Deloitte’s latest Annual Review of Football Finance reveals that Premier League clubs’ revenues have increased substantially across all areas of their business.  The Premier League now generates more revenue than any other league across each of the three primary revenue categories; matchday, broadcast and commercial.  This has enabled them to recruit and retain the best players which attracts fans and fills stadia resulting in on pitch success at home and abroad. 

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Domestic popularity, investment in facilities and global reach continue to drive revenue growth for Premier League clubs.  The top 20 clubs reported revenues of over £1.5 billion for 2006/07 and we estimate this will have increased to £1.9 billion for the 2007/08 season just ended.”

“So far there is limited evidence that the clubs are translating this revenue boost into improved profits.  The record amounts of spending on wages and player transfers were such that operating profitability declined in 2006/07.  With increased television revenues, profitability will have improved in 2007/08, probably to record levels.  However, the exact bottom line result achieved will depend on the degree of spending restraint displayed by clubs.”

The amount Premier League clubs spent on wages increased by 13% in 2006/07, marginally ahead of the rate of increase in revenue (11%).  This was in anticipation of the significant revenue uplift for 2007/08, as a result of the new broadcasting rights deals.

The revenue boost has also fuelled investor interest, with around 40% of the clubs in the top two tiers of English football having changed ownership in the last couple of years.

Paul Rawnsley, Director in the Sports Business Group at Deloitte commented: “The global interest in English football from broadcasters, viewers and commercial partners will continue to grow and will add further substance to a business model which remains primarily financially based on a successful domestic market.  In turn, we expect there will continue to be significant investor interest from around the globe and further ownership changes.  The key strategy for earning a return from owning a club appears to be brand value and long term asset appreciation, rather than the more tangible ongoing measure of profitability.”

The report, in its 17th year, confirms that the Premier League clubs remain by far the biggest earners in world football.  Other key findings of the Deloitte Annual Review of Football Finance 2008 include:
• English football contributed around one quarter of the total revenue of the European football market of £9.2 billion in 2006/07.
• Premier League clubs generated the highest revenue (£1.5 billion) of any league in Europe in 2006/07, followed by Germany (£0.9 billion), Spain (£0.9 billion), Italy (£0.8 billion) and France (£0.7 billion).
• The aggregate operating profits of German Bundesliga clubs in 2006/07 of £168m exceeded those for the Premier League (£95m) for the first time, albeit the position may have altered for 2007/08.
• Championship clubs’ revenues grew by 3% to £329m in 2006/07.  Championship clubs’ aggregate operating losses worsened as wage increases (14%) outstripped revenue growth (3%).
• English professional football’s annual tax contribution to Government is now more than £700m.

As in other sectors of the economy, there is now a greater scrutiny of football’s balance sheet.  Alan Switzer, Director in the Sports Business Group at Deloitte commented: “Whilst there is more debt in the game than ever before, there is also more revenue, and more interest from wealthy investors and financiers.  It should also be noted that over one-third of the Premier League clubs’ net debt of almost £2.5 billion is of a non-interest bearing ‘soft loan’ nature.

“The English clubs have also invested significantly in stadia and youth facilities over the past decade, with over £1.7 billion of such assets recorded on clubs’ balance sheets.  This is in stark contrast to other European leagues like Italy.”

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Note to editors

Basis of preparation
The News Release and Highlights are extracted from the relevant sections of the Deloitte Annual Review of Football Finance (May 2008).  The bases of the opinions and calculations are explained in 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 costs between playing staff and non-playing staff.  Therefore, unless otherwise stated, references to wages relate to total wages for a club/division, including playing and 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.

Exchange rate
The exchange rate at 30 June 2007 has been used to convert figures in Euros (£1 = €1.4856).

About the Sports Business Group at Deloitte
Over the last 15 years Deloitte has developed a unique focus on the business of sport. Our 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 strategic business reviews, operational turnarounds, revenue enhancement, stadium and facilities development plans, business planning, feasibility studies, economic impact studies, due diligence, benchmarking, reviews of sports regulations, market analysis, corporate finance advisory work, valuations and bid support on acquisitions and disposals; we 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 website at www.deloitte.co.uk/sportsbusinessgroup

About Deloitte 
In this press release references to Deloitte are references to Deloitte & Touche LLP, which is among the country’s leading professional services firms.  Deloitte & Touche LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein whose member firms are separate and independent legal entities. Neither DTT nor any of its member firms has any liability for each other’s acts or omissions. Services are provided by member firms or their subsidiaries and not by DTT. Deloitte & Touche LLP is authorised and regulated by the Financial Services Authority. The information contained in this press release is correct at the time of going to press. For further information, visit our website at www.deloitte.co.uk