiment it brought with it. Commenting on the record level of seventeen Football League clubs that entered insolvency proceedings in 2002 and 2003, Paul Rawnsley said: "As we predicted, the Football League has come through a particularly challenging couple of years with a full complement of clubs intact — just! There is now an increased air of financial realism at Football League clubs.  Better financial management is being further encouraged and supported by governance changes including sporting sanctions for insolvency, limits on wage spending and division-dependent pay levels for players."

Rawnsley continues: "Having overcome the challenges of the past couple of years and taken their 'reality check,' the majority of professional clubs below the Premiership can now look forward to a more secure financial future."

Dan Jones adds: "When it comes to raising capital everyone is now more cautious and much wiser than previously. A rash of well-publicised negative experiences mean clubs and financiers are now only finalising deals after rigorous due diligence to spot potential issues and prevent problems later on."

Whilst it is the pay packets of players that receive most media coverage, Deloitte highlight that the success of English football has delivered other benefits too, including a significant annual return for Government. Deloitte Partner Richard Baldwin of the Sports Business Tax Group comments: "There is sometimes a perception that the game does not pay much tax. In fact, professional football contributed around £550 million of tax to Government in 2002-03. The total contribution by clubs in the top four divisions over the past 12 years has been over £3 billion. A tidy sum for the Exchequer!"

NOTE: The exchange rate at 30 June 2003 has been used to convert figures in Euros (£1 = €1.437). For a copy of this News Release denominated in Euros please email your request to msitzoukis@deloitte.co.uk.

About this news release
The news release and highlights are extracted from the relevant sections of the Deloitte Annual Review of Football Finance (August 2004). The bases of the opinions and calculations are explained in the relevant sections andappendices of that publication.

The analysis of the financial results and position of English clubs, and comparisons between them, has been based on figures extracted from the latest available group or company financial statements. The analysis of the financial results of various European leagues, and comparisons between them, has been based on figures extracted from the relevant company or group financial statements or from information provided to us by national associations/leagues.

In some cases Deloitte have made adjustments to the disclosed figures to enable, in Deloitte's view, a more meaningful comparison of the financial results and position of the football business on a club by club basis. Deloitte have not performed any verification work or audited any of the information contained in the statutory financial statements for the purpose of their analysis.

In relation to estimates and financial projections, actual results are likely to be different from those projected because events and circumstances frequently do not occur as expected, and those differences may be material. Deloitte can give no assurance as to whether or how closely the actual results ultimately achieved will correspond to those projected and no reliance should be placed by any party on such projections.

The published financial statements of clubs rarely split wages and salaries costs between playing staff and non-playing staff. Therefore, unless otherwise stated, references to wages and salaries relate to total wages and salaries for clubs, including non-playing staff.

The publication and this news release are intended to provide general information on the finances of the clubs in English football and other European leagues and cannot be relied upon to cover specific situations. No responsibility for loss occasioned to any person acting, or refraining from action, as a result of any material in this news release will be accepted by Deloitte & Touche LLP, Deloitte Touche Tohmatsu, and all other member firms of Deloitte Touche Tohmatsu organisation and their affiliates and in all cases any successor or assignee.  Readers should not act upon any material in this news release without taking relevant professional advice.

About the Sports Business Group at Deloitte
Over the last decade Deloitte has developed a unique focus on the business of sport. Deloitte's specialist Sports Business Group offers a multi-disciplined expert service with dedicated people and skills capable of adding significant value to the business of sport. Whether it is benchmarking or strategic business reviews, operational turnarounds, revenue enhancement strategies or stadium/venue development plans, business planning, market and demand analysis, acquisitions, due diligence, expert witness, audits or tax planning; Deloitte have worked with more clubs, leagues, governing bodies, stadia developers, event organisers, commercial partners, financiers and investors than any other adviser. For further information on our services you can access our Web site at www.sportsconsulting.co.uk.

About Deloitte
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