Premier League clubs’ revenues increase by 12%, to £2.3 billion, in 2010/11
but cost control remains the key challenge
31 May 2012
Premier League clubs’ combined revenue reached a record £2,271m in 2010/11, according to the 21st Annual Review of Football Finance from the Sports Business Group at Deloitte. In total, the top 92 clubs in English football saw revenues increase by 9% to £2.9 billion in 2010/11.
Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Top clubs in English football have continued to show impressive revenue growth despite a difficult economic climate. Premier League clubs’ revenues increased by 12% in 2010/11, driven by broadcast revenue increasing by 13%, to £1,178m, in the first year of a new three year broadcast cycle. This uplift was primarily due to an increase in overseas broadcast deal values, demonstrating once again the Premier League’s unrivalled global popularity. Commercial revenue grew by 18% during 2010/11, although this was largely attributable to clubs with a more global profile. Matchday revenue increased by £20m (4%) to £551m, however almost half the clubs suffered a reduction in matchday revenue in 2010/11.”
More than 80% of the Premier League clubs’ revenue increase was spent on wages, which increased by £201m (14%) to almost £1.6 billion, and resulted in a record Premier League wages/revenue ratio of 70%.
Adam Bull, Consultant in the Sports Business Group at Deloitte, noted: “Despite the increase in revenue generated by Premier League clubs, operating profits reduced by £16m (19%) to £68m in 2010/11 and combined pre-tax losses were £380m. Gross transfer spending by Premier League clubs increased by £210m (38%), to a record level of £769m. The challenge for clubs remains converting impressive revenue growth into sustainable profits. This will become even more important for a number of clubs as the financial results for 2011/12 will, for the first time, count towards their UEFA Financial Fair Play break-even calculation.”
Revenue in the Football League Championship increased by £17m (4%) to £423m, prompted by an increase in the solidarity payments from the Premier League and the promotion of some larger clubs into the division.
Alan Switzer, Director in the Sports Business Group at Deloitte, commented: “The Football League’s achievement in attracting fans and growing revenues is often overlooked. The Championship is the fourth best attended League in Europe, ahead of the top divisions in Italy and France.
“Whilst Championship revenues have held up well, a wages/revenue ratio of 90%, combined operating losses of £130m and record pre-tax losses of £189m, are a cause for concern. It is therefore encouraging that in April 2012 Championship clubs agreed to the implementation of new financial fair play regulations that aim to help clubs reduce the level of annual losses.”
Other key findings of the Deloitte Annual Review of Football Finance 2012 include:
Of the £2.4 billion net debt in the Premier League, 62% (£1.5 billion) is in the form of non-interest bearing ‘soft loans’, of which almost 90% relates to three clubs - Chelsea (£819m), Newcastle United (£277m) and Fulham (£200m). On the positive side of the balance sheet, Premier League clubs recorded a carrying value of tangible fixed assets of almost £1.9 billion, reflecting the huge investment in facilities seen over the past two decades and a carrying value of player registrations of around £1.2 billion.
Commenting on the regulatory developments in the game, Paul Rawnsley, Director in the Sports Business Group at Deloitte, said: “The rulebooks in England have evolved in recent years to enable a more interventionist approach by the football authorities at all levels of the professional game. In addition, clubs competing in UEFA competitions from the 2013/14 season will be monitored for compliance with the break-even requirement. This is the cornerstone of UEFA’s financial fair play regulations which aim to help clubs across Europe achieve a more sustainable balance between their costs and revenues and encourages investment for the longer term benefit of football. A significant number of clubs around Europe have some distance to travel on the road towards compliance. For many clubs there is a renewed focus on increasing revenues and the cost-side of the business model of some clubs also needs adapting. Overall, we expect the effective implementation of these measures, at both domestic and international levels, will help deliver a better balance between clubs’ costs and revenues.”
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 2012). The bases of the opinions and calculations are explained in that publication. 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 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 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.
The exchange rate at 30 June 2011 has been used to convert figures between Euros and Pounds Sterling (£1 = €1.1073).
About the Sports Business Group at Deloitte
Over the last 20 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.
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