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Premier League clubs’ revenues hit £2 billion as football proves recession resilient

Premier League clubs regain their status as world’s most profitable

The new television rights deal sent Premier League clubs’ revenue soaring to £1,932m in 2007/08 and revenues are estimated to have reached £2 billion in 2008/09 according to the latest Annual Review of Football Finance from the Sport Business Group at Deloitte.  In a sign of football’s resilience to the economic downturn, Deloitte expects England’s top clubs will continue to grow revenues in 2009/10, albeit at a slower pace.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “The domestic and international popularity of the Premier League continues to generate remarkable revenue growth.  Between 1992 and 2008, revenues for the top 20 clubs grew at a compound annual rate of 16%, compared with 5.4% for the UK economy as a whole.  Revenue increased by 26% in 2007/08 and Premier League clubs generated £800 million more revenue than their nearest rivals from the other ‘big 5’ leagues.

“It will, of course, be hard to maintain this pace in the immediate future.  The new economic realities may lead to flat matchday revenues.  While attendances continue to hold up well, many clubs have frozen or reduced ticket prices.  However, the stepped increases in the current domestic broadcast deal and the new UEFA Champions League TV deal make it likely overall revenues will edge up.”

The majority of the incremental broadcast revenue has been spent on player wages and transfers.  Wage costs in the Premier League increased by £227m (23%) in 2007/08 to reach £1.2 billion, the largest annual increase recorded by the Premier League.  Spending in both the Summer 2008 and January 2009 transfer windows reached new record levels with an estimated £675m investment in new players (gross spending).

Alan Switzer, Director in the Sports Business Group at Deloitte commented: “Despite this increase in wage costs, Premier League clubs improved their wages / revenue ratio to 62% and generated record operating profits in 2007/08 of £185m.  However lower revenue growth in forthcoming seasons means clubs will have to focus on improving cost control – both wages and other operating costs – if profits are to be maintained.”

Other key findings of the Deloitte Annual Review of Football Finance 2009 include:

  • The total European football market grew by £1.1 billon to £11.6 billion in 2007/08.
  • Premier League clubs generated the highest revenue (£1.9 billion) of any league in Europe in 2007/08, followed by Germany, Spain and Italy (each £1.1 billion), and France (£0.8 billion).
  • English clubs have regained their status as the most profitable in the world having lost this title to the Bundesliga in 2006/07.
  • Total revenues for the 72 Football League clubs exceeded £500m for the first time.  These will be boosted from the coming season by an improved broadcasting deal and the presence of Newcastle United. 
  • The enhanced broadcasting revenues should help Championship clubs address record losses which reached £102m in 2007/08.
  • The top 92 English Clubs invested £187m in facilities in 2007/08, bringing the cumulative spending to well above £2.5 billion since 1992/93.  Their high quality stadia has been a key driver of attendances which exceeded 30m from league games alone in 2008/09.  The Championship is now the 3rd best attended league in Europe.
  • Net debt in respect of Premier League clubs increased to £3.1 billion in 2007/08 up from £2.7 billion the previous season.
    Serie A was the fastest growing league with total revenues increasing by 34% to €1.4bn but posted a third year of operating losses.
  • The Government’s tax take from the top 92 professional football clubs rose to £860m and will exceed £1 billion per year with the introduction of the 50% rate for earnings over £150,000.

Paul Rawnsley, Director in the Sports Business Group at Deloitte commented: “Whilst debt in the Premier League has risen, two-thirds of this debt is in respect of just four clubs – Arsenal, Chelsea, Liverpool and Manchester United – and around £1.2 billion is non-interest bearing ‘soft loans’.  On the positive side of the balance sheet, these four clubs also had £1 billion of assets in respect of investment in stadia and other facilities and a further £450m from investment in players.  Looking forward there will be an increased focus on clubs’ business models and financial sustainability.  Debt is not necessarily a bad thing for clubs; as long as it is manageable within a club’s finances and is sustainable and repayable.”

- ENDS -

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 (June 2009).  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 and over time.  Deloitte have not performed any verification work or audited any of the information contained in the financial statements or other sources in respect of each club 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 wage 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 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 2008 has been used to convert figures in Euros (£1 = €1.2632).

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 LLP, which is among the country's leading professional services firms.  Deloitte 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 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 more information, please visit www.deloitte.co.uk

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