Top 92 English clubs’ revenues up almost £100m to over £2.5 billion in 2008/09, as football proves resilient to the downturn
Cost control remains the key challenge for Premier League clubs, with operating profits more than halving to £79m
Premier League clubs’ revenue reached a record £1,981m in 2008/09 and will have exceeded £2 billion in the 2009/10 season, according to the latest Annual Review of Football Finance from the Sport Business Group at Deloitte. The new broadcast contracts will drive a further increase in revenues to £2.2 billion in 2010/11. In total, the Top 92 English clubs’ saw revenues increase by £100m to over £2.5 billion.
Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Despite the sharp economic contraction, Premier League clubs were able to increase revenues by 3% in 2008/09. Whilst commercial income fell marginally (1%), both matchday and broadcasting revenues increased. For the 2009/10 season just ended, combined attendances for the Premier League and Football League exceeded 30 million – a level not seen since well before the introduction of all seated stadia. When you factor in the recently negotiated Premier League overseas broadcast deals, which come into effect from 2010/11, football has shown remarkable recession resistance during these difficult economic times.
“However, Premier League clubs’ operating profits more than halved from £185m in 2007/08 to £79m in 2008/09. The challenge for clubs continues to be converting their impressive year on year revenue growth into sustainable levels of profits that allow for continued investment in infrastructure and talent. This is particularly the case as credit is likely to remain less available to football clubs than it was two or three years ago.”
The £49m increase in Premier League clubs’ revenue was less than half the £132m increase in wage costs, driving total wages up to more than £1.3 billion resulting in a record wages / revenue ratio of 67%. Gross transfer spending by Premier League clubs also increased from £664m in 2007/08 to a record £713m in 2008/09.
Alan Switzer, Director in the Sports Business Group at Deloitte, commented: “The record wages to revenue ratio of 67% in the Premier League in 2008/09 is a concern, and we expect wages growth to outstrip revenue increases again in 2009/10. This will further reduce operating profitability, a decline that cannot continue indefinitely. However, clubs have the opportunity, via the revenue uplift from the new broadcast deals from 2010/11, to get wage levels down to a more sustainable share of revenue. It’s not the first such opportunity. It remains to be seen whether they grasp it.”
The Football League Championship clubs continued to grow their revenues, by 12% to £375m, in 2008/09. Paul Rawnsley, Director in the Sports Business Group at Deloitte, noted: “The Football League’s achievement in growing revenues, with the value of new broadcast deals’ still to come when the clubs’ 2009/10 accounts are released, coupled with the Championship being the third best attended League in Europe, is remarkable. However, a wages / revenue ratio of 90% across the Championship is a cause for serious concern and will need to be addressed.”
Other key findings of the Deloitte Annual Review of Football Finance 2010 include:
Whilst debt in the Premier League has risen slightly to £3.3 billion, around 40% of this (£1.4 billion) is in the form of non-interest bearing ‘soft loans’. On the positive side of the balance sheet, Premier League clubs had £1.9 billion carrying value of tangible fixed assets, reflecting the huge investment in facilities seen over the past two decades, and the carrying value of player registrations which exceeded £1 billion for the first time.
Alex Byars, Senior Consultant in the Sports Business Group at Deloitte, commented: “Given the ongoing increases in wages, transfer spending and debt levels, we welcome the recent steps taken by football authorities, both domestically and at a European level, to help clubs address the continuing cost control challenge. The UEFA Club Licensing and Financial Fair Play Regulations, approved in May, will require clubs competing in UEFA competitions to aim to ‘break-even’, with potential sanctions from the 2013/14 season for non-compliance. The Premier League now requires all its member clubs to apply for a UEFA Club Licence, and has prevented clubs that exhibit financial warning signs from additional spending on players, to help limit future cost growth.
“Clubs have time to make any necessary adjustments to their business plans before the new UEFA Regulations are effective, and the benefit of the revenue uplift from the new Premier League broadcast deals from 2010/11 to help them balance the books.”
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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 (June 2010). 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.
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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.
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The exchange rate at 30 June 2009 has been used to convert figures in Euros (£1 = €1.1741).
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.
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