Fuelled by the impact of the first year of a new broadcast rights cycle, Premier League clubs generated record revenue of £3.26 billion (€4.4bn) in 2013/14 – up 29 per cent on 2012/13 – according to the 24th Annual Review of Football Finance from the Sports Business Group at consultancy firm Deloitte.
The average revenue for a Premier League club in 2013/14 was £163 million – just £7 million less than the combined revenues of the 22 First Division clubs in 1991/92; the final season before the introduction of the Premier League.
Dan Jones, Partner in the Sports Business Group at Deloitte, said the impact of the Premier League’s broadcast deal was clear to see. “Broadcast income increased by £569 million in 2013/14, accounting for 78 per cent of the overall growth in revenue in the Premier League. Continued growth in both commercial and match day revenue helped Premier League clubs’ combined revenues reach £3.26 billion – a staggering increase of £735 million compared with the season before.
“In 2013/14 even the Premier League club receiving the least from domestic league broadcast distributions earned more from this source than all but five other European clubs. Following recent announcements of commercial deals for a host of the largest clubs, we expect the Premier League to surpass the Bundesliga in commercial revenue terms and hence lead the world in all three key revenue categories from 2014/15,” he added.
Other key findings of the Deloitte Annual Review of Football Finance 2015 include:
- The ‘big five’ European leagues’ combined revenues rose by 15 per cent to €11.3 billion in 2013/14, with the Premier League more than €1.6 billion higher than the next-highest revenue-generating league, Germany’s Bundesliga, which generated €2.3 billion;
- The Premier League surpassed the Bundesliga as Europe’s most profitable league. Clubs in France’s Ligue 1, by contrast, generated a combined operating loss of €140 million, €137million worse than 2012/13;
- Manchester United generated an all-time record operating profit of £117 million, whilst Tottenham Hotspur recorded the highest-ever pre-tax profit, of £80 million;
- Despite no new stadia opening for the first season since 2004/05, capital expenditure by English football’s 92 league clubs totalled £280 million, representing the highest-ever level of investment in stadia and facilities;
- Total transfer expenditure for the 92 English League clubs in 2013/14 topped £1 billion for the first time, a record which has already been surpassed by transfer activity in the 2014/15 season;
- Premier League clubs reduced their aggregate level of net debt by 6 per cent to £2.4 billion, (of which over two-thirds is non-interest bearing) benefiting from an increase in cash balances. Nine clubs improved their net debt/funds position over the course of the season, with Arsenal, Aston Villa and Tottenham Hotspur responsible for a combined reduction of £205 million in net debt;
- Total owner investment at both Chelsea and Manchester City topped £1 billion at each club since their respective takeovers;
- The government’s tax take from the top 92 professional football clubs in 2013/14 was around £1.4 billion.
Premier league clubs also made a combined operating profit of £614 million, up from £82 million in 2012/13, and an aggregate pre-tax profit of £187 million – the first since 1998/99. This was almost four times greater than the previous record of £49m, set way back in 1997/98.
“Premier League clubs also showed relative restraint in terms of wage costs, with less than 20 per cent of their revenue growth being absorbed by wage costs,” noted Jones. “Indeed, the Premier League’s wages to revenue ratio reduced to 58 per cent (from 71 per cent) in 2013/14, the lowest it has been since the 1998/99 season. The current broadcast deal also comes as cost control regulations, at both domestic and European level, have caused many clubs to rein in their spending relative to the revenue they are now capable of generating. The end result has been a remarkable turnaround in profitability,” he advised.
In the [second-tier] Championship, overall revenue increased by 12 per cent to £491 million, however, clubs continue to pay more in wages (£518 million) than they earned in revenue. The wages/revenue ratio in the second tier was 105 per cent in 2013/14, compared with 106 per cent in 2012/13. This resulted in operating losses of £222 million and a combined pre-tax loss of £247 million.
According to Adam Bull, Senior Consultant in the Sports Business Group at Deloitte, Championship clubs continue to deliver some alarming financial results. “Whilst the desire of individual clubs to reach the promised land of the Premier League is understandable, and heightened given the value of the new broadcast deals, The Football League is right to try and ensure this is not at the expense of the long-term sustainability of any club,” he concluded.