The 92 Premier League and Football League clubs generated more than £4 billion in revenues for the first time in 2014/15, a new record, according to the 25th Annual Review of Football Finance from the Sports Business Group at Deloitte. In addition, clubs’ capital expenditure reached £305 million (€394m), the most ever invested in a single season.

Premier League clubs once again saw record revenues, generating £3.3 billion as the league continues to benefit from the current broadcast rights cycle, which began in 2013/14. The lucrative broadcast deals have also helped clubs to record a second consecutive year of pre-tax profits in 2014/15, the first time this has happened since 1999.

Despite the revenue increase being modest (3 per cent) when compared with wage costs growth (7 per cent), Premier League clubs’ operating profitability was still the second highest it has ever been and almost seven times the average of the five years to 2012/13.

“The pace of football’s financial growth in two and a half decades is staggering,” noted Dan Jones, Partner in the Sports Business Group at Deloitte. “By half-time of the second televised Premier League game next year, more broadcast revenue will have been generated than during the whole of the First Division season 25 years ago. It is particularly reassuring to see that clubs are looking to spend on improving stadia and infrastructure.”

“The impact of the Premier League’s broadcast deal is clear to see. For the first time, the Premier League leads the football world in all three key revenue categories – commercial, match day and broadcast – and this is driving sustainable profitability. When the enhanced new broadcast deals commence in the 2016/17 season, operating profits could rise as high as £1 billion.”

Other key findings of the Deloitte Annual Review of Football Finance 2016 include:

• The combined revenue for the big five European leagues rose by 6 per cent to €12 billion in 2014/15, with the Premier League more than €2 billion higher than the next highest revenue-generating league, Germany’s Bundesliga, which generated €2.4 billion;
• The Premier League remained Europe’s most profitable league in 2014/15, followed by the Bundesliga and La Liga. In contrast, clubs in Italy’s Serie A and France’s Ligue 1, generated combined operating losses;
• Premier League clubs’ combined gross expenditure to acquire players was a record-high of £1.1 billion in the 2014/15 season;
• Premier League clubs’ net debt remained at £2.4 billon with interest-free soft loans, usually from the owners, accounting for 75 per cent of the total;
• The Government’s tax take from the top 92 professional football clubs in 2014/15 was around £1.5 billion, up from £1.4 billion the previous season.

Although the wages/revenue ratio has increased for the Premier League clubs, Jones does not see this as cause for concern: “Wage costs grew at a faster rate than revenues in 2014/15 and as a result the division’s wages/revenue ratio rose from 58 per cent to 61 per cent. However, this represents the second lowest level since 2004/05 and is ten percentage points lower than in 2012/13. In fact, in the last two years, only 30 per cent of revenue increases have been consumed by wage growth, whereas in the five years to 2012/13 this figure was 99 per cent.”

In the second tier Championship, combined revenues grew 12 per cent to £548 million in 2014/15, exceeding £0.5 billion for the first time. Wage costs rose by 4 per cent to £541 million which, despite a reduction in the wages/revenue ratio from 106 per cent in 2013/14 to 99 per cent, means clubs spent almost as much on wages as they generated in revenue. This remains an unsustainable level of spending without the support of owner funding. This resulted in operating losses of £225 million and a combined pre-tax loss of £191 million.

“With promotion to the top flight now worth at least an additional £170 million to those Championship clubs not in receipt of a parachute payment, it is no surprise that clubs are doing all they can to put the best talent on the pitch in the hope of reaching the promised land of the Premier League,” said Adam Bull, Senior Consultant in the Sports Business Group at Deloitte.

“At the same time, as none of the Championship clubs reported an operating profit in 2014/15 they need to be mindful that profits from player sales or owner funding are likely to be needed if they do not gain promotion,” he advised.

Categories: Articles, Broadcast, Content, Markets, Pay TV, Research, Rights