Premiership wages drop for first time ever
Deloitte’s latest Annual Review of Football Finance, released on 1st of June that Premiership clubs’ total wages have dropped for the first time in the league’s history. The report also confirms that, the Premiership clubs remain by far the biggest earners in world football, with the top 20 clubs generating over €1.95 billion in revenue.
Dan Jones, Partner in the Sports Business Group at Deloitte, commented: "Over the past decade, we have seen Premiership wages rise by an average of 20% each year. The 3% reduction in the total wage costs for Premiership clubs, based on the latest available figures for the 2004/05 season, provides a stark contrast. Our latest analysis further supports the improving balance between revenue and costs, not just in England, but also across Europe. The need to ‘save clubs from themselves’ with a salary cap now seems far less important than it did five years ago.”
The report also highlights the prowess of the Premiership compared to its global rivals. Alan Switzer, Senior Consultant in the Sports Business Group commented: “While the German Bundesliga and Italian Serie A clubs had the biggest leaps in financial fortunes, with revenues up 17% and 16% respectively, English Premiership clubs remain well ahead. Premiership clubs benefit from a more even spread of revenue across different sources and different clubs, and greater profitability than European rivals. Let’s hope England’s World Cup on-pitch performance can mirror its business and financial success!”
Key findings of the Deloitte Annual Review of Football Finance 2006:
• The ‘big five’ European leagues generated 54% of the total €11.6 billion European football market. These are the top tier leagues in England (€1.97 billion), Italy (€1.34 billion), Germany (€1.24 billion), Spain (€1.03 billion) and France (€0.7 billion).
• Clubs in Germany (17%) and Italy (16%) had the highest rates of revenue growth for the 2004/05 season, compared to 1% in the English Premiership.
• In addition to the English Premiership, clubs in Italy (down 2%) and France (down 3%) also managed a reduction in total wages costs in 2004/05. Across the ‘big five’ leagues, the ratio of wages to revenue continues the improving trend of recent years.
• English clubs are the most profitable in Europe, followed by Germany. For 2004/05, a record 14 clubs reported pre-tax profits.
• Revenue generated by The Championship clubs of €453m reaffirms it as Europe’s sixth biggest league, after the ‘big five’, and an impressive €198m ahead of the next biggest second tier league in Europe (Italian Serie B).
Paul Rawnsley, Director in the Sports Business Group at Deloitte went on to discuss the outlook for football finance: “We expect English clubs to continue to lead the world financially. The new TV deals are set to boost Premiership clubs’ revenues to over €2.5 billion from 2007/08. Whilst the majority of the increase is likely to be spent on players, there will also be further investment across the clubs’ businesses to secure this broad based future success.”
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Annual Review of Football Finance 2006
Basis of preparation
The News Release and Highlights are extracted from the relevant sections of the Deloitte Annual Review of Football Finance (June 2006). 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 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 totals, for both years, for each division in Appendices 1 and 2 are for the clubs which comprised that division in the 2004/05 season. Where comparisons have been made, in the review itself, of league or divisional totals, we have used – for 2003/04 and earlier seasons – the relevant totals for the divisional composition in that season.
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.
The exchange rate at 30 June 2005 has been used to convert figures in Euros (£1 = €1.4806).
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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 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; we have worked with more clubs, leagues, governing bodies, stadia developers, event organisers, commercial partners, financiers and investors than any other adviser.
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